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The Department of Defense announced on Tuesday that it is canceling a $10 billion cloud contract with Amazon and Microsoft that had been the subject of a court struggle. The JEDI agreement, or Joint Enterprise Defense Infrastructure, has become one of the Department of Defense’s most complex contracts. The Pentagon claimed in a press release on Tuesday that the JEDI Cloud contract “no longer satisfies its goals” owing to “changing requirements, increased cloud familiarity, and industry improvements.” However, the battle over a cloud computing project appears to be far from done. In a news statement, the Pentagon stated that enterprise-scale cloud capabilities is still needed and announced a new multi-vendor contract known as the Joint Warfighter Cloud Capability. The agency aims to solicit offers for the contract from both Amazon and Microsoft, claiming that they are the only cloud service providers that can match its requirements. However, it noted that it will continue to do market research to see whether others might match its requirements. CNBC reached out to Amazon and Microsoft for comment, but neither responded right away. Microsoft’s stock fell marginally as a result of the announcement, while Amazon’s stock scarcely moved. The costly JEDI contract was designed to upgrade the Pentagon’s information technology operations over a 10-year period. In 2019, Microsoft won the cloud computing contract, defeating market leader Amazon Web Services. Amazon’s cloud computing unit filed a complaint in the United States Court of Federal Claims a month later, disputing the JEDI judgment. President Donald Trump’s animosity toward Amazon and its CEO, Jeff Bezos, the business claimed, encouraged the Pentagon to award the contract to Microsoft. According to a study issued last year by the Pentagon’s inspector general, the award did not appear to be influenced by the White House. However, the inspector general stated in a 313-page report released in April 2020 that it had minimal assistance from White House officials throughout its investigation, and as a result, it was unable to finish its investigation into charges of ethical violations. The Department of Defense said chosen cloud vendor for the new contract must meet a number of requirements, including working on all three classification levels (unclassified, secret, and top secret), being globally accessible, and having top-tier cybersecurity protections. The agency estimates the contract value to be in the billions of dollars, however the maximum amount is still being determined. It anticipates a five-year contract, with a three-year performance base period and two one-year option periods. This story is currently being updated. Keep an eye out for new information. CNBC has a YouTube channel. WATCH THIS VIDEO TO SEE HOW AMAZON WEB SERVICES MOVES MASSIVE AMOUNTS OF DATA TO THE CLOUD/nRead More

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