NSA awards $10 billion cloud contract to Amazon, Microsoft protests

Contract award comes on the heels of a protracted and bitter dispute over a Pentagon contract

The National Security Agency (NSA) has awarded a contract worth up to $10 billion to Amazon , setting off another fight between Amazon and Microsoft over national security contracts.

On July 21 Microsoft filed a formal bid protest with the Government Accountability Office, an independent federal agency that handles contract disputes, after Microsoft applied for the opportunity and was rejected. A decision is expected by Oct. 29.

The contract award comes on the heels of a protracted and bitter dispute over a Pentagon contract, also worth up to $10 billion, which was awarded to Microsoft before getting bogged down in lawsuits and ultimately scrapped. If the NSA can fight through an often bruising bid protest process, the new contract could extend Amazon’s lead in the fast-growing cloud computing market where rivals are gaining on it.

The NSA has offered few details about the purpose of the contract. An NSA spokesman said the agency had awarded a contract for “cloud computing support services,” but declined to elaborate or specify who won it.

“The agency will respond to the protest in accordance with appropriate federal regulations,” the spokesman said.

The NSA award is likely to improve Amazon’s prospects in the insular national security sector, where untold billions in spending from the Pentagon and the intelligence community represent a lucrative growth market.

The company has been making inroads there for years. It got an early foothold in 2013 when it secured a $600 million cloud contract with the CIA. That work accelerated Amazon’s capabilities with respect to handling classified and top secret data, while also allowing other government agencies to access its services.

A Microsoft spokeswoman confirmed the company has protested the NSA’s decision.

“We are exercising our legal rights and will do so carefully and responsibly,” the spokeswoman said.

An Amazon spokesman referred questions to the National Security Agency.

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