Pentagon Pauses $10 Billion JEDI Cloud Contract; Amazon, Microsoft Are Finalists New Defense Secretary Mark Esper will review the cloud computing contract, for which Amazon and Microsoft are finalists. President Trump has cited critics' accusations of favoritism toward Amazon.
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Pentagon Pauses $10 Billion Contract That Embroiled Amazon In Controversy

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Pentagon Pauses $10 Billion Contract That Embroiled Amazon In Controversy

Pentagon Pauses $10 Billion Contract That Embroiled Amazon In Controversy

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  • <iframe src="https://www.npr.org/player/embed/747374991/747504780" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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DAVID GREENE, HOST:

All right. The Pentagon is hitting the pause button on a massive technology contract in which Microsoft and Amazon were finalists. And we should note both those companies are financial supporters of NPR. This JEDI contract is worth up to $10 billion over a decade. And the project has brought out drama of Washington proportions - lawsuits, investigations, rebukes and finally the interest of President Trump.

Here's more from NPR's Alina Selyukh.

ALINA SELYUKH, BYLINE: This Pentagon cloud contract brings out superlatives. It's the biggest of its kind, the first to bring modern computing technology anywhere - be it a desert or a submarine.

DANIEL IVES: Probably the most important cloud deal ever.

SELYUKH: That's Wedbush Securities analyst Daniel Ives.

IVES: This is the Pentagon moving to cloud. And any company that gets this - it's going to be a massive ripple effect for decades to come. I can't understate the importance of JEDI.

SELYUKH: JEDI...

(SOUNDBITE OF LIGHTSABER WHIRRING)

SELYUKH: ...That's the name of this cloud contract - Joint Enterprise Defense Infrastructure. You might think of a cloud as some server that safeguards your vacation photos. JEDI is sort of like that but for sensitive military data. It would unify the Pentagon's many disjointed networks. And more importantly, it would give American war fighters - anywhere - access to the most cutting-edge technology, like artificial intelligence.

Daniel Goure of the nonprofit Lexington Institute calls it simply a war cloud.

DANIEL GOURE: They're supposed to integrate and move the kind of information that war fighters can act on - whether it's a ship at sea, a soldier in the field, somebody running a satellite or a ballistic missile system.

SELYUKH: Start with these high stakes, add in the price tag of up to $10 billion and you set the stage for the drawn-out, dramatic saga that JEDI has become. Four tech giants put in bids - Amazon, Microsoft, IBM and Oracle - we should note all are NPR's financial supporters. Only Amazon immediately matched all of the Pentagon's security requirements. Amazon already had a contract with the CIA for its cloud business. And so the fight began.

Here's Andrew Hunter of the Center for Strategic and International Studies.

ANDREW HUNTER: The Department of Defense does millions of contracts every year, most of them do not involve this level of controversy.

SELYUKH: Oracle led the charge. Its target - Amazon, whose government business has been rapidly ballooning. Oracle accused Pentagon of tailoring the JEDI contract to favor Amazon. Its bigger argument was that the Defense Department should select multiple companies instead of just one. Hunter says, as long as the contract's requirements are all justified, it's not unusual for only one company to qualify.

HUNTER: The classic example is aircraft carriers. If you want a large aircraft carrier, there's only one shipyard in the world that can do that in Virginia.

SELYUKH: But then it got personal. Three Pentagon employees had previously done work for Amazon's cloud division. An Oracle lobbyist compiled a colorful flowchart of these alleged connections, labelling it a conspiracy. It circulated around Washington. Both the Defense Department and Amazon fought the allegations. The Pentagon even came out calling them manipulative speculation.

At least four separate reviews investigated the bidding process in the government and the Court of Federal Claims. All of them allowed the contract to proceed. But the complaints reached the ear of President Trump, whose disdain for Amazon CEO Jeff Bezos is no secret. In July, Trump told reporters he has gotten, quote, "tremendous complaints" about the Pentagon's handling of the contract.

(SOUNDBITE OF ARCHIVED RECORDING)

PRESIDENT DONALD TRUMP: I will be asking them to look at it very closely to see what's going on because I have had very few things where there's been such complaining.

SELYUKH: And now Trump's ask for a close look is being answered. Newly installed Defense Secretary Mark Esper is re-examining the project, and the Pentagon says no decision will be made on JEDI until he's done. Before this, the contract was on the verge of being awarded, with Amazon and Microsoft the two remaining finalists. Alina Selyukh, NPR News, Washington.

(SOUNDBITE OF LRKR'S "BLUE LOVE (UBERVICE REMIX)"

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