Pentagon Asks Court to Hold Off on Microsoft Cloud Contract
Pentagon Asks Court to Hold Off on Microsoft Cloud Contract
(Bloomberg) -- Government lawyers are asking a federal judge for permission for the Pentagon to reconsider parts of its decision to award Microsoft Corp. a controversial $10 billion cloud contract after a legal challenge from Amazon.com Inc.
In a filing to the U.S Court of Federal Claims on Thursday, the government said it was seeking 120 days “to reconsider certain aspects” of the decision.
During that period, the Defense Department could make changes that “may obviate the need for further litigation in this court,” the government said in a filing made public on Thursday night.
A remand “is in the interests of justice because it will provide the agency with an an opportunity to reconsider the award decision at issue in light of AWS’s allegations, this court’s opinion and any new information gathered during the proposed remand,” the government said.
When the government seeks to revisit a procurement decision, it often means the federal agency involved sees a weakness in its ability to defend against the legal challenge of a bidder and wants to address the problem, said Charles Tiefer, a University of Baltimore School of Law professor.
‘Partial Admission’
“It’s like a partial admission of guilt on the government’s part,” Tiefer said. “They are basically admitting that they messed up the first time and would like to patch over the faulty structure.”
Among the issues the Defense Department wants to revisit are elements of the bidders’ price proposals and online marketplaces, according to the filing.
The Defense Department “determined that the best and most efficient path forward is to conduct a re-evaluation of the proposals in order to address the Court’s noted concerns,” Pentagon spokeswoman Rachel VanJohnson said in a statement.
Amazon Web Services, Amazon’s cloud unit, filed a lawsuit in November alleging political interference by President Donald Trump cost the company the cloud deal. The contract is valued at as $10 billion over a decade. 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.”
U.S. Court of Federal Claims Judge Patricia Campbell-Smith gave a boost to Amazon’s challenge in an opinion made public earlier this month when she wrote that the Defense Department might have misjudged part of Microsoft’s pricing proposal for the work.
It’s likely Amazon’s “chances of receiving the award would have increased” if it weren’t for the Pentagon’s errors, she wrote.
Amazon opposes the government’s request to revisit the bid, while Microsoft supports it, according to the government filing.
Tiefer said Amazon may be against the proposal because it views the scope of the Pentagon’s reevaluation as too narrow to change its decision to award the contract to Microsoft.
Amazon is “pleased that the Defense Department has acknowledged ‘substantial and legitimate’ issues that affected the JEDI award decision,” and said that corrective action is necessary, spokesman Drew Herdener said in a statement Thursday after business hours.
While Microsoft believes the Pentagon “made the correct decision” when it awarded the contract, it supports the Pentagon’s move “to reconsider a small number of factors as it is likely the fastest way to resolve all issues and quickly provide the needed modern technology to people across our armed forces,” Microsoft spokesman Frank Shaw said in a statement.
Amazon previously 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.”
Amazon has asked the court to allow it to question Trump, Defense Secretary Mark Esper, former Defense Secretary James Mattis, and Dana Deasy, the Pentagon’s chief information officer in order to gather evidence for its case.
To contact the reporter on this story: Naomi Nix in Washington at nnix1@bloomberg.net
To contact the editors responsible for this story: Sara Forden at sforden@bloomberg.net, Larry Liebert
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