The Washington PostDemocracy Dies in Darkness

After Trump cites Amazon concerns, Pentagon reexamines $10 billion JEDI cloud contract process

Defense Secretary Mark Esper gestures as he listens to President Trump speak during a ceremony for Esper at the Pentagon on Sunday. (Jonathan Ernst/Reuters)

The White House has instructed newly installed Defense Secretary Mark T. Esper to reexamine the awarding of the military’s massive cloud-computing contract because of concerns that the deal would go to Amazon, officials close to the decision-making process said.

The 11th-hour Oval Office intervention comes just weeks before the winning bid was expected to be announced and has now left a major military priority up in the air, said the officials, who spoke on the condition of anonymity to discuss the closed-door process freely. As recently as Sunday, the Defense Department defended its plans to move ahead with a single company for what is known as the Joint Enterprise Defense Infrastructure, or JEDI, a $10 billion contract that would be one of the government’s most expensive information technology procurements ever.

No decision has yet been made, the officials said. But some officials said the move to award the contract to more than one company is a possibility.

The president’s directive represents a departure from what is usually a scripted bureaucratic process. Trump on several occasions has spoken out against Amazon and its chief executive, Jeff Bezos. And he has attacked the Bezos-owned Washington Post for its coverage of him by conflating it with Amazon’s interests. The president has called the news organization the “Amazon Washington Post,” while accusing it of publishing “fake news” and being a “lobbyist newspaper” for the company.

Amazon did not return a request for comment.

The Capital One hack couldn't have come at a worse time for Amazon's most profitable business

Esper said in an interview with The Post on Thursday that he had heard “a lot from the Hill,” including members of both political parties and administration officials, on the issue. He pledged to take a “hard look” at it and did not set a timetable for his decision.

“I’ve heard from folks in the administration, so I owe, as the new guy coming in, a fresh look at it, study it, make sure I understand all the different factors,” Esper said. “I’m going to take a hard look at it. We’re not going to be making any decisions soon until I’m comfortable with where it is and . . . then we’ll look at what adjustments we need to make, if any.”

Giving the contract to more than one company would be welcomed by Oracle and IBM, whose business is threatened by Amazon. They have unsuccessfully sued to block the award. The Pentagon has said that only Amazon and Microsoft meet the minimum requirements for JEDI.

Oracle has lobbied Trump aggressively on the matter, hoping to appeal to his animosity toward Amazon as well as former defense secretary Jim Mattis, who angered the president when he resigned last year over the administration’s foreign policy decisions. Oracle Executive Vice President Ken Glueck, who runs the company’s policy shop in Washington, said he created a colorful flow chart labeled “A Conspiracy To Create A Ten Year DoD Cloud Monopoly” that portrayed connections among Amazon executives, Mattis and officials from the Obama administration.

That graphic made it to Trump’s desk and led to a discussion between the president and his aides, people familiar with the matter said. In April of last year, Oracle co-CEO Safra Catz also raised the issue directly with Trump at a dinner at the White House.

Glueck said in an interview this week that he planned to lobby Esper on the JEDI contract.

“There’s new leadership at the DoD, which is an opportunity,” Glueck said. “There’s very much a debate in the DoD over whether [awarding the $10 billion contract to just one company] is the best approach. It isn’t over until it’s over.”

Last month, the president told reporters during a news conference that he had asked aides to investigate the JEDI contract, citing complaints from companies that compete with Amazon.

“I’m getting tremendous complaints about the contract with the Pentagon and with Amazon. … They’re saying it wasn’t competitively bid,” Trump said in a July 18 press gaggle. “Some of the greatest companies in the world are complaining about it, having to do with Amazon and the Department of Defense, and I will be asking them to look at it very closely to see what’s going on.”

Trump says Pentagon's $10 billion cloud contract should be investigated. Again.

Trump’s directive could deal a blow to the federal ambitions of Amazon Web Services, the market-leading cloud computing provider. AWS is the only company that has received the highest-level Defense Department IT certification, known as Impact Level 6, which allows it to handle top-secret data. That advantage stems in large part from a $600 million contract with the CIA that was awarded in 2013.

The JEDI contract is aimed at building a departmentwide cloud computing infrastructure that will centralize the military’s vast network of information — now scattered across hundreds of mainframes and smaller clouds — into a more unified cloud service. That should facilitate the sharing of sensitive intelligence among the Army, Navy, Marines and Air Force and enable easier communication between command centers and hard-to-reach corners of the globe where U.S. troops are deployed.

JEDI also should allow the Defense Department to apply artificial intelligence algorithms more efficiently into how it wages war — military leaders have said that step is essential for their ability to compete with Russia and China.

“We’ve never built an enterprise cloud,” Dana Deasy, the Pentagon’s chief information officer, told The Post in September. “So starting with a number of firms while at the same time trying to build out an enterprise capability just simply did not make sense.” Having additional companies involved would “just double or triple your complexity,” Deasy said.

Meet the man at the center of the high-stakes, winner-take-all Pentagon cloud contract

It would not be the first time Trump has weighed in on procurement matters. The Pentagon and Lockheed Martin credited the president with helping them arrive at a deal that shaved $728 million from the cost of the F-35 Joint Strike Fighter program.

There is also precedent for Trump trying to tip the scales specifically against Amazon. Trump lobbied Postmaster General Megan Brennan to double the rate the Postal Service charges Amazon and other firms to ship packages, The Post reported in May 2018. The increase, which had to be reviewed by a regulatory commission, was never implemented.

Since the JEDI contract was unveiled in March of last year, allegations that the process was rigged for Amazon were steadily levied by Oracle, IBM and Microsoft.

Oracle alleged in a lawsuit that the Defense Department’s bidding process has been plagued with conflicts of interest that helped Amazon. Oracle’s attempt to block the award was rejected last month. But the judge in charge of the case, in a lengthy document unsealed last Friday, posed new questions about the Pentagon’s legal argument for awarding one big contract.

Defense Department spokeswoman Elissa Smith said in a statement Sunday that the judge also said the Pentagon was “reasonably justified” to award a single contract. Despite the “tension” in the judge’s ruling, the department felt it had been vindicated by a court decision in its favor to select one company for the procurement, she said.

Her statement also had harsh words for Oracle, in a sign of how the dispute over JEDI has turned bitter. Smith said Oracle employed “poorly-informed and often manipulative speculation” in its efforts to stop the contract from going to Amazon.

IBM also protested the bid with the Government Accountability Office. But its case was dismissed.

Government contracting analysts said it would be improper for a president to influence a procurement if he were to steer a contract toward or away from a specific company.

“Prior to an award — if the Defense Department needs to change its acquisition strategy, it’s going to have a lot of flexibility to do that. And there’s nothing improper about a new secretary of defense changing the strategy,” said Alan Chvotkin, executive vice president and counsel at the Professional Services Council, a trade group for government contractors. “The only thing that would trouble me about the president being involved is if he were involved in the source selection.”

Tom Davis, a former Virginia congressman who is now a partner focusing on government contracts law at Holland & Knight, said the president’s intervention probably will become the subject of litigation.

“He has every right to cancel the contract,” Davis said. “But he can’t say, ‘Don’t give it to Amazon. Give it to someone else.' That would run into legal problems.”

Dan Lamothe, Missy Ryan, Jay Greene and Damian Paletta contributed to this report.