In a newly unsealed court filing, Amazon blames an “extraordinary environment of corruption, interference, and retribution” by President Donald Trump for improperly influencing the U.S. Department of Defense to reaffirm its decision to award a $10 billion cloud computing project to its rival Microsoft.
“DoD strained at every step to ensure that Microsoft was given the benefit of the doubt, and scoured the record to invent wholly new and even more specious reasons to support maintaining the award to Microsoft where the proposals and evaluation criteria did not,” Amazon Web Services says in the filing.
Officials “held AWS and Microsoft to different standards,” allowing Microsoft to retain the contract “despite its inferior technical capability and higher price,” Amazon alleges. It calls the errors so egregious that they “can only be explained by the impact of the President’s anti-Amazon bias on DoD decisionmakers.”
Microsoft responded quickly, effectively calling Amazon a sore loser, twice over.
In reaffirming the decision, “the career procurement officials at the DoD decided that given the superior technical advantages and overall value, we continued to offer the best solution. We also know what it takes to serve the DoD having worked with them for more than forty years,” said Frank Shaw, a Microsoft corporate vice president, in a statement provided by the company.
“Amazon seems to be saying the only way they can ever lose is if the procurement isn’t fair,” Shaw said. “But every month, the market tells them that’s not true. Large and sophisticated customers regularly choose Microsoft over AWS. They do this because of the strength of our technology, our understanding of complex projects, and our overall value.”
He said it’s “time we moved on and got this technology in the hands of those who urgently need it: the women and men who protect our nation.”
The statements by the Seattle-area tech giants further escalated a year-long war of words over the Joint Enterprise Defense Infrastructure (JEDI) deal, a massive project to migrate the Pentagon’s computing infrastructure and data to the cloud. That migration is on hold pending Amazon’s appeal.
It’s not yet clear how the situation might change, if at all, under the administration of President-elect Joe Biden.
Amazon is asking the U.S. Court of Federal Claims to declare the contract award to Microsoft improper, direct the Pentagon to solicit and re-evaluate new proposals, and replace the Pentagon team responsible for the selection.
The JEDI deal is significant not only for its financial value but for the message it sends to the broader market. Amazon is the longtime leader in cloud technology and market share. Microsoft has leveraged its relationships with business customers, and its strength in enterprise technology, to compete aggressively in the booming field.
Amazon was seen as a frontrunner for the contract prior to Microsoft winning the deal in October 2019. Amazon protested that decision, alleging that Trump’s personal animus toward the company improperly influenced the outcome. The Department of Defense reviewed the decision after a federal judge issued a preliminary injunction in February. Following the review, the DoD reaffirmed the decision in September.
Amazon has vowed to keep fighting. Its 175-page amended complaint, originally filed under seal Oct. 23, was made public with redactions on Tuesday afternoon. The complaint alleges new flaws in the re-evaluation, calling it “riddled with errors even more egregious than those that plagued the initial award” of the contract to Microsoft last year.
For example, Amazon Web Services says a change in the Pentagon’s requirements, designed to correct a prior government error, allowed AWS to drop the price of its own proposal — taking away a price advantage that Microsoft had achieved based on what AWS calls the Redmond company’s “noncompliant technical approach.”
“AWS’s emergence as the lowest priced offeror complicated DoD’s efforts to steer the contract to Microsoft,” Amazon’s complaint says. “Faced with the untenable combination of Microsoft’s technical inferiority and now-higher price, DoD manipulated its evaluations to a degree that belies any façade of rationality.”
Microsoft’s Shaw responded in a statement, “As the losing bidder, Amazon was informed of our pricing and they realized they’d originally bid too high. They then amended aspects of their bid to achieve a lower price.”
In its September decision reaffirming the contract award, the Pentagon said it “determined that Microsoft’s proposal continues to represent the best value to the Government.”
In its own statement Tuesday, Amazon said the price change made its bid lower by tens of millions of dollars.
“The fact that correcting just one error can move the needle that substantially demonstrates why it’s important that the DoD fix all of the evaluation errors that remain unaddressed, and ensure they are getting access to the best technology at the best price,” the AWS statement says, in part. “We had made clear that unless the DoD addressed all of the defects in its initial decision, we would continue to pursue a fair and objective review, and that’s exactly where we find ourselves today.”
Amazon’s complaint calls President Trump’s influence on the procurement process “one of many dangerous examples of the elevation of the President’s personal interests above the national interest.” In this “environment of corrupt pressure,” Amazon says procurement officials faced retribution including possible loss of their jobs if they awarded the contract to Amazon.
“That environment has intensified in the months since the initial award, in lockstep with DoD’s increasingly irrational errors in its effort to satisfy the Commander in Chief and re-award JEDI to Microsoft,” the filing says.
However, Microsoft points to a report by the Defense Department’s inspector general in April that found, in part, that DoD officials “were not pressured regarding their decision on the award of the contract by any DoD leaders more senior to them, who may have communicated with the White House.”
The inspector general’s report also found that Pentagon officials violated federal regulations after the contract was awarded to Microsoft, by disclosing confidential aspects of its bid to Amazon.
Amazon suggests that the full extent of Trump’s influence isn’t clear, pointing out that the White House exercised presidential privilege and instructed several Defense Department witnesses not to answer questions from investigators. The company points to evidence including reports that Trump told then-Secretary of Defense James Mattis to “screw Amazon” out of the contract, which Mattis reportedly told Trump he wouldn’t do.
Bezos owns the Washington Post, one of Trump’s frequent targets. Trump has also battled publicly with Amazon over its U.S. Postal Service contract.
Microsoft and Amazon compete aggressively in the cloud market and routinely trade barbs. During his recent keynote at the company’s re:Invent conference, Amazon Web Services CEO Andy Jassy showed stats that put AWS’s share of the cloud infrastructure market at 45%, more than double Microsoft Azure. Jassy called Microsoft’s database licensing restrictions “punitive” for customers, and criticized Microsoft’s overall approach to cloud technology.
“If you look in the enterprise technology space, there are some providers who are competitor-focused,” Jassy said. “They look at what their competitors are doing, and they try to fast-follow one of them. We have a competitor like that across the lake from us here in Washington.”
The same week, Microsoft CEO Satya Nadella similarly criticized Amazon, without naming the company, citing what has become a common criticism of Amazon given the breadth of its business. “No customer wants to be dependent on a provider that sells them technology on one end, and competes with them on the other,” Nadella said. “It’s never been more important to get this equation right.”
Updated at 5:30 a.m. Dec. 16 with additional details.
