MSFT Microsoft Corporation

By John D. McKinnon 

WASHINGTON -- Amazon.com Inc. said Thursday it would protest the Pentagon's award of a massive cloud-computing contract to Microsoft Corp. in October, throwing yet another wrench in the long-running procurement battle.

Amazon had long been the favorite to win the Joint Enterprise Defense Infrastructure, or JEDI, contract, which is valued at up to $10 billion over the next decade. The Department of Defense investigated and cleared Amazon of conflict-of-interest allegations, but nonetheless ruled in the end that Microsoft was more qualified for the job.

The company's cloud unit, Amazon Web Services, said in a statement that it was "uniquely experienced and qualified to provide the critical technology the U.S. military needs."

"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," AWS said in the statement.

"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," AWS said.

The comment appeared to be directed at President Trump, who on July 19 called for an investigation of the Pentagon contract. "I'm getting tremendous complaints about the contract with the Pentagon and Amazon," Mr. Trump told reporters at the time. "I will be asking them to look very closely to see what's going on."

Amazon's comment Thursday suggested that Mr. Trump's interest in the JEDI procurement could become an issue in its protest. Amazon declined to comment beyond its statement. The White House and Microsoft didn't immediately respond to requests for comment.

"We will not speculate on potential litigation," a Defense Department official said.

Amazon is filing its protest in the U.S. Court of Federal Claims, where it earlier sided with the Pentagon against rival Oracle Corp.'s protest over the JEDI procurement. Oracle, which was eliminated from the competition, lost its protest and is currently appealing the court's ruling.

The JEDI contract could be worth up to $10 billion over a 10-year period if the Pentagon exercises all options under the deal, the Defense Department has said.

Microsoft and Amazon were the only remaining bidders after several other companies including Oracle were eliminated from contention.

The Pentagon has more than 500 separate clouds. JEDI is designed to serve as an umbrella system to rationalize that number and provide the military with access to services that better keep up with the pace of technology in civilian markets.

"We must improve the speed and effectiveness with which we develop and deploy modernized technical capabilities," Dana Deasy, the Defense Department's chief information officer, said in a statement after the award was announced.

In recent congressional testimony, Mr. Deasy denied that Mr. Trump or the White House influenced the JEDI selection process.

The process for developing and awarding the JEDI contract has been fraught almost from the beginning, amid multiple conflict-of-interest allegations and legal challenges, as well as concerns that opting for a single-source vendor might not be best for the military.

Most of the concerns about the JEDI procurement process have centered on allegations that Amazon had improperly influenced the project development to improve its chances of winning. Amazon has denied the allegations.

One issue that arose in the process was the role of Deap Ubhi, who previously worked at Amazon's cloud division before going to the Pentagon, where he worked on the JEDI program's development. He later returned to work for AWS.

The Pentagon initially concluded that Mr. Ubhi "did not negatively impact the integrity of the JEDI procurement" through his work on the project, according to a Defense Department filing earlier this year.

The alleged conflicts of interest led Oracle to file its legal challenge with the Court of Federal Claims, which ultimately rejected the company's concerns.

The Pentagon Inspector General's office began investigating the procurement even before a ruling was made on the bid protest, and the Defense Department formally referred some concerns to the IG.

Defense Secretary Mark Esper announced his own top-to-bottom review in early August, after President Trump voiced concerns about JEDI and Amazon, a company he has frequently criticized during his presidency.

Mr. Esper said in October that he was withdrawing from reviewing the contract to avoid the appearance of a conflict of interest. His son worked for one of the original bidders, IBM Corp., that was no longer in the running for the deal.

Write to John D. McKinnon at john.mckinnon@wsj.com

(END) Dow Jones Newswires

November 14, 2019 18:25 ET (23:25 GMT)

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