Late last year, Microsoft won the Pentagon’s controversial $10 billion war cloud Joint Enterprise Defense Infrastructure (JEDI) contract. In doing so, the company defeated its main cloud rival, Amazon Web Services (AWS). Amazon did not take the situation lying down and immediately started legal proceedings to stop Microsoft.
However, yesterday the Department of Defense’s Office of the Inspector General released a report endorsing Microsoft’s bid and award. In response, Microsoft has applauded the report and criticized Amazon.
As reported by Bloomberg, the 317-page report found the rewarding of the project complied with the DoDs compliance requirements. It also found Amazon received confidential information from the DoD that addressed questions in the company’s legal filings.
Specifically, 114 of those questions were from Microsoft’s own information:
“DoD provided AWS with detailed information regarding the strengths, weaknesses, and deficiencies of the Microsoft proposal, which is inconsistent with the DoD Source Selection Procedures Debriefing Guide.”
Following the report, Microsoft’s Fran Shaw said the details show Microsoft’s acquirement of JEDI was legal.
“The Inspector General’s report makes clear the DoD established a proper procurement process. It’s now apparent that Amazon bid too high a price and is seeking a do-over so it can bid again. As the IG’s report indicates, Amazon has proprietary information about Microsoft’s bid that it should never have had. At this stage, Amazon is both delaying critical work for the nation’s military and trying to undo the mistake it made when it bid too high a price”.
Legal Battle
Microsoft’s winning of the JEDI contract has been just one step in a storied saga.
Some cloud companies were removed for the running for simply lacking the cloud infrastructure necessary. Some of those companies, notably Oracle and IBM called for the contract to be split amongst vendors.
Oracle pursued legal action over the matter, claiming Amazon had an unfair advantage. It argued a company employee who previously worked with the Department of Defense could give them an inside track. That “inside track” did not work in Amazon’s favor by the end of the bidding process.
Yesterday’s report continued doubled down on a single vendor approach falling in line with the DoD’s regulations:
“We believe the evidence we received showed that the DoD personnel who evaluated the contract proposals and awarded Microsoft the JEDI Cloud contract were not pressured regarding their decision on the award of the contract by any DoD leaders more senior to them, who may have communicated with the White House.”
Since Microsoft won the contract, Amazon has started legal proceedings, won an injunction to stop the Pentagon and Microsoft from starting development, and called on President Trump to testify. With it looking increasingly likely Microsoft’s contract will go ahead, Redmond has been firing shots are Amazon over the last 24 hours.
Microsoft Hits Out
In a Microsoft blog, Deputy General Counsel Jon Palmer says Amazon’s bid was simply too high. He adds the company’s pursuit of legal action is the corporate equivalnt of sour grapes.
“Amazon would have you believe that it lost the award because of bias at the highest levels of government. But Amazon, alone, is responsible for the pricing it offered. As the government explained in its brief: “AWS and Microsoft each had a fair chance to build pricing for the entire procurement, based on their overall business pricing.” Amazon did build its pricing for the entire procurement, and it wasn’t good enough to win. And now it wants a re-do. That’s not good for our war-fighters. That’s not good for confidence in public procurement. It’s not good for anybody but Amazon.”
Expect the JEDI wars to continue.
