A federal judge in Washington ordered Microsoft on Thursday to halt all work on a $10 billion cloud-computing contract for the Pentagon, in a victory for Amazon, which had challenged the awarding of the contract.
In a sealed opinion, the judge, Patricia E. Campbell-Smith of the Court of Federal Claims, ordered work to stop on the Joint Enterprise Defense Infrastructure project, known as JEDI, until Amazon's legal challenge was resolved. The 10-year contract was one of the largest tech contracts from the Pentagon.
The decision adds to the acrimony surrounding the lucrative deal, which had set off a showdown among Amazon, Microsoft and other technology companies for the right to transform the military's cloud-computing systems. Amazon, which is considered the largest provider of such technology, had been seen as a front-runner to win the contract.
But in October, the Department of Defense awarded the deal to Microsoft. Amazon protested and said the awarding of the deal had been unfair.
The internet giant claimed that President Donald Trump had interfered in the bidding process for the contract because of his feud with Jeff Bezos, Amazon's chief executive and owner of The Washington Post. The Post has aggressively covered the Trump administration, and the president has referred to the newspaper as the "Amazon Washington Post" and accused it of spreading "fake news."
In December, Amazon filed a challenge to the deal in federal court, saying that Trump used "improper pressure" on the Pentagon at its expense. The company also argued that its cloud-computing services were superior to Microsoft's and that it was better situated to fulfill the contract's technical requirements.
"While we are disappointed with the additional delay we believe that we will ultimately be able to move forward with the work to make sure those who serve our country can access the new technology they urgently require," Frank Shaw, Microsoft's vice president of communications, said in a statement Thursday. "We believe the facts will show they ran a detailed, thorough and fair process in determining the needs of the warfighter were best met by Microsoft."
Lt. Col. Robert Carver, a Pentagon spokesman, said, "We are aware of the injunction but do not have a statement at this time."
Amazon did not immediately return a request for comment.
Since filing its legal challenge, Amazon has escalated the battle over the JEDI contract. Earlier this week, the company asked the court to let it depose Trump and Defense Secretary Mark Esper. Amazon argued that hearing from them was crucial to determining if they had intervened against it in the contract. Esper had recused himself from the contract award decision in October, citing his son's employment at IBM, one of the early bidders on the JEDI contract.
"The question is whether the president of the United States should be allowed to use the budget of the DOD to pursue his own personal and political ends," an Amazon spokesman said at the time.
The Pentagon said it was strongly opposed to Amazon's deposition request. Microsoft said Amazon "only provided the speculation of bias, with nothing approaching the 'hard facts' necessary" to demand them.
On Thursday, Campbell-Smith also required that Amazon pay a $42 million deposit that will be held by the court in case it later determines that the injunction was wrongfully issued and that Microsoft is owed damages.
The JEDI contract has also been in the spotlight because it is viewed as crucial to the Pentagon's efforts to modernize its technology. Much of the military operates on computer systems from the 1980s and '90s, and the Defense Department has spent billions of dollars trying to make them talk to one another.
Winning the deal was also hugely prestigious in the technology industry. Daniel Ives, an analyst for Wedbush Securities, has estimated that landing the JEDI contract put Microsoft in a position to earn the roughly $40 billion that the federal government is expected to spend on cloud computing over the next several years.