Microsoft wins $10 billion Pentagon cloud contract

The Department of Defense has awarded a $10 billion technology contract to Microsoft, in what was a closely scrutinized contest after President Trump said he might intervene in the hardfought commercial battle.

The 10year contract for the Joint Enterprise Defense Infrastructure, known by the cinematic acronym JEDI, had set off a showdown among Amazon, Microsoft, IBM, Oracle and Google. Intended to transform and modernize the military’s cloud computing systems, the contract is considered more important than its size because of its key role in new forms of war. Much of the military operates on 1980s and 1990s computer systems, and the Pentagon has spent billions of dollars trying to make them talk to one another.

The decision was a surprise, because Amazon had been considered a frontrunner to win the contract. But that was before Trump began his criticisms of Jeff Bezos, the founder of Amazon and, for the past several years, the owner of the Washington Post — a news organization the president refers to as the “Amazon Washington Post.”

A speechwriter for former Defense Secretary Jim Mattis, who over time became an enthusiast of moving Pentagon operations to the cloud, alleged in a book scheduled for publication next week that Trump had wanted to “screw” Amazon and give the contract to another company. In public, Trump said there were other “great companies” he wanted to make sure had a chance at the contract.

The issue quickly became radioactive at the Pentagon. The new defense secretary, Mark Esper, at first said he wanted to take several months to review the issue and then, a few days ago, recused himself from the bidding. He said he could not participate because his son worked for another competitor for the contract.

The betting was that Microsoft would, at most, get only part of the contract — and that the Pentagon, like many companies, would use more than one supplier for its cloud services. Microsoft was considered in the lead for other government cloud programs, including an intelligence contract. Its Azure cloud program is considered a worthy competitor, but only recently has Microsoft opened enough classified server facilities to be able to handle data on the scale of the Pentagon contract.

“This contract will address critical and urgent unmet warfighter requirements for modern cloud infrastructure at all three classification levels delivered out to the tactical edge,” the Defense Department said Friday.

Amazon, which calls its cloud platform Amazon Web Services, or AWS, said that it was surprised by the decision.

“AWS is the clear leader in cloud computing, and a detailed assessment purely on the comparative offerings clearly led to a different conclusion,” Drew Herdener, a spokesman for Amazon, said.

Price Floyd, a former head of public affairs at the Pentagon who consulted briefly for Amazon, said he thinks Trump’s vocal criticism of Amazon gives it ample grounds to protest the award to Microsoft. “He’s the commander in chief, and he hasn’t been subtle about his hostility toward Amazon,” Floyd said.

The concept of unifying information in the cloud has obvious benefits for the Pentagon as war fighters move to greater use of remote sensors, semiautonomous weapons and ultimately artificial intelligence. It is particularly crucial at a moment that U.S. Cyber Command has been elevated to a full combat command, equivalent to Central Command, which runs operations in the Middle East, or Northern Command, which defends the continental United States.

But some critics argued that such a large contract should not be awarded to any one technology company, while proponents said using a single provider would protect war fighters by eliminating glitches in military systems and streamlining communications.

The initial reaction Friday from some lawmakers was positive, mostly because the longdelayed contract had finally been issued.

Rep. Jim Langevin, DR.I., who has immersed himself in cyber issues, suggested that the military is finally catching up with private industry.

“Advanced generalpurpose cloud is the industry norm, and it’s past time the Department of Defense had access to these capabilities,” said Langevin, the chairman of the Armed Services Subcommittee on Intelligence and Emerging Threats and Capabilities.

Amazon, Microsoft, IBM, Oracle and Google began battling for the JEDI contract more than a year ago. Google dropped out last October without submitting a formal bid, saying the military work conflicted with its principles for the ethical use of artificial intelligence.

Kate Conger, David E. Sanger and Scott Shane are New York Times writers.