Microsoft beat out Amazon for a Department of Defense contract that could be worth as much as $10 billion over a decade, CNBC reported.
The achievement highlights the emergence of Microsoft’s Azure cloud as a challenger to AWS and represents the latest victory for Satya Nadella, who took over from Steve Ballmer as Microsoft chief in 2014. Early on in the process, Amazon was seen as the favorite, partly because its AWS business won a deal with the CIA in 2013. In addition, Amazon had been certified at the highest existing security clearance level, while Microsoft sought to catch up.
The Department of Defense announced its contract with Microsoft on the U.S. Department of Defense website. Part of that announcement states:
Microsoft Corporation, Redmond, Washington, has been awarded a firm-fixed-price, indefinite-delivery/indefinite-quantity contract with a ceiling value of $10,000,000,000 over a period of 10 years, if all options are exercised. The JEDI Cloud contract will provide enterprise level, commercial Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) to support Department of Defense business and mission operations.
JEDI stands for “Joint Enterprise Defense Infrastructure”. I find the name somewhat amusing, because it makes me think of President Reagan’s Strategic Defense Initiative (SDI) – which critics referred to as “Star Wars”.
The New York Times reported that the contract has an outsized importance because it is central to the Pentagon’s efforts to modernize its technology. According to The New York Times, much of the military operates on 1980s and 1990s computer systems, and the Defense Department has spent billions of dollars trying to make them talk to one another.