Claiming Trump bias, Amazon will challenge Pentagon’s award of $10 billion contract to Microsoft

WASHINGTON - Amazon said Thursday it will protest a Pentagon decision to award Microsoft a massive cloud computing contract worth up to $10 billion, making clear it will fight hard against what it called “unmistakable bias” and “political influence” in the Defense Department process.

The protest, filed under seal in federal court Nov. 8, comes after the Pentagon awarded the Joint Enterprise Defense Infrastructure contract to Microsoft last month - a contract that had long been expected to go to Amazon because its Amazon Web Services division has a formidable position and deep experience in cloud computing.

The Pentagon's decision, a bitter defeat for Amazon, had been delayed after President Donald Trump ordered Defense Secretary Mark Esper to review the contract after he was confirmed in July. Trump has repeatedly criticized Amazon, whose chief executive, Jeff Bezos, owns The Washington Post.

In awarding the contract to Microsoft, the Pentagon said it was making its decision on the merits and without regard to political considerations. But in its statement Thursday, Amazon strongly suggested that it believed the Pentagon was improperly influenced by Trump. Federal acquisition laws forbid politicians, including the president, from influencing contract awards.

"AWS is uniquely experienced and qualified to provide the critical technology the U.S. military needs, and remains committed to supporting the DoD's modernization efforts," Amazon spokesman Drew Herdener said in an emailed statement. "We also believe it's critical for our country that the government and its elected leaders administer procurements objectively and in a manner that is free from political influence. Numerous aspects of the JEDI evaluation process contained clear deficiencies, errors, and unmistakable bias- and it's important that these matters be examined and rectified."

The charged language in Amazon's response was striking because the tech giant has generally avoided conflict with Trump. But the protest suggests that Amazon wants a court to review the role of politics in the Pentagon's decision-making and scrutinize Esper and Trump's input in the process.

The loss of the JEDI contract was not only a significant financial disappointment for Amazon but also came after the company committed to hiring 25,000 people over 10 years in the Washington area, a significant East Coast expansion that in part was focused on government business.

In an emailed response to Amazon's statement, Defense Department spokeswoman Elissa Smith said, "We will not speculate on potential litigation." Microsoft did not provide comment.

Amazon is the commercial cloud computing market leader, holding a 48 percent market share, according to market-research firm Gartner. Microsoft is the second largest with a 15.5 percent share.

Amazon is also the only company to hold the Defense Department's highest-level security certification, called Impact Level 6. Microsoft made strides during the year-long period the award was tied up in litigation, finalizing a number of partnerships that analysts say may have narrowed the gap. Microsoft says it has made enormous progress on Level 6 certification and will be ready by the time JEDI is implemented.

Amazon filed its notice to protest under seal with the Court of Federal Claims. The company will still need to file a formal protest, laying out its arguments in detail.

The JEDI contract, announced in March 2018, is designed to modernize the Pentagon's computing infrastructure in the hands of a commercial tech company. For more than a year, the Pentagon faced harsh criticism that the procurement was written with Amazon in mind.

Tech rival Oracle, which wanted the contract but was eliminated in an earlier phase of the competition, sued the Defense Department and Amazon in the U.S. Court of Federal Claims, alleging conflicts of interest on the part of numerous defense officials who had close relationships with Amazon. The procurement was repeatedly delayed while Oracle's claims were investigated.

The procurement took a new turn earlier this summer when Trump asked Esper to re-examine the Pentagon's broader approach to the contract, citing concerns it would go to Amazon, people familiar with the matter told The Post at the time.

The president said on television that he had received "tremendous complaints" about the contract from Amazon's competitors, specifically Oracle, IBM and Microsoft. Soon afterward he retweeted a link to a Fox News segment that referred to the contract as the "Bezos Bailout."

Trump has gone after Amazon for a variety of reasons, including coverage in The Post he doesn't like, White House officials have previously told the newspaper. He has often derisively referred to the "Amazon Washington Post."

The Post's leaders have said that Bezos, who bought The Post in 2013 in his personal capacity, plays no role in coverage decisions at the newspaper.

Retired Navy commander Guy Snodgrass, who worked as a speechwriter for former Defense Secretary Jim Mattis, wrote in a recent book that Trump sought to "screw" Amazon out of the contract, and that Mattis refused to do so. Snodgrass' claims have not been independently verified.

Esper recused himself from the process just weeks before the award, citing his son's employment at one of the initial bidders.

Amazon could have filed its protest with the Government Accountability Office, which some experts had believed was the more likely venue because it could have stopped the contract with Microsoft from going into effect. Filing with the federal court, though, provides Amazon with a somewhat less rigid timetable for which to make its case. The contract will be implemented with Microsoft during litigation unless a judge puts a pause on the process.

Dana Deasy, the Defense Department chief information officer overseeing the source selection team, has argued that the JEDI procurement followed a two-tracked process in which Esper's review of the procurement's broader approach is completely separate from those who reviewed the bidders' applications. Deasy said in a recent congressional hearing that the members of the source selection team remained anonymous throughout the process and, to his knowledge, were never contacted by the president.

Steve Schooner, a procurement lawyer with George Washington University, called Deasy's testimony on that issue "fundamentally flawed," noting that another senior official makes the decision on who to award the contract to. This official's identity has remained anonymous.

"The source selection evaluation team makes a recommendation," Schooner said in an email. "The source-selection official exercises discretion and is empowered NOT to follow the source selection evaluation team's recommendation."

For Amazon, losing out to Microsoft wasn't just surprising; it was stinging.

At an all-hands meeting Thursday, Amazon Web Services chief executive Andy Jassy suggested to employees that Trump's interference scuttled the bid, according to a report from Federal Times, which viewed a video of the session.

“I think when you have a sitting president who’s willing to publicly show his disdain for a company and the leader of a company, it’s very difficult for government agencies including the DoD to make an objective decision without fear of reprisal,” Jassy said, according to the Federal Times report.