The US Secretary of Defense will reportedly review a $10 billion cloud contract over which President Trump has expressed skepticism.
The deal 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.
Elissa Smith, a Department of Defense spokeswoman, said to Business Insider that no decision will be made until the Secretary of Defense has completed an examination. The award was supposed to be made later this month.
“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 Defense 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 Defense 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 modernize 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 a 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 $10 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.