There is a disturbance in the force….

A recently unsealed court document details that Amazon has successfully halted work on the Department of Defense’s (“DoD”) multibillion-dollar Joint Enterprise Defense Infrastructure (“JEDI”) cloud contract because the Pentagon incorrectly evaluated one of the storage offerings from Microsoft, not because of the political interference of the White House. Amazon (Nasdaq: AMZN) has argued that if it had been evaluated correctly, Microsoft (Nasdaq: MSFT)would have lost the competition.

JEDI is the 10-year, $10 billion endeavor to modernize the military’s IT operations. The DoD plans to overhaul its entire IT infrastructure, creating a globally available and responsive network, to apply modern computing techniques, like artificial intelligence and machine learning, to its defense operations, including enhanced cyber defenses and robust encryption.

The Judge ruled the bid included a technical approach that was not allowed under the terms of the contract and the DoD erred in the evaluation. In the recent past, allegations have been made by Amazon that it lost the contract due to political interference by President Donald Trump, who has a long-standing feud with Amazon CEO Jeff Bezos – the owner of the Washington Post- a newspaper frequently critical of the president. There was no mention of this in the Judge’s ruling.

In August 2019, weeks before the winner was expected to be announced, President Donald Trump ordered the contract placed on hold so that Defense Secretary Mark Esper could investigate complaints of favoritism towards Amazon. After re-evaluating the proposals in October 2019, the JEDI contract was awarded to Microsoft.

Jeff Bezos has been quoted saying that Trump “used his power to ‘screw Amazon’ out of the JEDI Contract”. Amazon has previously delivered a $600 million cloud implementation for the CIA back in 2013, so there is a history of successful implementations with Amazon.

Oracle (NYSE: ORCL), another competitor, has complained about the “winner take all” deal that limits itself to a single vendor. In both court documents and public statements, DoD officials have warned that any further delay to the JEDI cloud would force DoD components to move ahead with different solutions because they can’t wait for the procurement controversies to be sorted out.

DoD spokesperson Heather Babb has said, “DoD has and will continue to operate multiple clouds and the JEDI Cloud will be a key component of the department’s overall cloud strategy. The scale of our missions will require DoD to have multiple clouds from multiple vendors. Even when a vendor is finalized, the “ten-year contract” is actually just a two-year guaranteed deal with renewal options, which means no matter who wins the Pentagon can always change course and back out of the agreement.

To quote Darth Vader, “I find your lack of faith disturbing.”

As it stands Pentagon officials have argued that any delay to the JEDI cloud would harm national security, and they have also stated in court documents that each month of the delay costs taxpayers $5 million to $7 million.

While JEDI is still up in the air as to the prime contractor award, it will still create opportunities for subcontractors and teaming partners in the areas of IT development, infrastructure, artificial intelligence and cybersecurity. FedBiz Access works with IT firms to help them get registered, get informed and get results in the federal contracting market, especially for SBA set-aside categories. FedBiz Access helps small businesses establish their foundation with the federal government through their initial registration and certification filings, as well as market research to find the right buyers.

FedBiz Access helps companies build a clear path from registration to award.

Rick Ferullo
RFerullo@FedBizAccess.com
(877) 258-4821