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Amazon says it lost $10bn Pentagon cloud bid due to “political influence”

Amazon Web Services (AWS) has confirmed that it is mounting a legal appeal against the Pentagon’s decision to award a $10bn (£7.8bn) cloud computing contract to Microsoft, claiming the process was subject to “political influence”.

The US Department of Defense announced that Microsoft had won the contract last month in a move that analysts predicted would help the software giant close AWS’s lead in the cloud computing sector.

But almost as soon as the contract was awarded, speculation emerged that Amazon would appeal the decision. The tech giant lent credibility to such suspicions when it described Microsoft’s victory as surprising and a source said the company was considering its options.

The procurement process has been blighted by claims of political interference. President Donald Trump, who has a long-running feud with Amazon founder Jeff Bezos, allegedly sought to stop AWS from bidding for the award.

Amazon revealed on Thursday that it had filed its protest in the US federal claims court. In a statement the company said:  “AWS is uniquely experienced and qualified to provide the critical technology the US military needs, and remains committed to supporting the Department of Defence’s modernisation efforts.

“We also believe it’s critical for our country that the government and its elected leaders administer procurements objectively and in a manner that is free from political influence. Numerous aspects of the Jedi evaluation process contained clear deficiencies, errors, and unmistakable bias — and it’s important that these matters be examined and rectified.”

When news of the contract award became public in October, Microsoft’s share price rose to a record high, pushing its market cap to $1.1tn (£860bn). Daniel Ives, an analyst at Wedbush Securities, predicted at the time that Amazon would take the Defense Department to court, albeit predicting Microsoft would ultimately win.

It is thought that Amazon’s protest is likely to put work on the project on pause. The ten-year deal, referred to as JEDI (Joint Enterprise Defence Infrastructure), involves a total overhaul and migration of the Department for Defense’s digital operations. Oracle has also challenged the decision, criticising the fact it has been awarded to a single supplier.