Pentagon Reaffirms Microsoft’s JEDI Cloud Award After Review (1)

The Defense Department reaffirmed its decision to award Microsoft Corp. a $10 billion cloud-computing contract after a re-evaluation.

The department said in a statement Friday that it “determined that Microsoft’s proposal continues to represent the best value to the government.”

The Pentagon previously said it wanted to reconsider “certain aspects” of the procurement, including elements of the bidders’ price proposals and online marketplaces, after a legal challenge of the award by market leader Amazon.com Inc.

The contract, known as the Joint Enterprise Defense Infrastructure, or JEDI, is valued at as much as $10 billion over a decade.

A Microsoft spokesperson said in a statement that the Pentagon confirmed that the company “offered the right technology and the best value. We’re ready to get to work and make sure that those who serve our country have access to this much needed technology.”

Amazon said in a blog post that the Pentagon’s re-evaluation was “nothing more than an attempt to validate a flawed, biased and politically corrupted decision.”

The Pentagon made its request to revisit the cloud award after Federal Claims Judge Patricia Campbell-Smith wrote in March that the Defense Department might have misjudged part of Microsoft’s pricing proposal.

Amazon Web Services, Amazon’s cloud unit, filed a lawsuit in November alleging that political interference by President Donald Trump cost the company the deal. Amazon said in the suit that the Defense Department failed to fairly judge its bid because Trump viewed Amazon Chief Executive Officer Jeff Bezos as his “political enemy.”

As part of that lawsuit, Amazon argued that Microsoft’s bid failed to comply with a government requirement that the winner’s data storage be “highly-accessible” under one of six possible price scenarios. The government argued that Amazon was elevating “superficial labels over technical performance.”

Campbell-Smith said it was likely Amazon’s “chances of receiving the award would have increased” if it weren’t for the Pentagon’s errors in evaluating the pricing proposals. After the ruling, the government requested to revisit the contract and allow bidders to revise the problematic part of that pricing scenario.

Amazon had sought a broader review of the bidding process by the Pentagon.

Judge Campbell-Smith has yet to rule on most of the merits of Amazon’s legal challenge. The court had paused proceedings in the case while the Pentagon revisited its decision to award the deal to Microsoft.

Earlier this week, a U.S. appeals court rejected Oracle Corp.’s legal challenge fighting its exclusion from seeking the cloud-computing deal.

(Updates with Amazon statement in sixth paragraph)

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Naomi Nix in Washington at nnix1@bloomberg.net

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Sara Forden at sforden@bloomberg.net

Larry Liebert, Paula Dwyer

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