Pentagon Moves Forward with JEDI Contract Despite Ethics Issues

By John D. McKinnon 

WASHINGTON -- The Pentagon has identified Amazon.com Inc. and Microsoft Corp. as finalists for its massive cloud-computing contract, and says the award process will move forward despite being clouded by "potential ethical violations."

The contract award, worth as much as $10 billion to the winner over a decade, has been on hold for weeks as the Defense Department re-examines its procurement process, in response to a legal protest by one would-be bidder, Oracle Corp.

Oracle contends the acquisition has been skewed to favor Amazon. The Pentagon said Amazon Web Services and Microsoft have met the minimum requirements to win the deal and will remain in the competition. The Pentagon said the soonest it could pick a winner is mid-July.

Oracle and IBM Corp. were eliminated, although Oracle's bid protest in the U.S. Court of Federal Claims appears likely to continue.

"The department's investigation has determined that there is no adverse impact on the integrity of the acquisition process," said Elissa Smith, a Department of Defense spokeswoman. "However, the investigation also uncovered potential ethical violations, which have been further referred to DOD IG," which is the Defense Department's Inspector General.

Ms. Smith didn't elaborate on the nature of the potential violations. She said the Pentagon also will be asking the Court of Claims to lift a stay on Oracle's protest case that the Defense Department requested while it investigated the alleged conflicts of interest.

Oracle's complaint focuses on Deap Ubhi, who worked at Amazon both before and after his 2016-2017 stint with the federal government. Oracle has contended that Mr. Ubhi helped steer the JEDI procurement process to favor Amazon while working at the Defense Department.

JEDI stands for Joint Enterprise Defense Infrastructure.

Amazon has disputed Oracle's allegations of wrongdoing, saying Mr. Ubhi recused himself from JEDI discussions inside the Pentagon. Oracle says he didn't recuse himself until the procurement work was in advanced stages. Mr. Ubhi couldn't be reached for comment on Thursday.

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

(END) Dow Jones Newswires

April 11, 2019 15:30 ET (19:30 GMT)

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