Microsoft wins DOD's JEDI cloud contract

Microsoft got a big win late on Friday when the Defense Department picked the Redmond, Wash.-based firm over rival bidder Amazon Web Services for DOD's heavily contested Joint Enterprise Defense Infrastructure contract.

The award has a $10 billion ceiling and spans a maximum 10 years if all options are exercised. In a statement, DOD said the base period is for two years and "projects user adoption will drive an estimated $210 million of spending" over that duration.

"DOD will rigorously review contract performance prior to the exercise of any options," the statement added.

"The National Defense Strategy dictates that we must improve the speed and effectiveness with which we develop and deploy modernized technical capabilities to our women and men in uniform," DOD Chief Information Officer Dana Deasy said. "The DOD Digital Modernization Strategy was created to support this imperative. This award is an important step in execution of the Digital Modernization Strategy."

Microsoft is positioned as the cloud provider of choice for the Pentagon for years to come, covering infrastructure and platform services. Additionally, DOD has its business software contract DEOS (Defense Enterprise Office Solutions) that is going to a federal systems integrator. That contract is currently being rebid after a protest, but whoever wins will be delivering Microsoft Office 365 email and applications across DOD.

AWS was a widely-held favorite to win JEDI but the contract's award to Microsoft was considered a very real possibility by analysts and market watchers as the competition progressed, even well before the initial downselect in April from four bidders to two. IBM and Oracle were eliminated from the competition with Microsoft and AWS left as the final two.

Microsoft and AWS have been "both laser focused on this cloud opportunity in the DOD and other agencies to successfully capture what could cumulatively be a $100 billion cloud market opportunity over the coming years including other ongoing government projects, thus playing a major role in morphing the cloud landscape within the Beltway for years to come," Dan Ives, managing director and equity research analyst at Wedbush Securities, wrote in a research note for clients Friday.

A longer version of this article was first published by FCW.