Amazon had been considered the favorite to win the deal, worth $10bn throughout the following 10 years.
The company, which already provides distributed computing to the US Central Intelligence Agency, said the decision was made because of political pressure.
In July, President Donald Trump threatened to mediate after what he described as "tremendous complaints".
Mr. Trump had previously attacked Amazon CEO Jeff Bezos, proprietor of the Washington Post, which has been critical of his presidency.
The Pentagon subsequently delayed its decision to award the contract until 25 October, when it was announced the work would be given to Microsoft.
Pentagon snubs Amazon for $10bn 'Jedi' contract
Defense Secretary Mark Esper said the challenge was fair.
"I am sure it was directed openly and fairly with no sort of outside impact," he told reporters in the South Korean capital Seoul.
The Joint Enterprise Defense Infrastructure venture - known as JEDI - is designed to modernize the antiquated data and communication systems inside the US military. The contract is considered to be particularly lucrative if other government departments pursue the Defense Department's lead while upgrading their own systems.
An Amazon spokesperson told the BBC: "Amazon Web Services is extraordinarily experienced and qualified to give the critical innovation the US military needs, and remains focused on supporting the DoD's modernization efforts.
"We also trust it's critical for our nation that the legislature and its chosen leaders administer procurements dispassionately and in a manner that is free from political impact.
"Numerous aspects of the JEDI evaluation process contained clear deficiencies, errors and unmistakable bias - and it's important that these matters be examined and corrected."
The BBC understands Amazon submitted its intention to protest against the decision to the Court of Federal Claims last Friday. The formal appeal itself will be filed at a later stage.
Microsoft didn't respond to requests for input.
Four companies had initially been in the running for the deal when the process was launched two years ago. IBM was eliminated, as was Oracle - which held up an unsuccessful legal challenge alleging irreconcilable situations stemming from Amazon's procuring of two previous Defense Department employees. Both were said to have been engaged with the JEDI selection process.
0 Comments