Finance

Pentagon Divides Big Cloud-Computing Deal Among 4 Firms

The Defense Department said Wednesday that it had awarded lucrative cloud-computing contracts to four companies: Amazon, Google, Microsoft and Oracle. The contracts run through 2028 and could be valued as high as $9 billion, the Pentagon said in a news release.

The work is for a new cloud architecture called the Joint Warfighting Cloud Capability, which would provide the Defense Department with cloud services “across all security domains and classification levels.”

The decision to award contracts to four companies was a shift for the Pentagon, three years after it had given a $10 billion cloud-computing contract to Microsoft. That contract, for the Joint Enterprise Defense Infrastructure, known as JEDI, became part of a legal battle over claims that President Donald J. Trump interfered in a process that favored Microsoft over its rival bidder, Amazon.

“This is the biggest cloud Beltway deal in history and was a key deal to win for all the software vendors in this multiyear soap opera,” Dan Ives, a tech analyst with Wedbush Securities, said in an email. “It’s good to finally end this chapter and get a cloud deal finally done for the Pentagon after years of a roller coaster.”

Amazon, Google, Microsoft and Oracle did not immediately respond to requests for comment.

In 2021, the department said it would not move forward with the Microsoft contract, as it “was developed at a time when the department’s needs were different and our cloud conversancy less mature.”

Instead, the Pentagon said, it would seek bids from multiple technology companies for the Joint Warfighting Cloud Capability. While market research indicated that Microsoft and Amazon would be best positioned to meet the needs, officials said they would also reach out to IBM, Oracle and Google.

Wednesday’s announcement on the marquee government contract was a big win for a wider swath of technology firms. The largest of them had pushed aggressively for the earlier JEDI contract, which was seen as the way to transform and modernize the military’s cloud-computing systems. Oracle was among the companies that lobbied for the Pentagon to give cloud-computing and other government contracts to multiple firms.

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