Federal Judge Halts Pentagon Cloud Contract -- Update
14 February 2020 - 9:28AM
Dow Jones News
By John D. McKinnon
WASHINGTON -- In a win for Amazon.com Inc., a federal judge on
Thursday ordered the Pentagon to halt work on the massive JEDI
cloud-computing contract awarded to rival Microsoft Corp.
Judge Patricia Campbell-Smith of the U.S. Court of Federal
Claims issued a preliminary injunction to block the Pentagon from
proceeding in response to a lawsuit from Amazon contending improper
influence from President Trump.
Mr. Trump has blamed Amazon founder Jeff Bezos for unfavorable
coverage of his administration in the Washington Post, which Mr.
Bezos bought in 2013. The Post says its editorial decisions are
independent.
Amazon, which recently sought to depose the president, said in
its motion that Mr. Trump "made crystal clear -- both to the public
at large, and by clear implication to senior [Pentagon] officials
(including his political appointees) -- that he did not want his
administration to award the contract to [Amazon]."
Amazon's suit -- and Thursday's ruling -- could add to the
questions being raised by critics about Mr. Trump's willingness to
weigh in on government business. In a recent statement, Amazon said
that "President Trump has repeatedly demonstrated his willingness
to use his position as president and commander in chief to
interfere with government functions -- including federal
procurements -- to advance his personal agenda....The question is
whether the president of the United States should be allowed to use
the budget of the DoD to pursue his own personal and political
ends."
The president last summer called for an investigation of the
Pentagon contract, before the award. "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." Mr. Trump also issued tweets
in which he complained about the process.
Amazon's complaint also cites a passage of a recent book by a
former speechwriter for then-Defense Secretary Jim Mattis. Author
Guy Snodgrass says in the book, "Holding the Line," that Mr. Trump
directed Mr. Mattis to "screw Amazon" out of the JEDI contract by
blocking its chance to bid on the deal. "Mattis demurred," he
said.
The White House didn't immediately respond to a request for
comment.
Steven Schooner, a George Washington University law professor,
said the judge's ruling on Thursday is unusual and could bode well
for Amazon's prospects.
"What is particularly significant is that...the court is
signaling that it is more likely than not that the plaintiff --
here, Amazon -- has pled a case in which it appears to be entitled
to a remedy and may ultimately prevail on the merits," Mr. Schooner
said.
In a statement, the Pentagon said Thursday that the ruling
further slows the enterprise cloud project, which has been under
development since 2017.
"We are disappointed in today's ruling and believe the actions
taken in this litigation have unnecessarily delayed implementing
DoD's modernization strategy and put our nation's warfighters in
harm's way," the Pentagon said. "However, we are confident in our
award of the JEDI cloud contract to Microsoft and remain focused on
getting this critical capability into the hands of our warfighters
as quickly and efficiently as possible."
Amazon's cloud unit, AWS, was long considered the favorite to
win the Joint Enterprise Defense Infrastructure, or JEDI, contract,
which is valued at as much as $10 billion over the next decade. The
company's bid was clouded by conflict-of-interest allegations,
however, which are still under investigation by the Pentagon's
inspector general. Amazon filed suit to block the contract award in
December.
The Defense Department recently filed a motion to dismiss
several of Amazon's claims concerning Mr. Trump's alleged
interference, contending that the company had waited too long to
raise them.
Amazon didn't immediately respond to a request for comment on
Thursday.
In a statement, Microsoft said it was confident it would
ultimately prevail and retain the contract.
"While we are disappointed with the additional delay we believe
that we will ultimately be able to move forward with the work to
make sure those who serve our country can access the new technology
they urgently require," said the statement from Microsoft spokesman
Frank X. Shaw.
Development of the JEDI contract began in earnest in 2017
following a visit to Seattle and Silicon Valley by Mr. Mattis, who
met with Mr. Bezos among others on the trip. As the JEDI proposal
took shape, some potential bidders for the contract, including
Oracle Corp., began to complain the contract was tailored
specifically for Amazon.
Oracle executives and others also began digging into financial
and other connections between Amazon and several then-Pentagon
officials who had some involvement in various aspects of the deal.
Defense officials ultimately sided with Amazon, concluding the ties
didn't affect the integrity of the procurement.
But the Pentagon ultimately ruled that Microsoft was more
qualified for the job. Amazon eventually filed suit to block the
contract in the U.S. Court of Federal Claims.
Write to John D. McKinnon at john.mckinnon@wsj.com
(END) Dow Jones Newswires
February 13, 2020 17:13 ET (22:13 GMT)
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