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 (NASDAQ:MSFT), a significant development in Amazon's (NASDAQ:AMZN) 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.