The Return of JEDI: Why The Military’s Cloud Contract Sequel Could Cost Much More Than The Original $ 10 Billion

Four letters have sparked another cloud war between the biggest players in the industry, but this battle will have multiple winners.

JEDI was the first. The successor, JWCC, has renewed hostilities between Amazon.com Inc.
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Microsoft Corp.
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Google parent alphabet
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Oracle Corp.
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and International Business Machines Corp.
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– with the decidedly higher stakes and the most complex deal.

The Joint Venture Defense Infrastructure, or JEDI, was a Pentagon defense contract designed for a single vendor, resulting in a controversial award to Microsoft in 2019 that sparked years of controversy and lawsuits that only ended this week, despite the government canceling the award in July. .

As the JEDI fight raged on for years, the cloud industry was undergoing a rapid shift from the single source contract approach that the Department of Defense was adopting to a so-called “multi-cloud” model of more than one provider. .

See also: Restarting JEDI allows us to correct your error

The sequel, the Joint Warfighting Cloud Capability contract, to be awarded in April 2022, will go to multiple vendors, with Amazon and Microsoft already claiming two of the spots. Google Cloud, Oracle and IBM confirmed to MarketWatch that they will compete to join Amazon and Microsoft in the deal in recent days, and they hope to know if they are deemed viable starting this month.

The Department of Defense has not assigned a value to JWCC, which would allow troops to access data at the unclassified, secret, and top-secret classification levels, but it could be worth much more than the $ 10 billion JEDI deal. The Defense Department said it “intends to seek proposals from a limited number of sources, namely Microsoft Corporation (Microsoft) and Amazon Web Services (AWS),” according to a Press release.

“JEDI, conceived with noble intent and a baseline that is now several years old, was developed at a time when the department’s needs were different and our cloud conversation less mature,” said the Chief Information Officer for the Department of Defense, John Sherman, in July, when the Department of Defense simultaneously announced JWCC and the termination of JEDI shortly after Amazon withdrew its legal challenge to JEDI. “The JWCC multi-cloud environment will serve our future in a way that JEDI’s unique award, the single cloud fabric simply cannot.”

In deep: How Amazon Created AWS and Changed Technology Forever

The JWCC structure is very important because it illustrates the industry-wide shift to multi-cloud vendor contracts and away from all-in-one solutions, says Will Grannis, managing director of the Google Cloud CTO office.

“What you’re seeing is in every business: healthcare, financial services, government agencies, retail. Businesses choose multi-cloud to meet the complexity of the service, ”Grannis told MarketWatch. “Multiple cloud is here to stay, and that is reflected in what is happening with JWCC.”

“Almost all large clients have a multi-cloud strategy. It’s a logical continuation of moving more to the cloud, ”Clay Magouyrk, executive vice president of Oracle Cloud, told MarketWatch. He explained that cloud infrastructure has grown rapidly to a $ 150 billion market because “people spend less on local computing and more on the cloud.” [Overall IT spending globally is about $1 trillion, he added.]

The COVID-19 pandemic, in turn, has accelerated the move to hybrid and multi-cloud systems as more people work remotely, prioritizing “elastic and flexible” data systems, said Tom Keane, vice president. Azure Global corporate at Microsoft. .

“There is growth in almost every industry through the cloud,” he told MarketWatch.

In fact, more than 80% of the respondents Gartner Study on cloud data management said they are using more than one cloud service provider.

In November, for example, the CIA awarded its C2E contract for certain intelligence operations, potentially worth tens of billions of dollars, to AWS, Microsoft, Google, Oracle and IBM. The deal replaces the $ 600 million C2S offer awarded in 2013 to Amazon.

As of 2019: Amazon, Oracle and IBM battle it out in a mysterious world of military contracts

While the government is moving toward a multi-cloud deal, as these contracts are called, single-vendor contracts continue to cause legal battles. Microsoft is disputing a secret $ 10 billion cloud computing contract awarded earlier this year by the National Security Agency to Amazon Web Services, which filed a protest with the Government Accounting Office in July. Microsoft declined to comment on the NSA contract.

Microsoft’s protest marks a reversal of what happened with JEDI. Oracle protested the original JEDI contract when it appeared Amazon would win it, and Amazon sued the federal government after it awarded it to Microsoft in October 2019, prompting complaints and litigation over the deal’s single-source award structure. and conflicts of interest. Amazon said separately that the award was clouded by then-President Donald Trump’s animosity toward Amazon founder Jeff Bezos, who also owns the Trump-critical Washington Post.

For more: What Amazon Really Accused Trump of Doing in the JEDI Deal

Last month, Oracle asked the US Supreme Court not to dismiss its case on JEDI even though it no longer exists. “Cases do not become moot simply because a defendant issues a press release claiming to have ceased his misconduct,” the company said in a statement. supplemental summary against the DoD.

The Supreme Court rejected Oracle’s case on Monday, effectively ending the year-long JEDI battle. Now the sequel begins.

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