AWS and Oracle Protest Microsoft’s Surprise $10 Billion Pentagon JEDI Contract Win

Amy Larsen DeCarlo – Principal Analyst, Security and Data Center Services

Summary Bullets:

• Microsoft’s JEDI win after an often controversial procurement process that many said favored AWS caught the industry off guard

• Arguing that the process was tainted by Department of Defense (DoD) employee conflicts of interest and political interventions, Oracle and AWS are both contesting the procurement in court

The DoD sent shockwaves through the cloud computing sector in October with the announcement that Microsoft Azure had won the multi-billion single award Joint Enterprise Defense Infrastructure (JEDI). Cloud behemoth AWS, long considered to be the one to beat in the closely watched and often controversial process, expressed surprise at the outcome. Some insiders have suggested that challenges during the bidding gave Microsoft the time to pull together a more cohesive and competitive cloud play. But others, including Oracle, a one-time competitor for the deal, are calling out the process as inherently unfair.

AWS also joined the fight, filing paperwork in federal court because company executives don’t think the bid process was adjudicated fairly. In a video, AWS CEO Andrew Jassy said the company wants to press the Pentagon to “shine a light on what really happened.” In his view, Jassy said multiple aspects of the evaluation process were deficient and error prone, and there was also “unmistakable bias” which interfered with procurement.

Oracle is continuing its protest in the courts with a new filing in the U.S. Court of Appeals. After the Pentagon rejected Oracle’s bid saying the company had not met certain gating criteria, Oracle filed suit in U.S. Federal Claims Court contesting the bid process based on conflicts of interest DoD employees that were part of the JEDI procurement process had with AWS. At least two former Pentagon procurement staffers that had some history with the JEDI bid are now employed by AWS.

After Judge Erik Buggink sided with the findings of an internal Pentagon investigation into the bidding process and dismissed the complaint, Oracle appealed the decision saying the lower court applied the wrong precedent to make its decision that the software giant’s bid had not been impacted by the single source nature of the award. Oracle filed a brief in early November after Microsoft won the JEDI contract protesting, among other issues, the arbitrary timeframes competitors were required to meet gating criteria.

Oracle and others have taken issue with the single award nature of the contract, something that runs counter to the trend in the industry to rely on multiple cloud providers for redundancy and price control. President Donald Trump added fuel to the fire and raised eye brows by weighing in on the procurement process. Trump suggested in July that he was going to investigate the process, stating to reporters, that he was “getting tremendous complaints about the contract with the Pentagon and Amazon.” AWS’ Jassy also noted that when a sitting President interjects an opinion about a deal publicly, it is very difficult for the agency “to make an objective decision without fear of reprisal.”

The JEDI procurement process has been turbulent throughout. Beyond complaints about the deck being stacked in favor of AWS, some employees of the bidders expressed consternation on an ideological basis of supporting warfighting efforts through their technological development and delivery efforts. At least reportedly in part because of these internal protests, Google withdrew its bid. Some Microsoft staffers have also decried the award though Microsoft says it plans to move forward.

 

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