Pentagon cancels JEDI contract with Microsoft amid dispute from Amazon

Pentagon Andy Dunaway/USAF via Getty Images

The Pentagon is officially scrapping its $10 billion JEDI contract with Microsoft that was disputed by Amazon, citing the fact that it "no longer meets its needs."

The Defense Department announced Tuesday that the Joint Enterprise Defense Infrastructure cloud contract is being canceled almost two years after it was awarded to Microsoft, The Washington Post reports. Amazon had been challenging the contract, arguing the process that resulted in it being awarded to Microsoft was "tainted by politics," The Associated Press writes. The contract "would have resulted in Microsoft building a cloud storage system for sensitive military data and technology," CNN reports.

Amazon has alleged that former President Donald Trump used "improper pressure" to divert the contract away from Amazon in an attempt to harm "his perceived political enemy," then-CEO Jeff Bezos. Earlier this year, a judge rejected an attempt to dismiss Amazon's allegations. While this legal dispute has been happening, "the Defense Department has been unable to move forward with the contract it awarded to Microsoft," the Post notes.

Ultimately, Defense Department said Tuesday that "due to evolving requirements, increased cloud conversancy, and industry advances, the JEDI Cloud contract no longer meets its needs." The Pentagon will now solicit bids from Microsoft and Amazon for a new contract, according to CNN.

This decision came as a "massive financial blow to Microsoft," the Post wrote, though the company acknowledged that the Defense Department "faced a difficult choice: continue with what could be a years-long litigation battle or find another path forward."

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