Microsoft is pushing forward with JEDI recruiting despite Amazon's legal fight

Key Points
  • After winning the JEDI contract, Microsoft is recruiting people with security clearances and offering pay raises to employees.
  • There is a backlog of employees waiting to get the necessary clearances.
  • Amazon has disputed the awarding of the contract, arguing that bias on the part of President Trump affected the process.
Satya Nadella, chief executive officer of Microsoft Corp., departs the "Tech For Good" meeting at Elysee Palace in Paris, France, on Wednesday, May 23, 2018. A group of industry executives met with France's President Emmanuel Macron to discuss how to use technology to improve people's lives.
Christophe Morin | Bloomberg | Getty Images

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, or 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.

Amazon has contested the Pentagon's decision to award the contract to its smaller cloud rival, citing in a lawsuit a bias on the part of President Donald Trump and repeated attacks against Amazon and CEO Jeff Bezos as evidence of an unfair process.

But Microsoft isn't slowing down. Brad Smith, Microsoft's president and chief legal officer, told CNBC on Saturday that "we have if anything been moving even faster since that contract was awarded."

Microsoft has a history with government contracts and has spent years going through the process of clearing employees for defense work, said two of the people. The company has hundreds of cleared engineers, one of the people said. But there are so many people in the pipeline that Microsoft faces an 18-month bottleneck getting current employees through the process, a different person said.

Microsoft's website lists more than 100 openings for people with security clearances, though none mention JEDI by name. Openings are for positions including principal software engineering managers and principal program managers. In January, Microsoft plans to hold two recruiting events in Reston, Virginia, near the headquarters of the Central Intelligence Agency in Langley.

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"The Department of Defense is confident in the JEDI cloud contract award and remains focused on getting this critical capability into the hands of our warfighters as quickly and efficiently as possible," Pentagon spokesperson Elissa Smith said in an email. "The department's Cloud Computing Program Office continues to work with Microsoft to prepare the JEDI cloud environment."

A Microsoft spokesperson declined to comment.

As part of the internal recruiting process for Defense Department work, Microsoft regularly offers to pay for employee applications for security clearances, according to a person familiar with the process. The clearance brings with it a 20% to 30% salary increase, depending on the level of authorization and the employee's role, the person said, adding that not every employee will need clearance to contribute to JEDI.

According to a court filing that became public on Monday, Amazon and the Defense Department have agreed that there's currently no reason to ask the court for a restraining order because the Pentagon has said it "will not proceed with performance of the JEDI contract beyond initial preparatory activities" until Feb. 11, 2020, at the earliest.

The battle for JEDI has been hotly contested since 2018, when the Pentagon announced its plan for a $10 billion and 10-year upgrade to its IT operations. Amazon Web Services holds a commanding lead in cloud infrastructure, with 47.8% of the market, according to Gartner, and was widely considered the favorite to win JEDI, in part because of a big contract the company has had with the CIA since 2013. Microsoft Azure is a distant second, with 15.5% of the market.

In Monday's court filing, Amazon asserted there was a "fundamental defect" in the procurement process. Early on, according to Amazon, Pentagon staffers observed the strengths of AWS offerings, but their views became more negative over time as Trump's bias became more evident.

"This abrupt change in course reflects the culmination of President Trump's improper interference and express direction to officials responsible for overseeing the award of the JEDI contract," Amazon wrote.

— CNBC's Amanda Macias contributed to this report.

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