- Microsoft viewed the bidding process for the Pentagon’s contentious $10 billion cloud computing contract as a “very large scale engineering project,” company President Brad Smith told Business Insider.
- The Pentagon on Oct. 25 selected Microsoft for the deal, called the Joint Enterprise Defense Infrastructure (JEDI) contract, to move the Department of Defense’s sensitive data to the cloud.
- It was largely considered a surprise upset over Amazon Web Services — but not to Smith, who said Microsoft used the bidding process as an opportunity to improve its technology.
- Amazon is challenging the Pentagon’s decision based on alleged political interference.
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For many months, Amazon Web Services was considered the frontrunner to win a contentious $10 billion cloud contract with the Pentagon. That contract, called the Joint Enterprise Defense Infrastructure (JEDI) deal, would see key pieces of the Department of Defense’s computing infrastructure moved up to the cloud.
While Microsoft was seen as a strong contender, the convention wisdom was that Amazon had it in the bag: It was widely seen as the only cloud with the right mix of technologies and security clearances to meet the requirements of the contract.
So when Microsoft ultimately won the deal, it was seen as an upset. Amazon is challenging the decision based on the idea that the outcome was so unlikely it had to involve alleged political intervention.
But to Microsoft President Brad Smith, the company’s top lawyer, the win came as no surprise. Smith tells Business Insider that Microsoft took the JEDI bidding process as a challenge and opportunity to make its Azure cloud platform more competitive with AWS, its dominant rival.
“What was surprising to the outside world in terms of end result was less surprising to us,” Smith told Business Insider this week at the World Economic Forum in Davos. “We knew how hard we had been working and, perhaps more importantly, how much progress we made in not just satisfying but exceeding the requirements.”
‘A very large scale engineering project’
Bidders for the JEDI contract had around two years from the time the Pentagon announced the deal, to when it made a decision. That gave Microsoft time, according to Smith, to improve its actual technology, instead of just its pitch.
“A lot of times, companies think about this as wanting to sell what they’ve already built, but especially when you have this much time, you have the opportunity to think more about how you can build what the customer really wants to buy,” Smith said.
The Pentagon spelled out its requirements in great detail, Smith said.
“Perhaps the most natural thing for someone to do is to tout all the areas where feel they already meet the requirements,” Smith said. “What we did was think about this not just as a sales opportunity, but really, a very large-scale engineering project.”
Microsoft identified the areas where it had opportunities for improvement and put “large numbers” of engineers to work, who worked with a great sense of urgency, Smith said.
“We didn’t stop improving the project or a feature when we got to the point where we met the requirement,” Smith said. “We saw each area as potentially an opportunity to exceed the requirement and the feature that the Pentagon wanted.”
Microsoft’s hybrid cloud and Amazon’s challenge
Microsoft CEO Satya Nadella recently said he believes the company’s investment in the so-called hybrid cloud – an area in which Amazon is generally considered to be playing catch up with Microsoft – helped it secure the contract.
“If you sort of even go back to the JEDI contract, that’s kind of what happened really,” Nadella said, “We stayed and said ‘Look, somebody like the Department of Defense is going to need forward deployment that is not going to be like, ‘Oh, here’s the cloud.” We just built basically a leadership position in what people describe as hybrid computing.”
Amazon has other ideas. The company has repeatedly touted what it believes is its own “technical superiority” over Microsoft in response to the Pentagon’s decision, which it is challenging in court.
This interview is part of a partnership between Business Insider and Microsoft at the 2020 World Economic Forum. Business Insider editors independently decided on the topics broached and questions asked.