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Amazon doesn’t have much time to decide on a protest because DOD is already moving forward with plans for JEDI’s implementation.
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Amazon (AMZN) could mount a strong appeal to the Defense Department’s decision to award Microsoft (MSFT) the multibillion-dollar JEDI cloud computing contract, legal and contracting experts said.
Amazon’s best chance of overturning the decision, announced October 25, would be to argue the department reached an “unreasonable conclusion,” ignoring the cloud-computing company’s front-runner status throughout most of the review process, the lawyers said.
“You put weight on the argument of the unreasonable decision,” said Joshua Schwartz, co-director of George Washington University’s Government Procurement Law Program. “It just makes your case much better.”
Amazon is less likely to succeed if it tries to prove President Donald Trump, who has clashed repeatedly with the company and its CEO, Jeff Bezos, pressured DOD on its decision or in any way exhibited bias toward the company’s JEDI bid, the legal experts said.
To prove bias in contract awards “is hard—it’s a losing argument for Amazon,” said Terrence O’Connor, director of government contracts at the law firm Berenzweig Leonard.
Amazon doesn’t have much time to decide on a protest because DOD is already moving forward with plans for JEDI’s implementation.
“DOD will immediately begin work to accredit the JEDI cloud environment, establish the required security controls, and address the many requirements for integration between the commercial provider and the DOD enterprise,” a DOD official said.
The department also has started planning how “multiple combatant commands and DOD components” can be the first to move their computer capabilities to the cloud, said the official, who declined to discuss potential litigation.
Microsoft is gearing up to begin fulfilling the contract “to satisfy the urgent and critical needs of today’s warfighters,” said Toni Townes-Whitley, the company’s president of U.S. Regulated Industries. “We look forward to expanding our longstanding partnership with DOD.”
In the contract appeals process, the company has three days after the award’s announcement to request a department debriefing to learn why its bid to provide cloud computing capabilities to the Pentagon fell short. Under federal regulations, the agency is encouraged to schedule a debriefing within five days of receiving a request but has discretion to take longer.
After the debriefing process, Amazon would have five days to file a case with the Government Accountability Office to obtain an automatic stay, halting work on JEDI. Amazon technically faces no time limit in filing a protest in the U.S. Court of Federal Claims but realistically must file before DOD proceeds substantially with Microsoft as the JEDI contractor.
“Clear leader.” An Amazon spokesperson didn’t respond to The Capitol Forum’s requests for comment on a possible challenge. But shortly after the DOD announced its decision, a company spokesperson told media outlets that Amazon “is the clear leader in cloud computing, and a detailed assessment purely on the comparative offerings clearly lead to a different conclusion” for which company should have won JEDI.
Amazon Web Services has been a dominant force in cloud computing for years: The company had 47 percent market share in 2018, followed by No. 2 Microsoft’s 22 percent, according to a Goldman Sachs report.
Amazon won the $600 million contract to convert the CIA’s computer network to the cloud, and is fulfilling cloud contracts for the Treasury and Justice departments, which positioned it as the favorite to win JEDI. Amazon generally offers a broader suite of features than its competitors, which focus on particular cloud services, leading many to conclude that Amazon would be best suited to be DOD’s sole provider of JEDI cloud services.
Amazon should base its contract appeal on the interim evaluations DOD gave the company’s bid throughout the review process before reaching its final decision, O’Connor said.
Amazon can point to expertise and experience it possesses that competitors lack, attorneys said. For example, one reason DOD selected Amazon as a JEDI finalist was that company had the best rating—Impact Level 6—to handle highly classified material.
Microsoft, meanwhile, is still in the process of completing its Impact Level 6 certification. “We are in the final stages with IL6 and we are confident we will meet the timeline laid out in the JEDI RFP,” Microsoft’s Townes-Whitley said. “We are committed to meeting all the requirements of JEDI.”
Filing at the GAO. By filing an appeal with the GAO, Amazon would get an “automatic stay of performance,” which would halt any JEDI-related work at the DOD for 100 days while the agency considered Amazon’s complaint, Schwartz said.
If the GAO denies Amazon's protest, the company still could file for a preliminary injunction in the U.S. Court of Federal Claims.
The court issues a preliminary injunction based on the likelihood of a plaintiff’s case succeeding, possible irreparable harm to the plaintiff or whether any harm caused by the contract award outweighs the public benefits.
Federal Claims Court cases are often lengthier than the those at the GAO but “allow Amazon to request a much wider array of documents, communications and witness cross-examinations,” said Retired Colonel David Hayden, a former senior legal adviser to the U.S. Northern Command who’s now an attorney at Smith Anderson, a Raleigh, North Carolina-based law firm.
Bias is “a losing argument.” Amazon will find it much harder to win a protest by arguing Trump—and the DOD by extension—showed bias in naming Microsoft JEDI’s winner, legal experts said, although the president has given the company fodder for such a claim.
Trump last year allegedly told then-Defense Secretary James Mattis to “screw Amazon” out of the JEDI contract, according to a new book by Guy Snodgrass, a former speechwriter for the secretary. Also in 2018, Trump reportedly pressed U.S. Postmaster General Megan Brennan to double the shipping rate the Postal Service charges Amazon and other companies.
Trump has frequently tussled with The Washington Post, which Bezos owns.
Adopting the bias argument would put the company in an ironic position: Rivals such as Oracle (ORCL) complained that Amazon’s allies within DOD created JEDI as a single-source contract to give the company an edge in winning it. Although GAO and a Court of Federal Claims judge rejected Oracle’s argument, accusations of DOD’s favoritism toward the company dogged Amazon throughout the review process. Oracle filed its opening brief on Friday in an appeal of the Court of Federal Claims decision.
The bias argument only has been successful in a handful of contract protests. In 2004, Darleen Druyun pleaded guilty to violating conflict of interest laws by engaging in employment negotiations with Boeing while also negotiating the lease of 100 Boeing KC 767A tanker aircraft.
Druyun also asked Boeing to employ both her daughter and the daughter’s boyfriend, which the aircraft manufacturer did in the fall of 2000, according to documents related to the case. The GAO ultimately found that Druyun was biased in favoring Boeing in the contract review.
Amazon could introduce the idea of bias to trigger discovery and put on the record the allegations of improper presidential interference, according to Schwartz. “When people in the position of power make disparaging comments about one of the competitors, it makes it harder for the government to defend its case,” he said.
