Microsoft just took an important step to take on Amazon for a crucial $10 billion cloud contract

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Microsoft CEO Satya Nadella

• On Wednesday, Microsoft announced that Azure Government Secret, its government cloud for storing classified information, has met the requirements for IL-6 - the highest security certification from the Department of Defense.
• Should Azure Government Secret win the accreditation, it could help Microsoft in its bid for the winner-take-all $10 billion Joint Enterprise Defense Infrastructure (JEDI) contract with the Pentagon.
• To date, Amazon is the only company that has achieved the IL-6 accreditation - meaning that, right now, it's the only cloud that can handle the Department of Defense's most classified data. That gives it a big edge in the JEDI fight.
• Microsoft also announced that six of its Azure Government regions now have IL-5 accreditation, the second-highest certification.
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Last week, the Department of Defense narrowed the competition for a $10 billion cloud contract to two players, Amazon Web Services and Microsoft. Now, Microsoft is gearing up to make itself more of a contender.

On Wednesday, Microsoft unveiled some new updates to take it one step closer to being on par with Amazon Web Services as it competes for the Joint Enterprise Defense Infrastructure (JEDI) contract, a winner-take-all Pentagon contract to move its sensitive data to the cloud.

Microsoft announced that Azure Government Secret - its government cloud for storing classified information - now has two new data centers in the U.S. that were built to meet the requirements of IL-6 (Impact Level 6), the highest security certification from the Department of Defense. In addition, Microsoft announced it meets the requirements for the Director of National Intelligence (DNI).

However, while these new facilities meet the requirements, they're not yet actually accredited yet. Microsoft is currently in the process of "working closely" with its government partners for achieving both of these accreditations, it says.

"From our facilities, to our systems, to our personnel, we followed the strictest adherence to the requirements to support data at Impact Level 6," a Microsoft spokesperson told Business Insider.

Meanwhile, Amazon is currently the only company that has a product that's certified at IL-6, thanks to its Secret Region cloud product. Given that this advantage puts Amazon in a better position to win the deal, there's a lot riding on whether or not Microsoft can officially get itself accredited before the deal is awarded.

Overall, analysts have said that AWS is the frontrunner for winning JEDI, although Microsoft has made significant improvements that could help snatch it out of the hands of Amazon.

Read more: Oracle and IBM are officially out of the race for a key $10 billion defense cloud contract as Amazon and Microsoft move ahead

During the accreditation process, Microsoft Government Secret is available in private preview for customers on a case-by-case basis.

Related to all of this, Microsoft also announced that all six of its Azure Government regions now have IL-5 accreditation, the second-highest level of certification. Before, only two regions did.

"For more than 40 years we have prioritized bringing commercial innovation to the DoD," Lily Kim, general manager of Azure Global at Microsoft, said in a statement. "We also continue to help our customers across the full spectrum of government, including every state, federal cabinet agency, and military branch, modernize their IT to better enable their missions."

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