RCPmag

Open Menu Open Menu


Bekker's Blog by Scott Bekker, Editor in Chief

Blog archive

How Permanent Is Microsoft's Shocking JEDI Win?

The conventional wisdom was that the massive Joint Enterprise Defense Infrastructure (JEDI) contract was Amazon Web Services' to lose.

Then Microsoft was named on Friday as the winner of the contract to be the sole cloud contractor for the Pentagon -- a deal valued at up to $10 billion over 10 years if all the options are exercised.

Here's how Adam Mazmanian at Federal Computer Week described what it means for Microsoft in a comprehensive piece on the deal:

The move positions Microsoft as the cloud provider of choice for the Pentagon for years to come, covering infrastructure and platform services. Additionally, the Department of Defense recently awarded its business software contract DEOS (Defense Enterprise Office Solutions) to a Microsoft integrator. While that contract is currently under protest, whoever wins will be delivering Microsoft 365 email and applications to the DOD.

The market agreed on Monday morning, with TheStreet reporting:

Fresh off of an earnings beat that sent the stock higher last week, Microsoft opened Monday's trading at a record after winning a major government contract. ... Microsoft was trading up 3% near $145 a share.

Victory laps by Microsoft could be premature, however.

Kara Swisher, the New York Times columnist and CNBC contributor who has some of the best sources in Silicon Valley, warned everyone not to expect AWS to take the decision as final. Especially given President Donald Trump's public statements about Amazon CEO Jeff Bezos.

In an appearance Monday on CNBC, Swisher said:

Luke, I see lawyers. The Force is with the lawyers. I think this is going to be challenged. I think some of these statements that Trump has made on ... not just in this case, which was interesting and not surprising ... but also online. He does it on Twitter all the time, calling it 'Amazon Washington Post.' They were a front-runner until these comments started happening. ... If I was Amazon, I would be wanting to have some discovery and depose some people about what was said and how it was said.

Some of the Trump rumors come from former Defense Secretary James Mattis. Here's a CNBC report on a portion of Mattis' book:

In the summer of 2018, President Trump called Mattis and directed him to "screw Amazon" out of a chance to bid on the JEDI contract, according to the forthcoming book "Holding The Line: Inside Trump's Pentagon with Secretary Mattis." The account was written by Guy Snodgrass, who served as a speechwriter for Mattis.

"Relaying the story to us during Small Group, Mattis said, 'We're not going to do that. This will be done by the book, both legally and ethically,'" Snodgrass writes. CNBC has reviewed the relevant passages of the book.

Of Microsoft, Swisher said:

The whole thing is not great. It's not a great way to win. That said, Microsoft has made a lot of strides with Azure. But they've kept quiet off to the side. They didn't go buy a newspaper, they didn't get in the cross-hairs of Trump and so that's the question. How much [Trump] involvement is here or just a lot of bluster.

Amazon's public statements so far, out of a spokesperson, are that the company was "surprised" by the decision. No word yet on whether it'll decide to tie it up in litigation or focus on winning some of the many other cloud service deals that are expected to come out of the U.S. federal government over the next few years.

This decision is a big win for Microsoft. As for the challenge aspect, think of it like the replay rule in the NFL. The refs have to overturn the ruling on the field, and the ruling on the field is that the JEDI contract belongs to Microsoft. But as the decision Friday showed, anything can happen, and may yet.

Posted by Scott Bekker on October 28, 2019 at 3:34 PM


Featured

Most   Popular