Report: Amazon Could Challenge Microsoft's Pentagon Contract Award

Amazon.com, Inc. AMZN is considering its legal options to protest the Pentagon's decision to grant a $10-billion cloud computing contract to Microsoft Corporation MSFT, Reuters reported Monday. 

What Happened

The Department of Defense awarded the JEDI, or Joint Enterprise Defense Infrastructure, cloud contract to Microsoft on Friday.

The $10-billion military deal saw four tech giants — Amazon, Microsoft, Oracle Corporation ORCL, and IBM IBM — locked in intense competition over the last year, with allegations against each other flying high.

Amazon was the frontrunner until July, when President Donald Trump intervened. 

Trump — who is a frequent critic of Amazon CEO Jeff Bezos — said that he had been receiving “tremendous complaints” about the JEDI contract, and that his administration would review it. 

What’s Next

Amazon said it was surprised by the Pentagon's decision.

"[Amazon Web Services] is the clear leader in cloud computing, and a detailed assessment purely on the comparative offerings clearly lead to a different conclusion," the company said in a statement, CNN reports.

"We remain deeply committed to continuing to innovate for the new digital battlefield where security, efficiency, resiliency, and scalability of resources can be the difference between success and failure."

According to legal experts consulted by Reuters, Amazon has primarily two options to choose from to appeal the Pentagon’s decision.

It could go to the Government Accountability Office, the U.S. Congress’s auditing body, which could issue an immediate stay on the contract pending an investigation.

Amazon could also pursue the matter at the Court of Federal Claims, which would allow it to request additional documents and information from the Pentagon through discovery.

Price Action

Amazon shares were trading down slightly at $1,776.45 premarket Tuesday, while Microsoft shares were down 0.2% at $143.90. 

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