Amazon ‘Quite Likely’ to Prove Pentagon Made an Evaluation Error in JEDI Cloud Contract, Judge Says

A federal judge granted Amazon’s request for a preliminary injunction to block the Pentagon from moving forward with work under its Joint Enterprise Defense Infrastructure cloud contract due to what the judge said was “quite likely” a material error in Microsoft’s bid overlooked by Pentagon officials.

While Judge Patricia Campbell-Smith issued the ruling for a temporary injunction Feb. 13, the court unsealed her lengthy and technical opinion Friday evening. The halt is another delay for the Defense Department’s purchase of a commercial enterprise cloud—a procurement that has already stretched more than two years due to lawmaker inquiries, bid protests and a legal challenge in federal court. Microsoft won the  contract worth up to $10 billion in October. Amazon’s filed its lawsuit in November..

In the ruling, the judge said Amazon was likely to show that Microsoft offered a “noncompliant storage solution” to reduce the costs of its JEDI bid and that the Pentagon “erred” by not issuing a “deficiency” to Microsoft’s proposal. The judge concluded that Amazon’s “chances of receiving the award would have increased absent [the Pentagon’s] evaluation error.” The type of storage Microsoft’s proposed is redacted, but the judge said the JEDI procurement “explicitly required online storage,” which the company did not offer.

“In the context of a procurement for cloud computing services, the court considers it quite likely that this failure is material,” Campbell-Smith said. “As such, [Amazon] likely is correct that [the Defense Department] should have assigned a deficiency to [Microsoft’s] proposal.”

The court defines a deficiency as “a material failure of a proposal to meet a Government requirement or a combination of significant weakness[es] in a proposal that increases the risk of unsuccessful contract performance to an unacceptable level.”

In a statement, Microsoft defended its JEDI bid, outlining several areas where its proposed cloud solutions topped Amazon’s.

“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. 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,” said Frank Shaw, Microsoft's corporate vice president of communications, in a statement to Nextgov. “Over the course of this more than two-year procurement, the Department of Defense reviewed our bid’s compliance with eight distinct evaluation factors and 55 individual sub-factors, and issued 36 ratings based on these factors. Microsoft’s products and services were subjected to four individual test scenarios, which were composed of more than 78 individual steps. We were rated equal or superior to AWS in every evaluation factor. Collectively, this caused the Department of Defense to select our bid as ‘significantly superior’ to AWS at a better price.”

AWS did not respond to requests for comment.

The judge said the Defense Department contends [Amazon] “seeks to elevate superficial labels over technical performance,” and that Amazon, if correct, “would have been as technically deficient as [Microsoft], and so would be in no position to complain of prejudice.” The Defense Department, the judge said, argued that Microsoft’s solution did what it was supposed to do regarding online storage, though the judge said the Defense Department did not identify “any part of the record” where it “made such an equivalence determination during the evaluation process.” 

Though officials from Microsoft and the Pentagon met to kick off JEDI planning, the judge’s ruling makes clear the department nor Microsoft can move forward on work under the JEDI contract until ordered to do so. The government, citing national security concerns, argued against a temporary restraining order to halt work.

“The court takes seriously the national security concerns implicated by the JEDI program. But the fact that the defendant is operating without the JEDI program now cuts against its argument that it cannot secure the nation if the program does not move forward immediately,” Campbell-Smith said. “The court does not find, under the present circumstances, that the benefits of the JEDI program are so urgently needed that the court should not review the process to ensure the integrity of the procurement.”

Amazon’s protest also included allegations that President Trump improperly influenced Pentagon officials. The judge does not address those allegations in Friday’s unsealed ruling. It is unclear how long the legal battle will play out, though a previous Court of Federal Claims case—filed by Oracle against the Defense Department, also over JEDI—took eight months to litigate. Oracle has appealed its case.