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Amazon, Google, Microsoft, and Oracle won a multibillion-dollar cloud services contract with the Department of Defense, which could amount to $9 billion for each company through 2028.
The Pentagon announced in a statement Wednesday that it will achieve market or better pricing and “optimized delivery” of cloud services with this joint contract.
The Department of Defense has thus opted to rely on multiple suppliers rather than a single company, as advocated during the administration of former President Donald Trump (2017-2021).
In fact, the Pentagon modified its previous strategy to ask several companies to offer their cloud services proposals, after it canceled a contract with Microsoft in July 2021 that kept it at loggerheads with Amazon.
With this project, the Pentagon wants to create a large cloud-based operating system for the Armed Forces, leveraging the technological capabilities of private providers to create new applications on the battlefield.
This initiative began when he was Secretary of Defense Jim Mattis – during Trump’s tenure – who hoped the project would serve as a platform for the Pentagon’s adoption of Artificial Intelligence to compete with China.
However, the contract fell through due to the Department of Defense’s insistence that it be awarded to a single company rather than several.
Firms such as Oracle and IBM protested even before it was awarded to Microsoft, arguing that such an approach went against good business practices.
Until the announcement of the award to Microsoft at the end of October 2019, the leading favorite to take it was Amazon.
Amazon accused the government, and specifically Trump – who did not get along well with its then CEO, Jeff Bezos – of making a political decision and filed a lawsuit.
The importance of this contract goes beyond its economic value – the largest in the Pentagon’s history in the technological field – because it is seen as a pioneer and may be followed by other similar contracts from other government agencies.