US President Donald Trump said that he would direct aides to investigate the US military's JEDI cloud, a contract that could last 10 years and be worth as much as $10bn.
Currently set to be awarded to either AWS or Microsoft Azure next month, the contract has been dogged by complaints of bias favoring Amazon - a company Trump has openly attacked - apparently due to his dislike for The Washington Post, which is owned by Amazon CEO Jeff Bezos.
Less like Star Wars, more like The Neverending Story
Criticism against the Joint Enterprise Defense Infrastructure contract - primarily pushed by companies that were unable to compete for it - has generally been split across two lines. One, is that a single-vendor contract is a bad idea as it cuts out innovation, creates a single point of failure, and means the military cannot use the best bits of different clouds.
The other critique is the much more serious allegation that the whole contract was designed for Amazon, containing contractual stipulations which could only be met by AWS when the contract was announced. Microsoft has since invested heavily to achieve the necessary certifications, like DoD Impact Level 6 (IL6), to become the only other qualifying competitor.
The contract favored Amazon, Oracle alleges, because AWS promised lucrative job offers to two Pentagon officials involved with the JEDI process. In particular, Deap Ubhi previously worked for Amazon and then spent 18 months at the US Digital Service (USDS) before returning to AWS. It is alleged that during his year-and-a-half stint he engaged in "highly technical" discussions with potential JEDI competitors and had access to a drive with information on the procurement.
Oracle took the DoD and Amazon to court over its claims, but the case was dismissed earlier this month. Separate challenges by Oracle and IBM to the Government Accountability Office were also dismissed. A DoD investigation concluded there may have been “potential ethical violations” involving Ubhi but cleared AWS of creating an organizational conflict of interest by hiring him.
The investigations and legal cases have delayed the JEDI contract award by several months, but it is currently expected to be awarded next month.
“I’m getting tremendous complaints about the contract with the Pentagon and with Amazon," Trump told reporters.
"They’re saying it wasn’t competitively bid... Some of the greatest companies in the world are complaining about it, having to do with Amazon and the Department of Defense, and I will be asking them to look at it very closely to see what’s going on."
He cited Microsoft, Oracle and IBM as among those complaining, along with some Republican politicians.
Senate Homeland Security Chairman Ron Johnson, a Wisconsin Republican who recently wrote to the Pentagon to express concerns about the contract, told Bloomberg that he discussed it with the president aboard Air Force One earlier this month. “He wanted to understand what the issues were, what our concerns were,” he said.
Also this month, Senator Marco Rubio penned an open letter to National Security Advisor John Bolton: "JEDI has the potential to be a $10 billion, 10-year contract. This type of fiscal and time commitment should demand a procurement steeped in competition and conducted without bias toward any one vendor.
"However, DoD has used arbitrary criteria and standards for bidders. Even though 200 companies were initially interested, DoD instituted such a restrictive criteria that only four companies bid on JEDI. DoD then further used the arbitrary criteria to eliminate two of the bidders, IBM and Oracle, leaving only Amazon and Microsoft. And in the end, DoD plans to award this massive contract to a single vendor, even though multiple vendors would ensure continuing price competition and access to the latest innovations."
A Rubio spokesperson confirmed to Bloomberg that Trump talked to the senator about the contract the next day, with a person familiar with the call adding that it sounded as if Trump was thinking about canceling the contract.
The publication also noted that Trump expressed frustration he wasn’t aware of the concerns. This is not the first time the President has been made aware of the contract and the lobbying efforts against it, however.
Last year, Oracle co-CEO and Trump transition team member Safra Catz raised the companies objections over the single award process during a dinner with the President.
“I talked to him about what commercial customers are doing in their move to the cloud and what I understand the Pentagon’s plan was to have one cloud,” she told reporters in Tel Aviv (via Reuters).
“I cannot think of a single commercial enterprise that has only one cloud, it just makes no sense. The way we see it the Microsoft workloads should go to the Microsoft cloud, the Amazon-type workloads... should go to Amazon, the Oracle should go to the Oracle cloud.”
Last year, reports swirled that an "Amazon-obsessed" Trump was considering blocking the company from JEDI, and was being encouraged by advisers to do so.
Trump, who has called the Bezos-owned Washington Post "fake news," has spread numerous factual inaccuracies about the relationship between the publication and Amazon, as well as made several other incorrect statements about Amazon.
Among his allegations are the claims that the Washington Post is used to lower Amazon's taxes - this is not true - and that Amazon costs "the United States Post Office massive amounts of money for being their Delivery Boy." This is also not true, USPS is legally required to not ship at a loss.
Ultimately, Trump did not act against Amazon's JEDI bid last year. It is unclear if he will do so now, or whether his comments about asking the DoD "to look at it very closely to see what’s going on" will be followed by concrete action.
DoD spokesperson Elissa Smith said: “We are aware of the remarks and have nothing to add at this time.”
War games and waiting games
While some of the Republican party have called for delays to the contract - including Rubio, who in 2016 received $4m in campaign donations from Oracle founder Larry Ellison - others have urged speed.
In a letter to Trump, published by the Federal News Network, four members of Congress said: "We believe that it is essential for our national security to move forward as quickly as possible with the award and implementation of this contract. It meets only a portion of DoD’s needs for cloud, but it is an important first step.
"Moving to the cloud will help DoD operate faster, more efficiently and compete with adversaries, like China.”
The members of Congress, who collectively have raised money from major defense contractors like Lockheed Martin, Raytheon and Northrup Grumman, added: "While it is understandable that some of the companies competing for the contract are disappointed at not being selected as one of the finalists, further unnecessary delays will only damage our security and increase the costs of the contract."
Rep Mac Thornberry, ranking member of the Armed Services Committee and one of the letter's authors, has so far received $5,000 from Amazon in 2020 campaign funds.
Democrat Rep James Langevin also defended the contract, telling the Associated Press that it would be “wholly inappropriate” for Trump or any member of Congress to interfere in the procurement process. So far this campaign cycle he has received $3,000 from Amazon.
AWS has beefed up its lobbying efforts, facing an increasingly hostile Trump administration.
Last week, CNBC reported the company had hired Jeff Miller to lobby on its behalf. Miller is one of more than 400 bundlers helping the Trump campaign raise funds for its reelection effort. In the second quarter, he helped raise just more than $110,000 for Trump Victory.
His company, Miller Strategies, also employs two alumni of the Trump administration - Ashley Gunn, a former special assistant to the president, and Jonathan Hiler, a prior Director of Legislative Affairs for Vice President Mike Pence.
The lobbyists join other AWS-specific lobbying groups King & Spalding and Van Ness Feldman, as well as lobbyists for the wider Amazon conglomerate, such as McGuireWoods, Ballard Partners, Monument Policy Group, Capitol Tax Partners, Subject Matter, Akin, Gump et al, Federal Street Strategies, Rich Feuer Anderson, Van Scoyoc Assoc, Holly Strategies, Bloom Strategic Counsel, and Baker & McKenzie.
In 2018, Amazon spent $14.2 million on lobbying, a record for the company. Its in-house lobbying efforts are run by Jay Carney, once President Barack Obama’s press secretary and now Amazon’s senior vice president for global corporate affairs.
Beyond the immediate issues of Trump's animosity towards the company, Amazon faces a potential greater threat from some Democratic hopefuls.
At a rally in Long Island City, Senator Elizabeth Warren likened Amazon to the power structures in the dystopian books and films The Hunger Games. In a Medium post she said: "My administration will make big, structural changes to the tech sector to promote more competition - including breaking up Amazon, Facebook, and Google."