Trump Says Pentagon’s $10 Billion Cloud Contract Should Be Investigated Again

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President Donald Trump on Thursday said he would direct aides to investigate a pending military contract widely expected to be awarded to Amazon Web Services, saying he had heard multiple complaints about an unfair bidding process.

His involvement would be an unusual Oval Office intervention in a process normally handled by military officials trained to follow complicated procurement laws and regulations.

The Pentagon has not yet announced a winner for the sought-after cloud contract, which has a $10 billion cost ceiling over a 10-year period. But executives at several of Amazon’s competitors have complained to Trump about the process, alleging that the not-yet-awarded contract was biased in favor of Amazon from the start. Some companies have found that personally appealing to Trump on a number of issues can lure him to get involved.

“I’m getting tremendous complaints about the contract with the Pentagon and with Amazon. . . . They’re saying it wasn’t competitively bid,” Trump said Thursday. “Some of the greatest companies in the world are complaining about it, having to do with Amazon and the Department of Defense, and I will be asking them to look at it very closely to see what’s going on.”

The president said he had heard complaints from “companies like Microsoft, Oracle and IBM,” each of which have bid on the contract. The Pentagon ruled recently that only Amazon and Microsoft meet the minimum requirements.

Microsoft is on the list of companies allegedly complaining to the White House about the contract. The company hadn’t publicly criticized the process previously and is a finalist, along with Amazon, to win the massive winner-take-all contract.

Microsoft spokeswoman Izzy Santa declined to comment. Representatives from Amazon and Oracle did not immediately respond to requests for comment. (Amazon founder and CEO Jeff Bezos owns The Washington Post.)

A Defense Department Spokeswoman did not immediately respond to a request for comment.

The president was referring to a pending Defense Department contract called the Joint Enterprise Defense Infrastructure, or JEDI for short, which is designed to build a departmentwide cloud computing infrastructure for the military. The contract is meant to modernize the U.S. military’s computing infrastructure and lay the groundwork for advanced artificial intelligence technology.

With a maximum value of $10 billion over a 10-year period, the contract could give the winner a dominant position in the emerging federal IT market, where the Pentagon is the biggest spender by far. It would absorb dozens of separate clouds the Pentagon is already running, suggesting some legacy contractors could be swept aside. And it could open up future opportunities for the winner, as the Defense Department integrates JEDI into its operations.

Raising the specter of yet another time-consuming review of the contracting process could further delay an award that was scheduled for late last year.

IBM and Oracle challenged the Pentagon’s decision to award the contract to a single company, first through protests with the Government Accountability Office, which were respectively denied and dismissed last year. Oracle then filed a motion to block the contract with the Court of Federal Claims. That touched off a highly unusual eight month court battle in which lawyers from Amazon and the Defense Department joined forces to defend a procurement process that still has not officially determined a winner.

Oracle accused the Defense Department of designing a flawed procurement tainted by several procurement officials who had close ties to Amazon. The company sought a permanent injunction, alleging Amazon had created an “organizational conflict of interest” through its revolving door hires.

One of them, a man named Deap Ubhi, worked for Amazon Web Services before a year-long stint at the Defense Department, during which he contributed to early planning documents for JEDI. He later rejoined Amazon.

The allegations related to Ubhi were enough to convince the Pentagon to reopen an earlier investigation into how the procurement was handled, delaying procurement by several months. The investigation concluded that there may have been “potential ethical violations” involving Ubhi, but it cleared Amazon of creating an organizational conflict of interest by hiring him. The judge overseeing the case concurred, rejecting Oracle’s arguments.

That decision appeared to clear the way for the Pentagon to award the contract as soon as next month. But Trump’s concerns with the deal could scuttle that timetable and further delay the award, depending on how the Pentagon handles his request. Further delays would likely be welcomed by Oracle and IBM, which have said the contract should be quashed entirely in favor of an award to more than one company.

An IBM spokeswoman said Thursday that the company “has long raised serious concerns about the structure of the JEDI procurement”; she added that more than one company should win the bid.

Almost from its inception, the JEDI contract has been dogged by allegations that procurement officials wrote it with Amazon in mind, which would suggest favoritism in a procurement process meant to give military agencies the best product at the best price.

Amazon is the only cloud provider with several years of experience holding and protecting classified government data, thanks to an earlier $600 million contract with the CIA.

Dana Deasy, the Pentagon chief information officer in charge of the procurement, rejected allegations of favoritism last year in an interview with The Post. He said the Pentagon’s decision to pursue a winner-take-all approach was motivated by a desire to avoid unnecessary complexity.

“We’ve never built an enterprise cloud,” he said. “So starting with a number of firms while at the same time trying to build out an enterprise capability just simply did not make sense.” Having additional companies involved would “just double or triple your complexity,” he said.

(c) 2019, The Washington Post ยท Aaron Gregg, Jay Greene



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