The news: A federal judge on the Court of Federal Claims declined to dismiss allegations that former President Trump interfered with the $10 billion Joint Enterprise Defense Infrastructure contract, a massive project to migrate the Pentagon’s computing infrastructure and data to the cloud.
Why it matters: Amazon has blamed Trump for improperly influencing the U.S. Department of Defense to reaffirm its decision to award the JEDI cloud computing project to its rival Microsoft. The DoD and Microsoft had filed a motion to prevent Amazon from making those allegations. The ruling means Amazon will be able to continue pursuing its argument in court, including potential depositions of Trump and former defense secretary Jim Mattis.
Background: Amazon was seen as a frontrunner for the contract prior to Microsoft winning the deal in October 2019. Amazon protested that decision, alleging that Trump’s personal animus toward the company improperly influenced the outcome. The Department of Defense reviewed the decision after a federal judge issued a preliminary injunction. Following the review, the DoD reaffirmed the decision in September.
In addition to allegations that the procurement process was improperly influenced by the White House, Amazon’s lawsuit claims DoD made a variety of technical errors in evaluating the relative merits of the bids. The Defense Department maintains “Microsoft’s proposal continues to represent the best value to the Government,” according to a September statement.
Amazon statement: “The record of improper influence by former President Trump is disturbing, and we are pleased the Court will review the remarkable impact it had on the JEDI contract award. AWS continues to be the superior technical choice, the less expensive choice, and would provide the best value to the DoD and the American taxpayer. We continue to look forward to the Court’s review of the many material flaws in the DoD’s evaluation, and we remain absolutely committed to ensuring that the Department has access to the best technology at the best price.” — an AWS spokesperson.
Microsoft statement: “This procedural ruling changes little. Not once, but twice, professional procurement staff at the DoD chose Microsoft after a thorough review. Many other large and sophisticated customers make the same choice every week. We’ve continued for more than a year to do the internal work necessary to move forward on JEDI quickly, and we continue to work with DoD, as we have for more than 40 years, on mission critical initiatives like supporting its rapid shift to remote work and the Army’s IVAS.” — Frank X. Shaw, corporate vice president, Microsoft Communications.
What’s next: Bloomberg noted that the decision throws “the entire project in doubt.” It’s also not yet clear how the situation might change, if at all, under the administration of President Biden.
The Department of Defense sent a memo to Congress on Jan. 28 that seemed to suggest a lengthy deposition process would make the JEDI project untenable. The memo was shared with The Washington Post and other publications.
“These motions will be complex and elongate the timeline significantly. The prospect of such a lengthy litigation process might bring the future of the JEDI Cloud procurement into question. Under this scenario, the DoD CIO would reassess the strategy going forward. Whatever the outcome, the Department’s unsolved capability gaps would still remain for enterprise wide, commercial cloud services – at all three classification levels – stretching from the homefront to the tactical edge – at scale.”
Cloud rivals: Microsoft and Amazon compete aggressively in the cloud market and routinely trade barbs. During his keynote last year at the company’s re:Invent conference, Amazon Web Services CEO Andy Jassy — who will soon take over as Amazon’s CEO — showed stats that put AWS’s share of the cloud infrastructure market at 45%, more than double Microsoft Azure. But Microsoft has been gaining market share in recent years. “Nadella & Co. continue to lead a transformational cloud story narrowing the gap vs. Bezos and AWS in 2021,” Wedbush Securities analyst Dan Ives said in a report this week following Microsoft’s earnings report that was boosted by Azure revenue growth.
Go deeper: Amazon: Trump corruption the only plausible explanation for Microsoft winning $10B cloud deal
GeekWire contributing editor Monica Nickelsburg added to this report.
