Amazon sues the Pentagon over $10 billion cloud computing contract

By: Chi Ngo
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Amazon filed a lawsuit in the U.S. Federal Court on November 22 to overturn the U.S. Defense Department’s decision to award a $10 billion cloud computing contract to rival bidder Microsoft. Federal Times first reported the news. The legal protest was filed under seal, allowing the case to be submitted without becoming a matter of public record. The company said it did so to protect sensitive information and trade secrets. 

Amazon’s cloud computing subsidiary, Amazon Web Services, claimed that the company selection process for the government Joint Enterprise Defense Infrastructure (JEDI) cloud contract “contained clear deficiencies, errors, and unmistakable bias.” According to Politico, the Pentagon awarded the $10 billion JEDI contract to Microsoft after President Donald Trump and members of Congress publicly complained that the competition unfairly favored Amazon. 

According to a 2019 survey by Spiceworks, Microsoft Azure is currently the most popular (with 16% market share) cloud computing service, followed by Amazon Web Services (13% market share). The services are evaluated based on critical attributes such as cost-effectiveness, reliability, security, trustworthiness, and customer support. 


The basis of Amazon’s claims 

The JEDI contract forms part of a broader digital modernization project at the Pentagon, aiming to speed up the military’s use of cloud computing systems, improve computing processes and ease data transmission. The deal is worth $10 billion over ten years. Before Microsoft won the bid on October 25, Amazon Web Services was the Pentagon’s preferred provider because of its market-leading position in cloud computing and its previous work with the Central Intelligence Agency (CIA). 

The Pentagon’s decision was made after President Trump announced in July that he was looking “very seriously” at intervening in the commercial battle, according to the New York Times. President Trump called JEDI “a very big contract, one of the biggest ever,” and said he was “getting tremendous complaints” from “different companies like Microsoft and Oracle and IBM. They’re saying it wasn’t competitively bid,” he said, saying that the bid was unfairly favoring Amazon. 

The New York Times also noted that the president’s weighing in on the procurement of a major government contract was a “highly unusual” move that raised “questions of improper political influence.” 

The Federal Times reported that Amazon has notified the U.S. Court of Federal Claims that it planned to use this statement of President Trump to make a case of interference. 

Jeff Bezos, chief executive officer of Amazon and owner of The Washington Post, has been an outspoken critic of President Trump. The president often criticizes Bezos and The Washington Post, referring to the newspaper as “fake news.”

“We […] 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 spokesperson Drew Herdener said in a statement to the press. 

The controversial bid for the JEDI contract  

After Amazon announced that it would challenge the Pentagon’s decision, U.S. Defense Secretary Mark Esper rejected the claims, Reuters reported

“The acquisition process was conducted in accordance with applicable laws and regulations,” the U.S. Department of Defense said in a statement in October, following the decision to go with Microsoft. “All offerors were treated fairly and evaluated consistently with the solicitation’s stated evaluation criteria.”

“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,” Janelle Poole, a spokesperson for Microsoft, told The Washington Post.

Several technology giants, including Amazon, Microsoft, IBM, Oracle, and Google, began competing for the JEDI contract in 2018. Google dropped out in October 2018 without a bid and in April this year, the Pentagon said that only Amazon and Microsoft had met its technical requirements for fulfilling the contract.

The bid for the JEDI contract has drawn a series of lawsuits, protests, and a Department of Defense inspector general investigation due to alleged misconduct and conflict of interest by Deap Ubhi, a U.S. Department of Defense official who worked on the procurement for JEDI. While at the department, Ubhi repeatedly praised Amazon and was later hired by the company, raising questions of conflict of interest. However, the investigation later found that Ubhi did not skew the competition in Amazon’s favor. 

In November, American technology company Oracle also filed an appeal with the U.S. Court of Appeals after a judge ruled against its accusations against the Department of Defense of improperly limiting competition when it set the terms of the procurement. Oracle is also seeking an injunction to stop Microsoft from commencing work on the program while the case is tried, according to Politico.