Is Microsoft's JEDI contract doomed before it begins?

When the Department of Defense awarded its new JEDI program (Joint Enterprise Defense Infrastructure) contract to Microsft, analysts raised plenty of questions. The program, designed to drag the military kicking and screaming into the 21st century through cloud computing technology, had been widely expected to go to Amazon, the clear leader in that field. Suspicions were immediately raised about the possibility that the contract had been steered away from Amazon because of President Trump’s famous and very public fights with the company’s owner, Jeff Bezos. (Also the owner of the Washington Post, another property that Trump isn’t exactly wild about.)

This led to Amazon filing a lawsuit to dispute the award on the grounds of assumed political bias. But that hasn’t stopped Microsoft from plunging ahead and taking a victory lap. They’re already starting to staff up for the project, or at least attempt to do so. (CNBC)

Microsoft is staffing up in preparation for its work with the Defense Department, even as Amazon is in court protesting the Pentagon’s decision, according to people familiar with the matter.

In the more than six weeks since winning the Joint Enterprise Defense Infrastructure (JEDI) deal, which is worth up to $10 billion, Microsoft has been trying to lure talent from defense contractors and other companies and get employees the necessary authorization to work on the project, said the people, who asked not to be named because they’re not authorized to speak on behalf of the company.

Microsoft’s CEO is painting a rosy picture of the ten billion dollar deal and claims that progress is accelerating. But not everyone in the industry (and indeed, even inside the company) is quite so confident. For one thing, this is a massive project that’s going to require a ton of staffing. Microsoft doesn’t have that many qualified people. They appear to be scrambling, going so far as to arrange a job fair in the near future to be held only blocks from the headquarters of the CIA in Langley, Virginia.

That’s not the only issue, however. Even if they can find a sufficient number of recruits, these jobs all require hefty security clearances. And the backlog of clearance requests currently in the pipeline means that it could take up to 18 months for any applicant to be cleared to work on the project. (Washington Business Journal)

CNBC reported Thursday that Microsoft Corp. (NASDAQ: MSFT) has been actively recruiting tech talent with security clearances, which are highly sought after in the D.C. market, in preparation for the stand-up of the cloud infrastructure contract potentially worth $10 billion.

Microsoft has no shortage of tech talent to work on the contract, but because of the time it takes to obtain a security clearance, CNBC said the company could face “an 18-month bottleneck” getting them through the Defense Department’s process.

Given the initial timeline for getting this project moving, a delay of a year and a half in getting people cleared to walk in the door is nothing to sneeze at. And if the project remains understaffed through the end of 2020, how long will it be before Microsoft starts missing deadlines and endangering their prospects of keeping the project in the long term?

Compounding the matter is the Amazon lawsuit I mentioned above. If Bezos’ lawyers can find an amenable judge who agrees that Trump’s distaste for Amazon pushed the contract to a less qualified (and potentially more expensive) competitor, they might manage to secure an injunction against further spending on JEDI while the case plays out. That might actually be good news for Microsoft in the short run because it would give them more time to get their new employees through the screening project. But it could also choke off their cash flow and leave the entire project staff twiddling their fingers.

It just seems like both the DoD and Microsoft are rushing forward in a rather reckless fashion and it’s ultimately our military that will pay the price if this all falls apart. And in case you’re wondering why Defense didn’t just go with somebody else, it’s because these two companies are pretty much the only game in town. The only other company with any sort of serious footprint in cloud computing is Google, but they come in a distant third in the cloud computing race.