Pentagon rules that Microsoft’s $10bn JEDI cloud contract award was fair

James is editor in chief of TechForge Media, with a passion for how technologies influence business and several Mobile World Congress events under his belt. James has interviewed a variety of leading figures in his career, from former Mafia boss Michael Franzese, to Steve Wozniak, and Jean Michel Jarre. James can be found tweeting at @James_T_Bourne.

Updated A report from the Inspector General at the US Department of Defense (DoD) has ruled that the DoD’s award of the JEDI $10 billion cloud computing contract to Microsoft was fair.

Following the announcement that Microsoft had won the contract back in October, Amazon Web Services (AWS), seen by many in the industry as the favourite, said it would appeal the ruling.

This duly happened; in November reports came that AWS had filed the paperwork, while in February AWS won an injunction after Judge Patricia Campbell-Smith, of the US Federal Claims Court, agreed to temporarily pause the contract, on condition of Amazon paying a $42 million bond to cover costs should the case not go its way. Last month, the Pentagon asked a federal court for 120 days to ‘reconsider certain aspects’ of the decision.

In its 317-page report, the Inspector General affirmed its belief that DoD personnel who evaluated the contract proposals were ‘not pressured’ into a decision by more senior leaders. Interviewees who were part of the evaluation and selection process told the report that public statements from President Trump and the ‘media swirl’ around the contract did not directly or indirectly influence the integrity of the procurement process.

Media discussion around the contract award focused on President Trump’s cool relationship with Jeff Bezos, CEO of Amazon and owner of the Washington Post, a publication the president has frequently decried as ‘fake news.’ As reported by CNBC, former secretary of defence James Mattis claimed in a book that President Trump had told him to ‘screw Amazon’ out of the JEDI deal.

Mattis was one of seven executives scrutinised by the report for alleged ethical misconduct. The report ruled that he did not violate any ethics agreements when he met with cloud industry executives, nor did he give preferential treatment to Amazon during the process.

However, the report ruled the DoD did err when it came to Amazon’s appeal process. On October 29, AWS submitted 265 questions to the procuring contracting officer, featuring details around Microsoft’s proposal. Following this, it was revealed that 13 reports regarding Microsoft’s interim and final proposal revisions had been disclosed to AWS.

It is worth noting that this report did not assess the ‘appropriateness’ of the contract award, in terms of the merits of each proposal, but the source selection process and compliance. AWS has been on record previously with its belief that, on technical competence, its bid was superior to Microsoft’s. CEO Andy Jassy told employees in November that customers said AWS was ‘about 24 months ahead’ for functionality and maturity.

“The Inspector’s General [sic] final report on the JEDI cloud procurement confirms that the Department of Defense conducted the JEDI cloud procurement process fairly and in accordance with law,” a statement from the DoD read. “The IG’s team found that there was no influence by the White House or DoD leadership on the career source selection boards who made the ultimate vendor selection.”

Microsoft welcomed the ruling. In a blog post Jon Palmer, deputy general counsel, noted the ruling that Amazon had been privy to proprietary information, and called for an end to the process.

“A central premise of the federal procurement system is that ‘full and fair competition’ on a ‘level playing field’ means that competitors are asked to make their best bids without knowing what the other has bid or will bid,” wrote Palmer. “They can’t offer a higher price in the hope they’ll win the bid anyway, and then turn around and ask to big again if they lose. Amazon is not asking to be on a level playing field. It’s arguing that the field be tilted in its favour.”

Palmer added that Microsoft had ‘invested significant time and engineering resources’ into its products specifically with regard to DoD operations, as well as build native edge devices. “There is a simple explanation for Microsoft’s victory – the strength of our technology, and our willingness to listen to and respond to our potential customers,” he added. “Even if you believe that Amazon may have started as the front runner, it’s clear our team worked hard to catch up and surpass them by investing in our technology and listening to the DoD.”

An AWS spokesperson told CloudTech that the report ‘didn’t tell much’, and questioned the interview gathering process. “This report doesn’t tell us much,” said the spokesperson. “It says nothing about the merits of the award, which we know are highly questionable based on the Judge’s recent statements and the government’s request to go back and take corrective action. And, it’s clear that this report couldn’t assess political interference because several DoD witnesses were instructed by the White House not to answer the IG’s questions about communications between the White House and DoD officials.

“The White House’s refusal to cooperate with the IG’s investigation is yet another blatant attempt to avoid a meaningful and transparent review of the JEDI contract award,” the spokesperson added. 

The next steps are unclear, but the DoD’s statement inferred the hope of a door being closed. “This report should finally close the door on corporate-driven attacks on the career procurement officials who have been working tirelessly to get the much needed JEDI cloud computing environment into the hands of our frontline warfighters while continuing to protect American taxpayers,” the DoD statement added.

You can read the full report here (pdf).

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