Judge Clears Way for Amazon and Microsoft to Compete for Giant Pentagon Contract

SEATTLE — A federal judge ruled on Friday that Amazon did not unduly influence the shape of one of the largest technology contracts in the Pentagon’s history, setting the stage for the Department of Defense to choose between Amazon and Microsoft for the $10 billion project.

Oracle had alleged that Amazon and the Defense Department biased the contract, known as the joint enterprise defense infrastructure, or JEDI, in Amazon’s favor because of conflicts of interest with past employees. The Pentagon’s internal reviews previously dismissed the claims, as did the Government Accountability Office. On Friday, Judge Eric Bruggink of the United States Court of Federal Claims found that those previous findings “were not arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law.”

There are no obvious remaining paths for Oracle to challenge the Department of Defense’s approach before the contract is awarded, probably in late August.

Doug Stone, an Amazon spokesman, said in a statement that the company “stands ready to support and serve what’s most important — the D.O.D.’s mission of protecting the security of our country.”

The JEDI contract is meant to bring the military into the modern era of cloud computing. The Pentagon plans to award the project to only one cloud vendor, even though many big organizations prefer to work with multiple cloud providers.

Oracle, IBM, Amazon and Microsoft all bid to supply the technology. But in April the Pentagon determined that only Microsoft and Amazon had the ability to deliver the project. Oracle had also challenged the measures the Pentagon used to evaluate bidders, but the judge found that they were acceptable.

Last year, before bids were due, Oracle challenged the structure of JEDI, arguing that by asking for a single vendor, the Pentagon favored Amazon Web Services, the largest cloud services provider. Oracle also argued that an Amazon employee who had worked on JEDI during a stint at the Defense Department had clearly favored Amazon over other tech companies and advocated the single-vendor approach.

ImageTwo of the world’s most valuable companies will face off for the Pentagon’s $10 billion contract.
CreditElaine Thompson/Associated Press

After the Government Accountability Office rejected Oracle’s complaints, the company took its claims to the United States Court of Federal Claims, which handles federal contract disputes.

Much of Oracle’s argument centered on a little-known entrepreneur, Deap Ubhi, who worked for Amazon getting start-ups to use the company’s cloud services before he joined the Pentagon. In his last two months, in 2017, Mr. Ubhi worked on JEDI before he returned to Amazon.

Oracle argued that Mr. Ubhi was central to the Pentagon’s decision to hire a single cloud provider and that he clearly favored Amazon over other tech companies, citing messages Mr. Ubhi sent at the time.

Amazon has countered that the Pentagon identified 72 people substantially involved in developing the contract and its requirements, and that Mr. Ubhi worked on JEDI for only seven weeks, in the project’s early stages.

[Read more about how a little-known entrepreneur held up one of the largest federal information technology contracts in history.]

The Government Accountability Office found that Mr. Ubhi did not improperly influence the contract, and that even if he had favored Amazon, the Pentagon had good reasons to hire a single cloud provider. The Pentagon, however, did refer some of Mr. Ubhi’s behavior to its inspector general for an ethics review.

In a statement, an Oracle spokeswoman, Deborah Hellinger, did not directly address the ruling. She said the company’s offerings provided “significant performance and security capabilities over legacy cloud providers.” She also said the company looked forward to working with the Pentagon and other agencies on other contracts.

The Pentagon did not immediately respond to a request for comment.

Judge Bruggink wrote that the final judgment was pending as he prepared a detailed reasoning behind his findings.

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