How will Microsoft Manage the Contract Game?

The 10-year pentagon deal isn’t going anywhere or anytime soon. Microsoft and Amazon were leading in the race for the contract; in October 2019, the contract was awarded to Microsoft. The $10 billion deal was awarded by Pentagon to Microsoft, saying that the company had won the race fair and square. Amazon that has become a technology giant with cloud computing offerings claims political bias and approached the US federal court last week to stop the deal from moving forward. Amazon is questioning the deal and various situational decisions made during the deal.

After last Wednesday’s, January 22, 2020, court filing, the shares of Microsoft went down. The investors are worried that the giant might lose a lucrative deal with the door-opening contract. Microsoft that has been playing second fiddle in the race to cloud computing has a lot more to lose than AWS. According to Statista, in the global market share of public cloud infrastructure service providers in Q3 2019, AWS currently holds 39%, Azure 19%, and Google 9% share.      

Amazon filed the motion in the US Court of federal claims saying that it supports the government’s decisions to digitize its systems, but it wants the current process of awarding the contract to be reviewed. According to the company, President Trump views CEO Jeff Bezos as a political foe. 

The Joint Enterprise Defense Infrastructure (JEDI) contract is aimed at modernizing the current legacy technology systems and enhance the systems with cloud computing. The contract was set to make the US military deal with modern warfare requirements across all defense departments. Amazon currently has a contract with the CIA, so everyone expected this contract to go the same way, but the White House interfered with the contract in August 2019. Thus, the contract went to Microsoft a few months later.

Microsoft, in recent years, has been able to reengineer its efforts with cloud computing, it has seen double-digit growth. It would be interesting how Microsoft will look to gain consumers’ trust that it can stand on big contracts.