The Department of Defense is reconsidering its decision to award Microsoft the JEDI contract, following legal challenges by Amazon.

Microsoft stunned Amazon and industry insiders when it won the Pentagon’s coveted JEDI contract, worth some $10 billion. The win lent a tremendous amount of credibility to Microsoft’s cloud business, proving it could compete with the biggest, for the best contracts. Microsoft CEO Satya Nadella predicted the contract could lead to a “halo effect” for the company, bringing in even more business.

Amazon, however, has not taken the loss lying down. The company almost immediately mounted a legal challenge and succeeded in getting a temporary injunction, preventing Microsoft from beginning on the contract. A judge agreed that Amazon stood a good chance of winning its case.

Now, according to Business Insider, “the Department of Defense on Thursday in a court filing said it ‘wishes to reconsider’ its decision to award the $US10 billion JEDI cloud computing contract to Microsoft.” The Department of Defense said its decision was “in response to the other technical challenges presented by AWS.”

An Amazon spokesperson told WebProNews: “We are pleased that the DoD has acknowledged ‘substantial and legitimate’ issues that affected the JEDI award decision, and that corrective action is necessary. We look forward to complete, fair, and effective corrective action that fully insulates the re-evaluation from political influence and corrects the many issues affecting the initial flawed award.”

A reversal by the Pentagon would be a big loss for Microsoft, and likely have a major impact on how the Pentagon awards contracts going forward.

*Updated with comment from Amazon*