Amazon Claims Pentagon's JEDI Overhaul Keeps Microsoft in Drivers Seat

By John D. McKinnon 

WASHINGTON -- Amazon.com Inc. accused the Pentagon of seeking to manipulate its review of a huge cloud-computing deal to steer the award to rival Microsoft Corp.

In a court filing made public Tuesday, Amazon urged a federal judge to require the Defense Department to conduct a broader review than it has proposed.

Judge Patricia Campbell-Smith of the U.S. Court of Federal Claims already halted work on the Joint Enterprise Defense Infrastructure, citing allegations by Amazon of contract irregularities.

In response, the Pentagon sought a halt to temporary court proceedings, saying it needed time to rethink certain aspects of the project.

The Pentagon last year awarded the contract, expected to be worth up to $10 billion over a decade, to Microsoft Corp. -- triggering the lawsuit challenging the decision by Amazon.

The Pentagon's move to pause the court proceedings opens the door to possible changes in the deal, particularly on pricing evaluations that Amazon said were unfair.

But in Amazon's response Tuesday to the Pentagon's proposed delay, the online giant said the Pentagon's plan to reconsider only a narrow range of issues is aimed at preserving Microsoft's award.

Amazon's cloud unit, Amazon Web Services, or AWS, was long considered the favorite to win the huge contract, but lost out to Microsoft in a decision that Amazon contends was tainted by political influence from President Trump.

"The Government should not be permitted to gerrymander the corrective action to preserve the illusion that Microsoft offered the lowest price while simultaneously perpetuating competitive impediments for AWS," Amazon said in its filing.

Mr. Trump has blamed Amazon founder Jeff Bezos for unfavorable coverage of his administration in the Washington Post, which Mr. Bezos bought in 2013. The Post says its editorial decisions are independent.

The Pentagon and Microsoft didn't immediately respond to requests for comment. DoD has said its contract decision was made fairly. Microsoft has said it believes the DoD made the correct decision, and supported the Pentagon's decision to reconsider a small number of factors.

In a statement, an Amazon representative said there were problems with the DoD's initial decision that the Pentagon's proposal doesn't address.

"Instead of addressing the breadth of problems in its proposed corrective action, the DoD's proposal focuses only on providing Microsoft a 'do-over' on its fatally flawed bid while preventing AWS from adjusting its own pricing in response to the DoD's new storage criteria," the representative said.

Write to John D. McKinnon at [e-mail]

(END) Dow Jones Newswires

March 24, 2020 13:20 ET (17:20 GMT)

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