Amazon May Become One of the Largest Defense Contractors Overnight

Jeff Bezos is eyeing a $10 billion Pentagon contract called JEDI

The Pentagon Department of Defense
The Pentagon, headquarters of the United States Department of Defense.
David Mark/Pixabay
By Alex Lauer / October 9, 2019 2:21 pm

There are a few different levels of informed Amazon consumers. On the bottom rung are the people who think Amazon is just about free shipping, Alexa and cool gadgets. Next there are the people who know things like Amazon Web Services owns the biggest chunk of the cloud computing market, and that the company shares video from Ring doorbells with police. Then at the top, there are those who know the company’s next goal: U.S. Department of Defense contracts. 

Amazon is currently the frontrunner for the “one of the most lucrative defense contracts ever,” according to an article in MIT Technology Review. The contract in question is the Joint Enterprise Defense Infrastructure program (JEDI) which will offer “cloud computing services to the Department of Defense.” The payout for the company who lands it? Up to $10 billion.

The bidding process has been particularly heated, because unlike some military contracts that are divided up between different companies to maximize competition (in both technology and price), the Pentagon is looking for a sole provider. That means there will immediately be a new power player in defense. 

As MIT writes, this has been a long-term goal for Amazon: “The company has spent the past decade carefully working its way toward the heart of Washington, and today — not content with being the world’s biggest online retailer — it is on the brink of becoming one of America’s largest defense contractors.”

This won’t be Amazon’s first foray into providing cloud computing for the federal government. In 2013, AWS became the CIA’s cloud computing supplier to the tune of $600M. And once one agency signs on, it can create a ripple effect where other agencies take note and eventually sign up, too. 

You might be wondering why the Department of Defense needs to outsource its cloud computing. Didn’t they create the precursor to the internet (ARPANET)? Yes, but in recent years “the money big tech firms bring to information technology dwarfs what the Pentagon spends on computing research,” according to MIT.

But if Amazon wins this Department of Defence contract, what’s next? What’s a bigger cash cow than U.S. military spending? According to an expert interviewed by MIT, they’ll do what they always do: go global. 

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