The US Defense Department cancelled its $10 billion JEDI cloud-computing project on Tuesday and will rebid a multiple vendor contract, saying in a statement that tech giants Microsoft Corp and Amazon.com are the only providers "capable of meeting the department's requirements."
Microsoft shares dipped a little more than 1% after the news before bouncing back to trade down 0.6%.
The now-cancelled Joint Enterprise Defense Infrastructure Cloud (JEDI) contract was budgeted for as much as $10 billion and was part of a broader digital modernization of the Pentagon aimed at making it more technologically agile.
The contract was awarded to Microsoft in 2019, but Amazon quickly filed a lawsuit to object. Amazon, which was seen as a front-runner to win the project, has argued the contract process reflected undue influence from former President Donald Trump.
While president, Trump publicly derided then-Amazon CEO Jeff Bezos and repeatedly criticized the company. A US Court of Federal Claims judge in April refused to dismiss Amazon's claims.
"The Department intends to seek proposals from a limited number of sources, namely the Microsoft Corporation (Microsoft) and Amazon Web Services (AWS), as available market research indicates that these two vendors are the only Cloud Service Providers (CSPs) capable of meeting the Department’s requirements," the department said.
Published 06 July 2021, 17:42 IST