Amazon: Pentagon should have tossed Microsoft’s JEDI bid over ‘noncompliant storage solution’


Microsoft CEO Satya Nadella says he believes experience in hybrid computing, across the cloud and on-premises installations, were key to winning the $10 billion JEDI contract. (GeekWire File Photo)

Amazon claims that Microsoft’s winning bid for the Pentagon’s coveted $10 billion cloud computing contract should have been disqualified after the Redmond company proposed using a type of data storage that didn’t meet the technical requirements laid out by the U.S. Department of Defense.

The Seattle tech giant’s cloud division, Amazon Web Services, alleges that Microsoft’s “noncompliant storage solution” allowed its rival to offer an artificially low price for the capability, leading to an unfair advantage.

That was the argument that convinced a federal judge to issue a preliminary injunction last month preventing Microsoft and the Pentagon from proceeding with work on the contract pending the outcome of Amazon’s legal challenge, according to court documents unsealed Friday afternoon. The text of the judge’s order had previously been filed under seal in the U.S. Court of Federal Claims.

The Department of Defense disputes Amazon’s argument, dismissing it as mere semantics. According to the judge’s summary, quoting from previously sealed filings, the DoD says Microsoft’s solution meets the technical requirements of the contract. The DoD calls out Amazon for focusing on “superficial labels” rather than actual performance.

If Amazon’s argument is correct, the DoD says, Amazon’s own proposed solution also would be technically deficient, and Amazon “would be in no position to complain of prejudice.”

The preliminary injunction was the first milestone in a larger legal process, and the ultimate outcome of the suit has yet to be determined.

At stake is a prestigious deal known as the Joint Enterprise Defense Infrastructure contract, or JEDI, that involves overhauling the Department of Defense’s technology infrastructure, allowing different branches of the military to share sensitive information in the cloud, while incorporating artificial intelligence technology.

Amazon sued the federal government after Microsoft emerged as the surprise winner of the JEDI contract last year. Amazon has also claimed that President Donald Trump’s personal animus toward Amazon improperly influenced the outcome of the JEDI competition.

Even in the unsealed order, the specific type of storage that Microsoft proposed is still redacted, but the Pentagon’s solicitation for bids “explicitly required online storage,” writes Judge Patricia E Campbell Smith in the order. The requirements defined online storage as “immediately accessible to applications without human intervention,” according to the order.

Amazon’s motion seeking the preliminary injunction is still under seal. However, the judge’s order quotes Amazon’s argument: Based on Microsoft’s “noncompliant storage solution,” Amazon claims, the Department of Defense should have deemed Microsoft’s “technical approach unfeasible, assigned a deficiency, and eliminated Microsoft from the competition.”

In her ruling, Judge Smith agreed that Amazon “likely is correct” that the Department of Defense should have assigned a deficiency to Microsoft’s bid based on this issue. She found that Amazon’s chances of receiving the JEDI contract probably would have increased if not for the government error in evaluating Microsoft’s bid.

“In the context of a procurement for cloud computing services, the court considers it quite likely that this failure is material,” the judge wrote.

In a statement Friday afternoon, Microsoft disagreed with the significance of the issue as a factor in evaluating its bid.

“The decision disagreed with a lone technical finding by the Department of Defense about data storage under the evaluation of one sub-element of one price scenario,” said Frank X. Shaw, Microsoft’s corporate vice president of communications, in a statement. “While important, there were six pricing scenarios, each with multiple sub-elements, and eight technical factors, each with numerous subfactors evaluated during the procurement. The decision does not find error in the Department of Defense’s evaluation in any other area of the complex and thorough process that resulted in the award of the contract to Microsoft.”

We’ve also contacted Amazon for comment on the unsealed ruling.

Post updated at 6 p.m. with additional details from court papers.

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