Amazon ‘bid high and lost’ on JEDI, Microsoft says after release of DoD watchdog report

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Microsoft’s headquarters in Redmond, Wash. (GeekWire Photo / Monica Nickelsburg)

Microsoft took aim at Amazon in a blog post Wednesday, accusing its rival of seeking an unfair advantage as the two companies lock horns over the Pentagon’s JEDI contract.

The Department of Defense awarded the Joint Enterprise Defense Infrastructure project to Microsoft last year despite Amazon’s apparent advantage during the bidding process. Amazon sued, claiming President Donald Trump’s personal animus toward the company and its CEO, Jeff Bezos, influenced the outcome.

Microsoft says Amazon “bid high and lost” and claims Amazon could use proprietary information gained through the lawsuit as an advantage.

“Amazon would have you believe that it lost the award because of bias at the highest levels of government,” wrote Jon Palmer, Microsoft’s deputy general counsel, in the blog post. “But Amazon, alone, is responsible for the pricing it offered.”

Microsoft was emboldened by a report released Wednesday by the Department of Defense’s inspector general. The report found no evidence that Trump inappropriately influenced the JEDI procurement process, though the inspector’s office said the White House prevented some DoD witnesses from answering questions.

The inspector general also found that the Defense Department improperly provided Microsoft’s proprietary information to Amazon through unredacted documents.

“By disclosing Microsoft’s proprietary information, the DoD also potentially provided AWS an unfair advantage in the cloud services marketplace,” the report says.

Update: Amazon issued this statement in response to the inspector general report:

“This report doesn’t tell us much. It says nothing about the merits of the award, which we know are highly questionable based on the Judge’s recent statements and the government’s request to go back and take corrective action. And, it’s clear that this report couldn’t assess political interference because several DoD witnesses were instructed by the White House not to answer the IG’s questions about communications between the White House and DoD officials. The White House’s refusal to cooperate with the IG’s investigation is yet another blatant attempt to avoid a meaningful and transparent review of the JEDI contract award.”

The judge overseeing the case issued a temporary injunction barring Microsoft and DoD from moving forward on the project because of a potential error in the government’s evaluation of the proposals. The Defense Department asked for 120 days to address the issue.

Amazon says the review by DoD is too narrow. The company is asking the judge to order the Pentagon to re-start the bidding process, which Microsoft claims would be unfair given the disclosures.

“[Amazon] wants the DoD to go back and broadly re-do its evaluation of many issues, hoping to rescue its losing proposal,” Palmer wrote. “Amazon, as an unsuccessful bidder, lawfully received some information about Microsoft’s winning price.”

Each company made its case in legal briefs unsealed Wednesday.

The document filed by Amazon claims that Microsoft’s bid was not compliant with the guidelines outlined by the Defense Department at the outset of the contest.

“DoD cannot gerrymander technical requirements to suit Microsoft’s non-compliant offer but hold AWS to pricing that was offered in connection with a compliant response to the soon-to-be defunct technical requirements of the original solicitation,” Amazon’s brief says.

The ultimate winner of the JEDI contract will be tasked with building out a war cloud for the military that could cost up to $10 billion over the next 10 years.

“Amazon did build its pricing for the entire procurement, and it wasn’t good enough to win,” Palmer said in the blog post. “And now it wants a re-do. That’s not good for our war-fighters. That’s not good for confidence in public procurement. That’s not good for anybody but Amazon.”

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