Amazon was believed to be the front-runner until Friday evening. "This adds $10 to the stock in my opinion".
IBM and Oracle did not immediately return requests for comment. According to the DOD, "Prior to the award, the department conferred with the DOD Inspector General, which informed the decision to proceed", it said in a release.
But the contracting process had always been mired in conflict of interest allegations, even drawing the attention of President Donald Trump, who has publicly taken swipes at Amazon and its founder Jeff Bezos.
The award to Microsoft is likely to fuel suspicions that Trump may have weighed in privately as well as publicly against Amazon. "We brought our best efforts to the rigorous JEDI evaluation process and appreciate that DoD has chosen Microsoft", Toni Townes-Whitley, president of USA regulated industries at Microsoft, said in a statement to NPR.
Analysts say that awarding such contracts to a single company gives the victor an unfair advantage in follow-on work.
"The National Defence Strategy dictates that we must improve the speed and effectiveness with which we develop and deploy modernised technical capabilities to our women and men in uniform", said DOD Chief Information Officer Dana Deasy.
Amazon spokesman Drew Herdener said that the company is "surprised" at the Pentagon's decision.
Both the Government Accountability Office and the Court of Federal Claims ruled against Oracle's attempts to force DoD to restart or to restructure the contract. This award is an important step in execution of the Digital Modernization Strategy...
As the decision approachUS, President Donald Trump waded into the controversy, telling reporters at the White House that complaints from companies with unsuccessful bids had convinced him to intervene in the process. Alphabet Inc.'s Google, another large cloud provider, withdrew from consideration a year ago amid employee concerns over the company's ties to defense contracting. Love us on Facebook or apply us on Twitter and Instagram for most sleek news and stay news updates. Cyber security may have been a key issue in this contract, as well as the focus and scope of these companies when it comes to day-to-day operations.
"JEDI Cloud is critical to safeguarding our technological advantage against those that seek to harm our nation", Shwedo said.
CNN reported in July this year that a document containing implied and explicit allegations regarding the contracting process compiled by Oracle had made its way to Trump's desk, with the President indicating he had concerns over the JEDI contract, and that the administration will be reviewing the matter. He has said that the single source bid amounts to "limiting competition".
-With assistance from Dina Bass, Sara Forden, Ben Brody, Ryan Beene, Matt Day and Stephen Tan.