The White House reportedly directed the Department of Defence to review a $10 billion cloud contract because it would probably go to Amazon

Associated PressPresident Donald Trump talks with reporters before departing for an event to celebrate the 400th anniversary celebration of the first representative assembly at Jamestown, on the South Lawn of the White House, Tuesday, July 30, 2019, in Washington. (AP Photo/Evan Vucci)
  • The Secretary of Defence says that JEDI, a $US10 billion Pentagon cloud contract, won’t be awarded pending a full review of the deal.
  • The Washington Post reports that this announcement comes at the direction of the White House, over concerns that the deal could go to Amazon.
  • Amazon Web Services and Microsoft are the two finalists for the deal.
  • It’s now unclear when the Pentagon will officially award the JEDI contract. It was expected to be awarded later in August.
  • The announcement comes after President Trump expressed his scepticism over the deal, citing concerns raised by lawmakers and by Amazon’s cloud competitors. Trump is said to want to “scuttle” the deal and revamp it.
  • Visit Business Insider’s homepage for more stories.

The US Secretary of Defence will review a $US10 billion cloud contract over which President Trump has expressed scepticism – and the Washington Post reports that it comes at the direction of the White House, over concerns that the deal could go to Amazon.

The announcement throws a major wrench into one of the most-closely watched tech deals, that until recently was considered all but assured to go to Amazon Web Services, the retailer’s tremendous cloud computing business.

Elissa Smith, a Department of Defence spokeswoman, said to Business Insider that no decision will be made until Secretary of Defence Mark Esper has completed an examination. The award was supposed to be made later this month, though the timeline is now unclear.

“Secretary Esper is committed to ensuring our warfighters have the best capabilities, including Artificial Intelligence, to remain the most lethal force in the world, while safeguarding taxpayer dollars. Keeping his promise to Members of Congress and the American public, Secretary Esper is looking at the Joint Enterprise Defence Infrastructure (JEDI) program. No decision will be made on the program until he has completed his examination,” Smith said.

The deal in question – the Joint Enterprise Defence Infrastructure, or JEDI, contract – has been a battleground for some of tech’s biggest companies. Under the deal, a single cloud provider will be tapped to provide the cloud computing infrastructure to modernise several key Pentagon IT systems.

That winner-take-all aspect has drawn scrutiny: Critics have alleged that the terms of the deal are unfairly weighted towards Amazon Web Services, and that making it winner-take-all ignores the fact that many modern enterprises rely on multiple clouds in concert for their IT infrastructure. Earlier this year, the DoD announced that Amazon and Microsoft are the two finalists for the deal, knocking Oracle and IBM out of contention.

Oracle, for its part, took legal action, alleging improprieties on Amazon’s part in the JEDI bidding process. While Oracle lost that particular battle, its message seems to have resonated in the nation’s capitol: Lawmakers including Sen. Marco Rubio wrote to President Trump with concerns that echoed Oracle’s, while White House aides reportedly showed the president an Oracle-linked document insinuating a conspiracy to award the contract to Amazon.

Amid all of this, President Trump has signalled an interest in revisiting the deal, citing concerns raised by Amazon’s cloud rivals. There are also indications that he’s considering the possibility of personally intervening in the JEDI award process.

“Trump wants to scuttle this process and possibly reopen it back up again with extra guardrails,” a source close to the White House recently told CNN.

If the process were restarted, it could mean that both Amazon and Microsoft lose out on the $US10 billion opportunity: Experts recently told Business Insider that a revised JEDI deal could mean that it’s no longer winner-take-all, which means that every cloud provider who participates in the deal might walk away with a smaller slice of that larger pie.

Indeed, the Washington Post reports that while no decisions have been made, the option of opening JEDI up to multiple companies remains on the table, citing officials close to the process.

Some have speculated that Trump’s scepticism of the deal might be rooted in his long-standing feud with Amazon CEO Jeff Bezos, who also owns the Washington Post, which has published coverage critical of the president.

Still, at least some on Capitol Hill have urged Trump to allow JEDI to continue on schedule, citing national security concerns if the contract award were delayed further.

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