DoD's Internal Investigation Finds No Major Fault in JEDI Process
The ongoing saga of the Pentagon's $10 billion JEDI cloud contract, awarded last fall to Microsoft and hotly contested since then by Amazon, has a new wrinkle.
In a 317-page report publicized this week, the Inspector General of the Department of Defense (DoD), which has been tasked with reviewing various complaints leveled against the DoD's decision-making, said that despite some minor missteps, it found no critical fault with the overall contract award process.
A major point of contention for Amazon, which officially filed suit against the DoD last December, is the undue influence President Donald Trump allegedly had over the contract process. Trump has a publicly acrimonious relationship with Jeff Bezos, CEO of Amazon and owner of The Washington Post. The DoD awarding the contract to Microsoft and its Azure cloud came to the surprise of many industry watchers who expected Amazon, with its market-dominating Amazon Web Services (AWS) platform, to carry it.
After an investigation that included over 80 interviews with many of those involved in the contract procurement process, the DoD's inspector general concluded:
[W]e believe the evidence we received showed that the DoD personnel who evaluated the contract proposals and awarded Microsoft the JEDI Cloud contract were not pressured regarding their decision on the award of the contract by any DoD leaders more senior to them, who may have communicated with the White House.
The perception of any bias, according to the report, was due to media coverage around the JEDI contract. "[M]edia reports, and the reports of President Trump's statements about Amazon, ongoing bid protests and 'lobbying' by JEDI Cloud competitors, as well as inaccurate media reports about the JEDI Cloud procurement process, may have created the appearance or perception that the contract award process was not fair or unbiased," the inspector general wrote.
The DoD watchdog did acknowledge that it was unable conduct as thorough an investigation as it would have liked because the White House invoked "presidential communications privilege" that barred interviews.
"[S]everal DoD witnesses [were] being instructed by the DoD Office of General Counsel not to answer our questions about potential communications between White House and DoD officials about JEDI," the inspector general wrote. "Therefore, 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."
The inspector general also concluded that the DoD's decision to award the JEDI contract to just one vendor was sound. Citing a federal acquisition regulation, the report explained that there are six conditions that prevent a government entity from awarding a contract to multiple vendors. A multi-vendor JEDI contract would have met three of them:
The PCO [Procuring Contracting Officer] determined that a single award was required because three of the six conditions prohibiting use of multiple awards applied to the JEDI Cloud procurement: 1) based on the contracting officer's knowledge of the market, more favorable terms and conditions, including pricing would be provided if a single award was made; 2) the expected cost of administration of multiple contracts outweighed the expected benefit of making multiple awards; and 3) multiple awards would not be in the best interests of the Government.
There were some ethical and procedural red flags uncovered in the inspector general's investigation, though none of them were deemed egregious enough to invalidate the legality of the contract process. One of the individuals involved in the process owned Microsoft stock, for instance, while two others were pursuing employment with Amazon while working with the DoD.
In addition, the inspector general found that "the DoD improperly disclosed source selection and proprietary Microsoft information to Amazon." The DoD also "failed to properly redact names of DoD source selection team members in the source selection reports that were disclosed to Amazon and Microsoft."
Despite finding no fault with the DoD's procurement process, the inspector general made clear that its report should not be taken as a ruling on whether the agency chose the right cloud provider for JEDI. It was an investigation of the ethics of the process, it indicated, not the technical suitability of either platform.
"In this report, we do not draw a conclusion regarding whether the DoD appropriately awarded the JEDI Cloud contract to Microsoft rather than Amazon Web Services. We did not assess the merits of the contractors' proposals or DoD's technical or price evaluations; rather we reviewed the source selection process and determined that it was in compliance with applicable statutes, policies, and the evaluation process described in the Request for Proposals."
Technical suitability is, of course, another pillar of Amazon's suit against the DoD. In its February request for an injunction against work on the JEDI contract (which was subsequently granted by a federal court), Amazon protested Microsoft's submission of a data storage technology as part of its JEDI proposal, describing it as a "noncompliant storage solution" that should have eliminated Microsoft from contention.
In granting Amazon's injunction request, Judge Patricia Elaine Campbell-Smith of the U.S. Court of Federal Claims said that Amazon "is likely to demonstrate that [the DoD] erred" by not disqualifying Microsoft's data storage solution, and that this error materially reduced Amazon's changes of winning the JEDI award.
In a blog post responding to the inspector general's report, Microsoft Deputy General Counsel Jon Palmer reiterated, "Microsoft won the JEDI contract because the Department of Defense found that we offered 'significantly superior' technology at a better price."