The ongoing controversy surrounding the Pentagon’s $10 Billion JEDI cloud contract has a new twist. It was awarded to Microsoft last fall and is hotly contested by Amazon.
The 317-page report by the Inspector General of Defense (DoD), which was charged with reviewing complaints against DoD’s decision making, stated that, despite minor errors, it found no fault in the overall contract award process.
Amazon has filed suit against DoD last December over undue influence President Donald Trump had on the contract process. Trump has a public acrimonious relationship to Jeff Bezos (CEO of Amazon and owner/operator of The Washington Post). Many industry watchers were surprised that the DoD awarded the contract to Microsoft and its Azure Cloud. They expected Amazon Web Services (AWS), which is the market leader, to be the recipient.
After conducting over 80 interviews with many people involved in the contract procurement process and completing an investigation, the inspector general of the DoD concluded:
[W]e believe that the evidence we received proved that the DoD personnel responsible for evaluating the proposals and awarding Microsoft the JEDI Cloud contract did not feel pressured to make a decision about the award of the contract.
According to the report, media coverage surrounding the JEDI contract was responsible for any bias perception. The inspector general stated that “[M]edia reports and President Trump’s statements regarding Amazon, ongoing bid protests, and ‘lobbying” by JEDI Cloud competitors may have created the impression or perception that the contract award was not fair or impartial.”
The DoD watchdog acknowledged that it could not conduct as thorough an investigation because the White House invoked “presidential communication privilege”, which barred interviews.
“[S]everal DoD witness [were] being instructed not to answer our questions regarding potential communications between White House officials and DoD officials concerning JEDI,” wrote the inspector general. “Therefore, it was impossible to determine definitively the extent or nature of interactions administration officials had or may have had with senior DoD officials about the JEDI Cloud procurement.”
The inspector general concluded that the DoD’s decision not to award the JEDI contract only to one vendor was sound. The inspector general cited a federal acquisition regulation to explain that six conditions prevent a government entity’s awarding contracts to multiple vendors. Three of these conditions would have been met by a multi-vendor JEDI agreement.
The PCO [Procuring Contractoring Officer] decided that a single award was necessary because three of six conditions that prohibit multiple awards were applicable to the JEDI Cloud procurement. These conditions were: 1) Based on the contracting officer’s knowledge of market conditions, more favorable terms, including pricing, would be provided if a single auction was made; 2) The expected cost of administration for multiple contracts outweighed any expected benefits; and 3) Multiple awards would not be in Government’s best interests.
Although there were some ethical and procedural red flags that were discovered during the inspector general’s probe, none were severe enough to invalidate legality of the contract process. One person involved in the process owned Microsoft stock. Two others were working for Amazon while they were with the DoD.
The inspector general also found that the DoD had improperly disclosed source selection, propriety, and other information.