Tuesday, February 25, 2020

Court orders Pentagon to halt work on Microsoft's JEDI cloud contract after Amazon protests

Feb 14. 2020
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By The Washington Post · Aaron Gregg 

WASHINGTON - A lawsuit brought by Amazon has forced the Pentagon to again pump the brakes on an advanced cloud computing system it sought for years, prompting yet another delay the military says will hurt U.S. troops and hinder its national security mission. 

A federal judge on Thursday ordered the Pentagon to halt work on the Joint Enterprise Defense Infrastructure cloud computing network, known as JEDI, while the court considers allegations that President Donald Trump improperly interfered in the bidding process.

The order comes a day before the Defense Department had planned to "go live" with what it has long argued is a crucial national defense priority. 

A Defense Department spokeswoman said the litigation will hurt U.S. troops. 

"We are disappointed in today's ruling and believe the actions taken in this litigation have unnecessarily delayed implementing DoD's modernization strategy and put our nation's warfighters in harm's way," said Rachel VanJohnson, a spokeswoman for the Pentagon's cloud computing program office. "However, we are confident in our award of the JEDI Cloud contract to Microsoft and remain focused on getting this critical capability into the hands of our warfighters as quickly and efficiently as possible."

The JEDI contract is meant to create a powerful, centralized computer system operated by a commercial technology company. 

The JEDI cloud is expected to improve U.S. troops' access to technology and intelligence in far-flung war zones. It is also expected speed up the adoption of advanced artificial intelligence that can quickly scan terabytes worth of drone surveillance footage, and serve as a stepping-stone for not-yet-imagined defense capabilities.

The sought-after contract, worth up to $10 billion over 10 years, was awarded to Microsoft in late October after a last-minute intervention from the White House prompted Defense Secretary Mark Esper to reexamine the department's approach.

Amazon's market-leading cloud computing division is suing the Defense Department in the U.S. Court of Federal Claims, arguing that the president's involvement skewed the playing field in its rival's favor. The company says the Defense Department made numerous errors as it weighed bids from Amazon and Microsoft. And it accused Trump of launching "repeated public and behind-the-scenes attacks" against Amazon to act on a grudge against the company's founder, Jeff Bezos. (Bezos also owns The Washington Post.)

In an extraordinary move, the company has asked to depose Trump, along with Esper, former defense secretary Jim Mattis and other officials. Late last month, Amazon filed a motion seeking to halt further contract performance while the court evaluates Amazon's claims.

George Washington University law professor Steven Schooner, a leading expert in government contracts law, said it is rare though not unprecedented for a court to order a halt to contract performance over the Justice Department's objections. 

He added, however, that the ruling could help Amazon's case moving forward. 

"What is particularly significant is that, given [the Justice Department's objection] . . . the Court is signaling that it is more likely than not that [Amazon] has pled a case in which it appears to be entitled to a remedy and may, ultimately, prevail on the merits," Schooner said in an email. 

An Amazon spokesman did not immediately respond to a request for comment on the ruling. Frank Shaw, Microsoft's vice president of corporate communications, expressed disappointment in the decision and defended the Pentagon's handling of JEDI.

"While we are disappointed with the additional delay we believe that we will ultimately be able to move forward with the work to make sure those who serve our country can access the new technology they urgently require," Shaw said in a statement. "We have confidence in the Department of Defense, and we believe the facts will show they ran a detailed, thorough and fair process in determining the needs of the warfighter were best met by Microsoft."

When Amazon filed its request to halt performance, company spokesman Drew Herdener argued that it is "common practice" to halt contract performance during a bid protest, adding that the company supports the Pentagon's technology modernization initiatives.

"It's important that the numerous evaluation errors and blatant political interference that impacted the JEDI award decision be reviewed," Herdener said in a statement at the time.

Thursday's news came with a tinge of irony for Amazon, which finds itself now opposed to the Pentagon's position. For most of last year, attorneys from Amazon and the Defense Department worked together to defend JEDI from a separate legal case brought by another company. 

"It is kind of a status quo in government that everything gets protested," Teresa Carlson, AWS public-sector vice president, said at a recent conference, adding, "which is kind of sad, because it delays innovation." (Carlson's comments came before AWS filed its bid protest.)

The Defense Department fought Amazon's request, hoping to move forward with Microsoft despite the litigation. The JEDI contract has already been delayed more than a year past its original planned start date. An earlier bid protest brought by Oracle forced delays as various allegations against Amazon required investigation. The case is being appealed.

Outside the courtroom, Oracle separately waged a long-running lobbying campaign seeking to get the president involved. Oracle co-CEO Safra Catz raised the issue directly with Trump at a White House dinner weeks after the project was announced in 2018, The Post and Bloomberg reported at the time.

Those efforts seemed to bear fruit last summer. Trump said in a July 18 news conference that he had received "tremendous complaints from companies that compete with Amazon, specifically naming Oracle, IBM and Microsoft. Around that time an Oracle lobbying document labeled "A Conspiracy To Create A Ten Year DoD Cloud Monopoly" reached his desk, The Post and CNN reported. 

Then, in late July, Esper launched a review of the Pentagon's broader approach to JEDI, telling The Post he wanted to "take a hard look" at the contract. He noted that he had "heard a lot from the White House" as well as from members of Congress. Defense officials have insisted that Trump did not "order" Esper to make any specific determination with respect to JEDI. They have argued it followed a separate track from the Defense Department procurement experts who evaluated bids. 

Court documents have subsequently revealed that Esper did meet with individuals closely involved in the evaluation process as part of his review. Whether those individuals were influenced by Trump's repeated statements against Amazon, or by Esper's line of questioning is an important question in the bid protest case. 

Throughout the repeated delays, defense officials have repeatedly said they need fast access to the JEDI cloud in order to achieve the department's technology modernization goals. 

In court filings unsealed Wednesday, the Defense Department estimated that putting another hold on JEDI would cost it between $5 million and $7 million every month it is held up. Although military agencies have at least 20 other contracts they can use to order cloud computing services, their existing ones are seen as too unwieldy. Several of them work through middlemen known as "cloud brokers" and require computing services to be ordered manually, which can cause significant delays.

Top officials have argued against delaying the project any longer. They say the JEDI cloud is an essential element of their strategy to compete with hostile nations for technological dominance. 

"The United States cannot expect military success fighting tomorrow's conflicts with yesterday's technology," Air Force Lt. Gen. Bradford Shwedo, who oversees command, control, communications and cyber initiatives at the Defense Department, wrote in a court filing unsealed Wednesday. "Providing DoD with rapid access to an enterprise cloud, one which provides elastic computing power and storage, is vital to U.S. national security."

"The men and women of the U.S. military must have access to the right technology at the right time to fight and win wars," Shwedo wrote. "Delaying implementation of a cloud solution will negatively affect DoD's efforts to be victorious in contested environments and retain global influence over our near-peer competitors."

 

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