The Pentagon Does An About Face On Cloud Contract.  Jeff Bezos Makes $8 Billion!

FILE - This March 27, 2008, aerial file photo, shows the Pentagon in Washington. The Pentagon is reconsidering its awarding of a major cloud computing contract to Microsoft after rival tech giant Amazon protested what it called a flawed bidding process. U.S. government lawyers said in a court filing this week of March 13, 2020 that the Defense Department “wishes to reconsider its award decision” and take another look at how it evaluated technical aspects of the companies' proposals to run the $10 billion computing project. (AP Photo/Charles Dharapak, File)

Back when Donald Trump was President, the Department of Defense signed a $10 Billion cloud computing contract with Microsoft, which beat out Amazon for the business.

It was a huge coup for one Seattle based company over another, but hopefully there wasn’t too much champagne popped at Microsoft in celebration, because what the military can giveth, it can also taketh away. 

The DOD announced Tuesday that the contract called JEDI (Joint Enterprise Defense Infrastructure) was being cancelled, and is looking for new bids from Amazon and Microsoft. 

It was a huge deal that got away. It would have allowed Microsoft to build an incredibly important storage system for sensitive military data and technology, including AI. 

The payout would have been $1 billion a year for 10 years.  A sweet commission for some Microsoft salesperson. 

When the Trump administration awarded it to Microsoft in 2019, it shocked industry insiders because Amazon was seen as a more viable candidate. Remember, new Amazon CEO Andy Jassy ran the cloud program for Amazon for years, and was in the middle of this bid. 

Amazon filed suit with the US Court of Federal Claims when the lost out on the bid. They argued that the reason Microsoft got the gig was because of Trump’s dislike for Jeff Bezos and the Washington Post. 

In March of 2020 the DOD said they would re-evaluate the decision, but just went ahead and cancelled the whole thing Tuesday. 

Clearly, Amazon Web Services was happy with the decision, saying this in a release. 

“We understand and agree with the DoD’s decision. Unfortunately, the contract award was not based on the merits of the proposals and instead was the result of outside influence that has no place in government procurement.”

Here’s the kicker to the story.  After the announcement by the DOD that the contract was cancelled, Amazon’s stock price rose 4.7%. So, the richest man in the world, Jeff Bezos, saw his net worth rise over $8 billion in the blink of an eye. 

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