Defense secretary to review $10B cloud contract before it’s awarded
The Pentagon said on Thursday that a highly sought-after cloud computing contract will not be awarded until Secretary of Defense Mark Esper has completed his examination of it.
The $10 billion, 10-year contract, known as the Joint Enterprise Defense Infrastructure (JEDI), has come under recent scrutiny from President Donald Trump, who has expressed concerns over the fairness of what has been a contentious bidding process among a handful of large tech companies.
Amazon has been widely seen as the front-runner to win the contract. Microsoft is the other finalist. The contract could be awarded as early as August 23.
The announcement from the Pentagon comes less than a week after CNN exclusively reported that Trump had seen and been briefed on a document alleging a large conspiracy to award Amazon the contract. The one-page document was produced by an executive at Oracle, which had also competed for the contract. It’s unclear how the document made it to the White House.
The document contains a flow chart titled “A Conspiracy to Create a Ten Year DoD Cloud Monopoly,” and provides a visual representation of a narrative that Oracle has been pushing for months — that a web of individuals inside and outside the Defense Department were greasing the wheels for Amazon to win the contract.
The JEDI contract has been the subject of an intense lobbying effort by Oracle, which has been trying to scuttle Amazon’s bid for months. Oracle’s own bid did not make it to the final stage. The company also launched a failed legal challenge of Amazon’s bid.
While it’s unclear how Oracle’s document made it to the White House, it seems to have played into the President’s well-known animosity toward the online retail giant and its founder, Jeff Bezos.
Thursday’s announcement raises questions about whether there is now political influence on a bidding process that up until now the Pentagon has insisted has followed all proper protocols.
Many of the implied and explicit allegations involving Amazon have been addressed by an internal Pentagon investigation or in Oracle’s lawsuit in federal court. Neither have determined them to be problematic.
In recent weeks, the President has indicated he has concerns over the JEDI contract, and that the administration will be reviewing the matter. The decision to revisit the contract, however, ultimately lies with Esper, the newly-confirmed secretary of defense.
When asked by a reporter about the contract during a July 18 appearance in the Oval Office with the prime minister of the Netherlands, Trump said, he’d been getting “tremendous complaints about the contract with the Pentagon and with Amazon,” including from Microsoft, Oracle and IBM.
“Great companies are complaining about it,” Trump said. “So we’re going to take a look at it. We’ll take a very strong look at it.”
On July 22, Trump retweeted a Fox News segment criticizing the JEDI contract as “The Bezos Bailout.” It’s not clear if the President had already seen the Oracle document by then.
Days after Trump’s public statements, Esper also mentioned reexamining the contract. “I’ve heard from everybody about JEDI Cloud, that’s one of the things I’m going to take a hard look at,” Esper told reporters at the Pentagon on July 24.
Recently, some Republicans on Capitol Hill have also been lobbying the Pentagon and the White House to revisit the contract, pushing forward similar questions raised by Oracle about the contract’s fairness.
Senators Ron Johnson of Wisconsin and Marco Rubio of Florida have written separate letters to the Pentagon raising concerns about moving ahead with the contract. Trump even discussed JEDI with Johnson on an Air Force One flight to Wisconsin in July, according to the senator’s office.
Trump also called Rubio last month to share his concerns about the contract, according to a Rubio spokesperson. Trump gave the indication that he may get involved in preventing the awarding of the contract if necessary.
In a statement Thursday, Rubio said he was “pleased” that Esper is reviewing the contract. A Rubio spokesperson tells CNN the Florida senator’s staff worked with the defense secretary’s office on the issue before the announcement.
On July 23, a dozen Republican House lawmakers sent Trump a letter urging him to delay awarding the JEDI contract. The letter states that awarding the contract would be “premature” because the Pentagon’s Office of Inspector General “is still investigating potential conflicts of interest by DoD employees in awarding the JEDI contract.”
Since October 2018, Rep. Steve Womack, Republican of Arkansas, has written letters to the President and the Department of Defense’s office of Inspector General explaining his concerns about the department’s single-award acquisition strategy. In May, he raised his criticisms directly to then-acting Secretary of Defense Patrick Shanahan in a hearing.
Womack told CNN last week he had questions about whether there were conflicts of interest involving Amazon and the Pentagon.
“Given the many shortcomings of the JEDI procurement process, I fully support Secretary Esper’s decision to review the program,” Womack said in a statement Thursday.
But other Republican members have urged the administration to award the contract soon. A July 18 letter to Trump signed by four GOP members of the House Armed Services committee, including ranking member Rep. Mac Thornberry, stated that “further delays will only damage our security and increase the costs of the contract.”
CNN’s Zachary Cohen and Kylie Atwood contribute to this report.