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Microsoft slams Amazon amid uncertainty over White House influence on $10B JEDI cloud deal

Microsoft says Amazon wants an 'unfair' advantage
  • Reuters (ARN)
  • 16 April, 2020 09:30

The US Pentagon’s inspector general could not determine whether the White House influenced the award of a US$10 billion cloud computing contract to Microsoft over Amazon after several officials said their conversations were privileged “presidential communications”.

Known as the Joint Enterprise Defense Infrastructure (JEDI), the cloud computing contract is intended to give the military better access to data and technology from remote locations.

“We could not definitively determine the full extent or nature of interactions that administration officials had, or may have had, with senior DoD officials regarding the JEDI Cloud procurement because of the assertion of a ‘presidential communications privilege,’” the report said, referring to the Department of Defense by its acronym.

Amazon, originally considered to be the favourite to win the award, has blamed President Donald Trump for bias against the company and for improperly pressuring the Pentagon.

The report leaves open the question of whether Trump improperly influenced one of the most closely watched procurement contracts given its size and the high-profile nature of the bidders.

Amazon filed a lawsuit in November just weeks after the contract was awarded to Microsoft.

Trump has publicly derided Amazon head Jeff Bezos and repeatedly criticised the giant online retailer. Bezos is also the owner of the Washington Post, which Trump has accused of unfair coverage.

Amazon has said the Defense Department’s decision to give the contract to Microsoft was full of “egregious errors,” which were a result of “improper pressure from President Donald Trump.”

Defence Secretary Mark Esper has rejected that there was bias and said the Pentagon made its choice fairly and freely without external influence.

The report delved into the topic of Trump’s influence on the contract further, including an allegation in a book that the president said Amazon should not get the contract.

In the inspector general’s report, former Defence Secretary James Mattis was specifically asked about the excerpt from his former staff member’s book that said the president told Mattis to “screw Amazon” out of a chance to bid on the JEDI cloud contract.

Mattis told the inspector general that he “cannot confirm” the former staff member’s account and added, “I don’t recall the president’s words on this (JEDI),” the report said.

Amazon did not immediately return requests for comment at the time of the announcement, however Microsoft deputy general counsel of litigation for Microsoft Jon Palmer heavily criticised Amazon in a blog post saying Amazon wasn't interested in a 'level playing field' but rather argued the field to be tipped in its favour. 

"Amazon does not just want to re-do its pricing now that it has information about Microsoft’s pricing. It wants the DoD to go back and broadly re-do its evaluation of many issues, hoping to rescue its losing proposal," Palmer said in his post.

"Amazon, as an unsuccessful bidder, lawfully received some information about Microsoft’s winning price.  The Inspector General’s (IG) report now reveals that Amazon also received Microsoft proprietary information it should not have received or used —information that the IG states could potentially give it 'an unfair advantage in the cloud services marketplace.'"

"Now that Amazon has this retained knowledge of Microsoft’s proprietary information, a complete re-do can only hurt Microsoft and benefit Amazon."

Palmer said Amazon within itself was responsible for the pricing it offered, further pointed out the government's brief explaining “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," he said. "We can all agree that bid protest cases, and the judges that preside over them, serve an important function in helping to ensure fair procurements.  But Amazon’s suggested approach – bid high, lose, try again – isn’t fair.  It’s the opposite."

Palmer explained the JEDI procurement lasted more than two years whereby the DoD reviewed Microsoft's bid against eight distinct evaluation factors and 55 individual sub-factors. The department subjected Microsoft products and services to four individual test scenarios, which were composed of more than 78 individual steps. 

"The result? We were rated equal or superior to Amazon in every evaluation factor," Palmer said. "Since we were awarded this contract, we’ve met every deadline established by the DoD. We were ready to move the first DoD early adopter units to the cloud on schedule on February 14. We’ll remain ready to serve the DoD as this process continues to move forward."

(Reporting by Chris Sanders; Editing by Jonathan Oatis and Bernadette Baum. Additional reporting by ARN staff.)