Pentagon Awards Microsoft $10Bn Cloud Computing Contract

Microsoft Corporation was awared Pentagon’s Joint Enterprise Defense Infrastructure (JEDI) contract valued $10 billion, making it the military’s largest information technology contract award in history.

“Microsoft Corporation has been awarded a contract with a ceiling value of $10 billion over a period of 10 years, if all options are exercised,” the pentagon said in a statement on Friday evening. 

The JEDI Cloud contract will provide enterprise level, commercial Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) to support US DoD business and mission operations, the pentagon said. 

Microsoft beat out Amazon, IBM, Oracle and Google to net the multi-billion dollar deal, central to the Pentagon’s efforts to modernize its technology.

Industry analysts considered Amazon a “clear front-runner” with the firm having built cloud services for the Central Intelligence Agency (CIA) previously.

“Amazon Web Services, or AWS, pioneered the lucrative cloud computing business more than a decade ago and holds a leading 48 percent market share, according to market-research firm Gartner. Microsoft is the second-largest with a 15.5 percent share,” writes The Washington Post, owned by Amazon’s founder, Jeff Bezos.

“The military also gave the company its highest data management certification. Microsoft’s designation was one step below Amazon’s,” the report said.

Amazon spokesman Drew Herdener said that the company is “surprised” at the Pentagon’s decision. “We’re surprised about this conclusion. AWS is the clear leader in cloud computing, and a detailed assessment purely on the comparative offerings clearly lead to a different conclusion.”

The military will now rent Microsoft’s “secure” services, instead of purchasing the hardware and software to operate in their own data centers. The design of the technology allows customers to tap into massive farms of servers as they need to.

Bezos also lost the title as the world's richest man, paving the way for Microsoft co-founder Bill Gates, after Amazon shares fell 9% in after-hours trading on Thursday.