Amazon Sues Pentagon Over $10 Billion Contract Awarded to Microsoft

Amazon's formal challenge to massive Pentagon award uses videos that mark potential influence exerted by Trump.

By Jay Greene, Aaron Gregg, The Washington Post | Updated: 23 November 2019 10:16 IST

Amazon Sues Pentagon Over $10 Billion Contract Awarded to Microsoft

Amazon filed a protest with the Court of Federal Claims to challenge the cloud-computing contract

Highlights

Amazon for the first time directly linked comments by US President
The e-commerce company repeated its claims
Microsoft also filed to intervene in the protest

Amazon on Friday cited comments by US President Donald Trump at a rally and to journalists as it pursues its challenge to the Pentagon's surprise decision to award a lucrative contract to rival Microsoft last month. For the first time, Amazon directly linked comments by the president to the award of the Joint Enterprise Defense Infrastructure contract, also known as JEDI, to Microsoft last month. Though Amazon filed its protest under seal, it also notified the Court of Federal Claims that it intends to use four videos as exhibits, including one of Trump at a February 2016 campaign rally, as well as one of a Fox News host urging him to prevent the Pentagon from awarding the contract to the online retail giant.

The e-commerce giant formally filed a protest with the Court of Federal Claims to challenge the award of the cloud-computing contract, following through on a threat it made last week. It did so under seal to protect trade secrets.

In a statement, the e-commerce giant repeated its claims that "unmistakable bias" and "political influence" tainted the decision-making process. Trump has repeatedly criticised Amazon, whose chief executive, Jeff Bezos, owns The Washington Post.

Amazon also repeated its suggestion that the award of the JEDI contract to Microsoft was improperly influenced by Trump.

"We also believe it's critical for our country that the government and its elected leaders administer procurements objectively and in a manner that is free from political influence," Amazon spokesman Drew Herdener reiterated, issuing the same statement he gave a week ago. "Numerous aspects of the JEDI evaluation process contained clear deficiencies, errors, and unmistakable bias- and it's important that these matters be examined and rectified."

A spokeswoman for Microsoft, Janelle Poole, said: "We're ready to get to work so the men and women in uniform who serve our country can access the critical new technology they urgently require. We have confidence in the qualified staff at the Department of Defense, and we 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."

The JEDI contract could be worth up to $10 billion (roughly Rs. 71,793 crores) over 10 years. Amazon, which pioneered the commercial cloud-computing market business and dominates it with a 48 percent market share, according to market-research firm Gartner, had been seen as the most likely winner. It said it would protest after Microsoft, which holds a 15.5 percent share of the market, got the contract.

Microsoft also filed to intervene in the protest, giving it an opportunity to participate in the case. Microsoft didn't immediately provide a comment. The White House and the Pentagon didn't immediately respond to a request for comment.

Amazon sought to file its protest under seal over concerns about revealing "proprietary information, trade secrets, and confidential financial information, the release of which would cause severe competitive harm," the company wrote. "The record in this bid protest likely will contain similarly sensitive information."

The company wrote that it would submit "proposed redacted versions" of its filings with the court.

JEDI is meant to create a powerful computing system that can centralise US military agencies' disparate computing systems, and lay a framework for advanced artificial-intelligence tools. It is worth up to $10 billion over a ten year period.

Amazon, the commercial cloud-computing market leader, was seen as the clear front-runner since the project was announced in March 2018. The award was delayed by more than a year as a lawsuit from Oracle - whose federal business is threatened by JEDI - sought to block the award.

The procurement took an unexpected turn this summer when Trump asked Secretary of Defense Mark Esper to reexamine the Pentagon's approach to the JEDI contract. The president said in a televised news conference that he had received "tremendous complaints" about the contract from Amazon's competitors, citing Oracle, Microsoft and IBM.

"Some of the greatest companies in the world are complaining about it, having to do with Amazon and the Department of Defense, and I will be asking them to look at it very closely to see what's going on," Trump said.

Soon afterward, he retweeted a link to a Fox News segment that referred to the contract as the "Bezos Bailout."

Retired Navy Cmdr. Guy Snodgrass, who worked for former Defense Secretary Jim Mattis as a speechwriter, wrote in a recent book that Trump had sought to "screw" Amazon out of the contract and that Mattis had demurred. His claims have not been independently verified.

The Defense Department also faces unresolved questions related to a surprise decision by Esper to recuse himself from the procurement just days before the award, after spending several months conducting informational interviews as part of the "review" Trump had ordered.

Dana Deasy, the Defense Department chief information officer, has said there is a two-tracked process in which Esper's review of JEDI's overall approach is separate from the team of procurement experts that were tasked with evaluating bids. He said in a recent congressional hearing that, to his knowledge, the president had no contact with the anonymous individuals who reviewed bids.

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