Does the Empire Strike Back When We Learn What Happens to the $10 Billion JEDI Contract?

Microsoft scored a huge victory by sweeping in and taking the $10 billion dollar, multi-year JEDI contract for military IT services from AWS (owned and operated by amazon.com, its parent company). The backstory on this is that James “Mad Dog” Mattis, then Secretary of Defense, met with Jeff Bezos who tweeted about it on August 10, 2017 and it appears that Mattis decided to structure a request for IT services (now known as the JEDI contract) that all but led to AWS being crowned the winner by the way the bid was structured.

However, this was not to be. Not only was Mattis gone by January of 2019, but President Trump and Jeff Bezos were having public squabbling matches regarding coverage of the Trump administration in the Washington Post (which Jeff Bezos had purchased in 2013). So tenuous is their relationship that Trump mocked Bezos on Twitter regarding his divorce which was precipitated by the leaked private messages and pictures between Mr. Bezos and his mistress.

What does this all have to do with JEDI? Quite a bit, actually. Amazon has won a perhaps Pyrrhic victory by getting an injunction and getting any work to stop on the process of implementing the JEDI contract on Microsoft’s cloud. Amazon is posting a $42 million bond to cover any costs the government or Microsoft might incur if it turns out that this stoppage is unjustified—not small beans, but not a lot of money to either of these tech titans.

Which way does this jump ball go now? It seems like Microsoft would still have the upper hand, because they as well as the U.S. government would have contemplated this outcome when they decided to switch to a Microsoft solution at what seems like the last minute.

Amazon makes a compelling case as well: Because of the public animosity between two feuding billionaires, one a president, and one the richest man in America, government officials would be afraid to award a contract to Amazon’s AWS because they would suffer the wrath of Trump and his officials. The Trump administration has made it no secret that there is a revolving door for people who don’t get with the Trump administration and its policies. Sounds like a win for Amazon, right?

At the same time, Jeff Bezos’s leaked text and pictures between his mistress bring up a larger question: How can the U.S. government trust some of its most precious data when the CEO not only leaks such personal information, but it is so public that Mr. Bezos himself discussed what he considered ransom demands from a tabloid that threatened to cover it on a blog post on Twitter. Even worse, supposedly the pictures and texts were obtained by the leader of Saudi Arabia, a foreign country, through a bug in WhatsApp that allowed installation of malware on Jeff’s phone that allowed all the data from his phone to be siphoned off to a foreign entity. It’s difficult for AWS to say they are the best solution when their own CEO admits that his most personal data (a secret affair with his mistress) was stolen. What would happen to real military secrets if Amazon’s CEO can’t protect his own?

The fallout from all this is what you’d expect. More arm waving, conjecture and confusion. The reality is this opens up the field to other players such as Google and Oracle. At the same time, there are hundreds of other clouds that may be able to make a case that they are a best fit for certain applications since they may specialize in specific compliances, such as SOX, PCI or HIPAA.

Ultimately, this calls into question whether the government should be putting all its cloud eggs in one basket. The longer-term solution is that the government needs to dictate a series of APIs that its developers and contractors use, and that all compliant clouds would be required to support. This would alleviate the problem of centralizing resources on a single vendor’s solution. 

In the medium term, lots of fireworks, lots of drama and most likely Microsoft, the original software empire, striking back and keeping the JEDI contract—one that was Amazon’s to lose. But the story isn’t written so we all need to keep watching for the return of the JEDI to see where this finally ends up.

— Marty Puranik