Pentagon Scraps JEDI Plan for Multi-Cloud Alternative

In an anticipated move, the U.S. Department of Defense (DoD) has taken steps to replace the ten-year, $10 billion Joint Enterprise Defense Infrastructure (JEDI) cloud computing contract it originally awarded to Microsoft (Nasdaq: MSFT) with a new multi-cloud, multi-vendor project.

"JEDI was developed at a time when the Department’s needs were different and both the CSP’s technology and our cloud conversancy was less mature,” said John Sherman, acting DoD chief information officer, quoted in a DoD statement. “[O]ur landscape has advanced and a new way-ahead is warranted to achieve dominance in both traditional and non-traditional warfighting domains.”

Out with JEDI, In with JWCC

The Pentagon is canceling JEDI in favor of a Joint Warfighter Cloud Capability (JWCC) that will be open to multiple vendors, though Microsoft and Amazon Web Services (AWS) seem likely to get a chunk apiece, as the DoD statement clarified:

“The Joint Warfighter Cloud Capability (JWCC) will be a multi-cloud/multi-vendor Indefinite Delivery-Indefinite Quantity (IDIQ) contract. The Department intends to seek proposals from a limited number of sources, namely the Microsoft Corporation (Microsoft) and Amazon Web Services (AWS), as available market research indicates that these two vendors are the only Cloud Service Providers (CSPs) capable of meeting the Department’s requirements.”

After the bidding process, contracts will be structured for five years, including three years to start, with two one-year renewal options.

End of a Sad Story

The cancellation of the Microsoft contract was no surprise to anyone, including Microsoft. From the outset, the DoD's original decision met with an outcry from Amazon (Nasdaq: AMZN), which embarked on a series of legal motions, attacking the selection process as flawed. And despite a government review that claimed to find no ethical deviations, Amazon kept up its barrage of briefs.

“The DoD faced a difficult choice: Continue with what could be a years-long litigation battle or find another path forward,” stated Toni Townes-Whitley, president, U.S. Regulated Industries at Microsoft, in a blog post. “Because the security of the United States through the provision of critical technology upgrades is more important than any single contract, we respect and accept DoD’s decision to move forward on a different path to secure mission-critical technology.”

Still, Townes-Whitley had this to say in the same statement:

"The 20 months since DoD selected Microsoft as its JEDI partner highlights issues that warrant the attention of policymakers: when one company can delay, for years, critical technology upgrades for those who defend our nation, the protest process needs reform. Amazon filed its protest in November 2019 and its case was expected to take at least another year to litigate and yield a decision, with potential appeals afterward."

Calling All Hyperscalers

The DoD may favor solutions from Microsoft and AWS, but it also plans to contact other hyperscalers. As reported in the Federal News Network, John Sherman stated to reporters:

“We’re going to engage all of them directly, including Google, Oracle and IBM.... We want to fully hear their companies’ capabilities, and we’re going to be asking for artifacts and engagement to ensure that if they’re able to meet the level we need, that we get all that information and keep that door open through October. We can never control for every factor, but our openness is going to be critical.”

Pentagon Sees a Clearer Path to Multi-Cloud

In its statements about the JWCC, the Pentagon pointed to two planned projects as bellwethers for the kinds of services the DoD is aiming to achieve. One is the Joint All Domain Command and Control (JADC2) initiative, which uses sensors and 5G to coordinate battlefield activity. The other is the DoD Artificial Intelligence and Data Acceleration (ADA) project, which will leverage AI for combatant commands throughout the U.S. armed forces.

Microsoft was already chosen for one element of the JADC2 — the Air Force’s Advanced Battle Management System (ABMS), which will be integrated with the JADC2. But there are plenty of opportunities here for other companies, including AWS. And the DoD's current awareness of the realities of multi-cloud environments points to chances for companies with all kinds of capabilities, including AI and security expertise.

Indeed, in jettisoning JEDI, the DoD may have opened the way for a more efficient and effective solution that meets its short-term objectives while ensuring a path to longer-term projects later on.

In midday trading, Microsoft shares were down slightly, trading at $277.16 (-0.49, -0.18%). Amazon shares were up, trading at $3,679.01 (+168.03, +4.79%).