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Pentagon will not award JEDI cloud contract until new Defense secretary completes review

Key Points
  • The Pentagon will not award a lucrative multi-year cloud-computing contract until newly appointed Defense Secretary Mark Esper completes a series of through reviews of the technology.
  • The JEDI deal, which could be worth up to $10 billion for services rendered over as many as 10 years, could go to either Amazon or Microsoft.
The Pentagon building in Washington, DC.
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WASHINGTON — The Pentagon will not award a lucrative multi-year cloud-computing contract until newly appointed Defense Secretary Mark Esper completes a series of thorough reviews of the technology.

"Given that this is a large acquisition program, you would expect any new secretary taking over the DoD to want to have a strong understanding of any major acquisition program. So that's, exactly what we are doing here," Dana Deasy, the Pentagon's chief information officer, said in a Friday morning briefing with reporters.

"Our job right now is to educate the secretary as to why we need a cloud," Deasy said, adding that the Pentagon would not rush to award the colossal cloud contract known as the Joint Enterprise Defense Infrastructure, or JEDI.

The JEDI deal, which could be worth up to $10 billion for services rendered over as many as 10 years, and was originally supposed to be awarded in September 2018.

At this point, the deal could go to either Amazon or Microsoft as they were the only two proposals that met the Pentagon's requirements. The JEDI deal could cement them even more in the cloud-computing arena.

Amazon and Microsoft did not immediately respond to CNBC's request for comment.

"We've got to get this right, so we are not going to rush to a decision. We are going to spend whatever time the evaluation team needs to spend to make sure we are picking the best technical solution at the right price with the right criteria," Deasy added, noting that the timeline for awarding the contract will go past the end of August.

Earlier this month, the Pentagon announced that Secretary of Defense Mark Esper would review the JEDI deal after President Donald Trump said that he had received complaints from companies about the process. Trump said in July that companies conveyed that the specifications of the contract favored Amazon, according to Bloomberg.

U.S. President Donald Trump listens as Mark Esper, U.S. Secretary of Defense, speaks during his swearing-in ceremony in the Oval Office of the White House in Washington, D.C., U.S., on Tuesday, July 23, 2019.
Bloomberg | Bloomberg | Getty Images

"I never had something where more people are complaining," Trump said during an event last month with the prime minister of The Netherlands at the White House. "Some of the greatest companies in the world are complaining about it," he added naming Microsoft, Oracle and IBM.

Read more: Trump says he's looking into a Pentagon cloud contract for Amazon or Microsoft because 'we're getting tremendous complaints'

While Trump didn't name Amazon CEO Jeff Bezos by name, the billionaire executive has been a constant source of frustration for the president. Bezos owns The Washington Post, which Trump regularly criticizes for its coverage of his administration. Trump also has gone after Amazon for, what he claims, as not paying its fair share of taxes and ripping off the U.S. post office.

The Pentagon downplayed concerns that the reviewing process for the JEDI deal was a break in the bureaucratic process.

"It's not a break from our standpoint," Deasy said.

"The reason I say that is, we have not stopped our selection process, I think what JEDI is going through is common to other large programs. You're gonna have protest and you're gonna have people that will weigh in. We have a new secretary, and as I said earlier, I would absolutely expect him on a program of this scale to want to completely understand that," he said, adding that the White House did not have a role in the contract's deal.

"As far as the commander-in-chief, not involved in the source-selection process and not involved in all of the efforts that we are doing with Secretary Esper," Deasy said.

Jordan Novet and Ari Levy contributed to this report from CNBC's San Francisco bureau.