Nation/World

After Trump cites Amazon concerns, Pentagon reviews $10 billion cloud-computing contract process

The White House has instructed newly installed Defense Secretary Mark T. Esper to re-examine the awarding of the military’s massive cloud-computing contract because of concerns that the bid would go to Amazon, officials close to the decision-making process said.

The 11th-hour Oval Office intervention comes just weeks before the winning bid was expected to be announced and has now left a major military priority up in the air, the officials said, who spoke on the condition of anonymity to discuss the closed-door process freely. As recently as Sunday, the Defense Department defended its plans to move ahead with a single company for what is known as the Joint Enterprise Defense Infrastructure (JEDI), a $10 billion contract that would be one of the government's most expensive information technology procurements ever.

No decision has yet been made, the officials said. But some officials said the move to award the contract to more than one company is a possibility.

The president's directive represents a departure from what is usually a scripted bureaucratic process. Trump has often spoken out against Amazon and its chief executive Jeff Bezos. And at times he has conflated Bezos' ownership of The Washington Post with Amazon's interests.

Amazon and the Pentagon did not immediately return a request for comment.

Giving the contract to more than one company would be welcomed by Oracle and IBM, whose business is threatened by Amazon and have unsuccessfully sued to block the award. The Pentagon has said that only Amazon and Microsoft meet the minimum requirements for JEDI.

Oracle has lobbied Trump aggressively on the matter, hoping to appeal to his animosity toward Amazon as well as former Defense Secretary Jim Mattis, who angered the president when he resigned last year over the administration's foreign policies. Oracle Executive Vice President Ken Glueck, who runs the company's policy shop in Washington, said he created a colorful flow chart labeled "A Conspiracy To Create A Ten Year DoD Cloud Monopoly" that portrayed connections between Amazon executives, Mattis and officials from the Obama administration.

ADVERTISEMENT

That graphic made it to Trump's desk and led to a discussion between the president and his aides, people familiar with the matter said. In April of last year, Oracle co-CEO Safra Catz also raised the issue directly with Trump at a dinner at the White House.

Glueck said in an interview this week that he planned to lobby Esper on the JEDI contract.

"There's new leadership at the DoD, which is an opportunity," Glueck said. "There's very much a debate in the DoD over whether [awarding the $10 billion contract to just one company] is the best approach. It isn't over until it's over."

Last month, the president told reporters during a news conference that he had asked aides to investigate the JEDI contract, citing complaints from companies that compete with Amazon.

"I'm getting tremendous complaints about the contract with the Pentagon and with Amazon . . . they're saying it wasn't competitively bid," Trump said in a July 18 press gaggle. "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."

Trump's directive could deal a blow to the federal ambitions of Amazon Web Services, the market-leading cloud computing provider. AWS is the only company that has received the highest-level Defense Department IT certification, known as Impact Level 6, which allows it to handle top-secret data. That advantage stems in large part from a $600 million contract with the CIA that was awarded in 2013.

The JEDI contract aims at building a Departmentwide cloud computing infrastructure that will ease the sharing of sensitive intelligence across the Army, Navy, Marines and Air Force. The Defense Department also sees it as an important steppingstone for incorporating artificial intelligence algorithms into how it wages war.

"We've never built an enterprise cloud," Dana Deasy, the Pentagon chief information officer, told The Post last September. "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.

It would not be the first time Trump has weighed in on procurement matters. The Pentagon and Lockheed Martin credited the president with helping them arrive at a deal that shaved $728 million from the cost of the F-35 Joint Strike Fighter program.

There is also some precedent for Trump trying to tip the scales specifically against Amazon. Last May Trump lobbied U.S. Postmaster General Megan Brennan to double the rate the Postal Service charges Amazon and other firms to ship packages, The Post reported at the time.

Government contracting analysts said it would improper for a president to influence a procurement if he were to steer a contract toward or away from a specific company.

"Prior to an award - if the Defense Department needs to change its acquisition strategy, it's going to have a lot of flexibility to do that. And there's nothing improper about a new Secretary of Defense changing the strategy," said Alan Chvoktin, vice president and general counsel at the Professional Services Council, a trade group for government contractors. "The only thing that would trouble me about the President being involved is if he were involved in the source selection."

- - -

The Washington Post’s Missy Ryan and Jay Greene contributed to this report.

ADVERTISEMENT