Please ensure Javascript is enabled for purposes of website accessibility

Pentagon Wants to Reconsider Part of Controversial JEDI Award Process

By Lou Whiteman - Mar 13, 2020 at 10:11AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

That's good news for Amazon, but it's far from a guarantee that the decision that awarded the $10 billion contract to Microsoft will be overturned.

The Department of Defense has asked a federal court to give it 120 days to reconsider aspects of a controversial $10 billion cloud computing contract that it awarded to Microsoft (MSFT 1.07%), a significant development in Amazon's (AMZN 3.15%) legal fight to get the award overturned.

In October, the Pentagon awarded the Joint Enterprise Defense Infrastructure (JEDI) contract to Microsoft, defying analysts' predictions that Amazon would win the contract. Amazon in November filed suit to try to reverse that decision, claiming that President Trump's long-standing feud with Amazon CEO Jeff Bezos had caused him to get involved and improperly influence Pentagon officials to steer the contract to Microsoft.

An illustration of a secure technology cloud.

Image source: Getty Images.

Defense contractors routinely file protests over major winner-take-all awards, but this one has come under particular scrutiny due to its size, the companies involved, and the allegations of improper presidential meddling.

The Defense Department in a court filing late Thursday reportedly said it "wishes to reconsider" one aspect of how it compared pricing, and said it also wanted to revisit its approach to online marketplace evaluations.

Amazon applauded the decision. "We are pleased that the DoD has acknowledged 'substantial and legitimate' issues that affected the JEDI award decision, and that corrective action is necessary," a company spokesperson said in an emailed statement.

However, it is far too soon to predict that the JEDI award will be overturned. Microsoft in a statement said that it supports the Pentagon's decision to reconsider "a small number of factors as it is likely the fastest way to resolve all issues."

The Defense Department has made JEDI one of its top priorities, but for now, work on the contract is on hold due to the court's finding of discrepancies in the award process. If the government is able to rectify and resolve the issues the court has identified so far without a full recompete, it will once again be up to the judge to decide whether to force a recompete or to allow Microsoft's JEDI implementation to proceed.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$109.56 (3.15%) $3.35
Microsoft Corporation Stock Quote
Microsoft Corporation
MSFT
$259.58 (1.07%) $2.75

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/02/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.