Trump's Amazon-Bashing Tweets Steer Clear of Pentagon Cloud Bid
(Bloomberg) -- Donald Trump often tweets about the many ways he dislikes Amazon.com Inc. and its founder Jeff Bezos -- from the president’s contention that the online merchant has a sweetheart deal with the Postal Service to Bezos’s ownership of what Trump calls “the Amazon Washington Post.”
Yet Trump hasn’t tweeted a word about the $10 billion Pentagon cloud contract that technology rivals complain Amazon is favored to win.
The impulsive president could weigh in anytime, but there’s probably a good reason for his reticence so far: Criticism from the commander-in-chief probably wouldn’t derail the deal, and it might even help deliver it to Amazon.
“If it were demonstrated that Amazon was denied the opportunity based on the president’s business interests or inappropriate criteria, that would raise eyebrows," said Steven Schooner, a professor at George Washington University Law School with expertise in government procurement.
Strict regulations govern what federal agencies can consider when awarding a competitive contract. If Amazon lost the deal after Trump interfered, the Seattle-based company could have grounds to challenge the decision, according to Schooner and other government-contracting experts.
The Pentagon is sticking with its plan to pick a single winner for the contract that it calls the Joint Enterprise Defense Infrastructure cloud, or JEDI, in a hat-tip to the fictional heroes of “Star Wars.” Proposals from contractors are due in September, and a contract award isn’t expected until next April.
The Defense Department has said using a single provider is the best way to deliver advanced, secure cloud services to warfighters who now depend on multiple outdated platforms. Defense Secretary Jim Mattis, who has championed the project as a priority, has praised the Central Intelligence Agency’s cloud project, which is run by Amazon.
Oracle, IBM, Microsoft
Oracle Corp., International Business Machines Inc. and Microsoft Corp. lobbied unsuccessfully for the Defense Department to split the broad contract among multiple suppliers, and Oracle lodged a challenge with the Government Accountability Office to the final request for proposals that the Defense Department issued last month.
Read More: Oracle Protests Pentagon Cloud Plan as Threat to Innovation
While Amazon could protest any intervention by Trump, no law flatly prohibits a president from publicly or privately urging a federal agency to choose a particular vendor for a contract or change the requirements of a solicitation, procurement experts said.
“The president can basically speak to anyone in the government he wants to,” Schooner said.
Trump hasn’t been shy about his opinions on other multibillion-dollar defense contracts.
He shocked the contracting world a month before he took office by criticizing Boeing Co.’s deal with the Pentagon to build a new Air Force One. He also tweeted that he asked Boeing to determine a price for an alternative to the F-35 Joint Strike Fighter that Lockheed Martin Corp. is building for the Air Force, Navy and Marine Corps, a project that Lockheed won over a competing bid from Boeing in 2001.
Waiting to See
In both those cases, Trump was tweeting critical remarks about a deal after the company won the contract, when the risk of tainting the procurement process was less, said Rick Holgate, a research director for consulting firm Gartner Inc.
“I’m not sure the president would be likely to weigh in on this at this point,” Holgate said of the JEDI contract. “He’s probably going to wait to see how this plays out.”
Under the law, federal agencies have to make clear in the final request for proposals the requirements and criteria they will use to choose a winning bid. While agencies have a lot of latitude to make their vendor choices, losing bidders can challenge a decision to the GAO or in the Court of Federal Claims contending that the ground rules set in a solicitation weren’t followed.
“There’s obviously some judgment calls involved in how proposals are rated, but those judgments have to at least be defensible and consistent with the factual record,” procurement lawyer Frank Murray Jr. said in an email. “If the evaluation shows that Amazon is the best value and should win” the award, “it would be a violation of procurement law for Trump” or another high-ranking official “to say, ‘You can’t award to Amazon, pick again.”’
Walling Off Influence
The GAO can confirm or deny protests and make recommendations to a federal agency overseeing a contract. The court can similarly intervene in the contract process.
“The procedure is set up to wall off political influence,” Schooner said. “Political influence is normally exerted at the time the requirements are determined.”
That might be one reason why some of Amazon’s critics sought Trump’s help well before the Pentagon released its final solicitation.
Conservative activist Seton Motley launched an advertising campaign in the New York Post earlier this year goading Trump not to let the Pentagon give the cloud contract solely to Amazon. The campaign showed photos of Bezos laughing and chatting with Mattis as well as a fictional letter from Bezos telling Trump that the contract “will really help my many efforts to oppose your Administration’s policies.”
Motley said he paid for the ads himself and had no contacts with Amazon’s competitors.
Even if Trump missed Motley’s campaign, there’s little doubt the president is aware of the pending cloud contract and Amazon’s potential stake in it.
In April, Oracle Chief Executive Officer Safra Catz criticized the bidding process in a private dinner with Trump, complaining that it seemed designed for Amazon to win, according to people familiar with the matter. Trump heard her out and said he wants the contract competition to be fair, but made no indication he’d interfere in the bidding, the people said.
At the time of the dinner with Catz, White House Press Secretary Sarah Huckabee Sanders said that Trump isn’t interfering in the cloud contract decision. The Defense Department “runs a competitive bidding process,” she told reporters.
©2018 Bloomberg L.P.