Microsoft has been forced to suspend its work on the lucrative JEDI contract after an appeal from competitor Amazon was upheld.
Joint Enterprise Defence Infrastructure (JEDI) is a multi-year contract with the Pentagon worth $10 billion, designed to modernise IT operations at the US defence hub.
The contract was awarded to Microsoft in October, which didn't sit well with Amazon, the company initially deemed favourite to seal the project.
Amazon argues the Pentagon's decision was directly influenced by US President Donald Trump, whose distaste for the company and its founder Jeff Bezos is well-documented.
It filed a request for investigation in November, and subsequently demanded the entire project is put on pause pending investigation.
Both Microsoft and the Department of Defense have expressed disappointment following confirmation of the temporary freeze.
“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 Corporate Vice president of Communications, told CNBC.
“We have confidence in the Department of Defence, and 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.”
DoD spokesperson Lt. Col. Robert Carver added: “We are confident in our award of the JEDI cloud contract to Microsoft and remain focused on getting this critical capability into the hands of our warfighters as quickly and efficiently as possible.”