Pentagon IG review finds DoD improperly disclosed JEDI information to AWS

The Defense Department improperly disclosed sensitive information about its JEDI Cloud contract decision to Amazon after the company lost out on the multibillion dollar award, according to a review of the hotly-contested procurement by the Pentagon’s inspector general.

The findings — which also indicate DoD failed to redact Microsoft’s proprietary information in its disclosures to AWS — are part of a sweeping 313-page report the DoD IG released Wednesday.

Overall, the review found that while two DoD officials committed ethical missteps as part of the contracting process, they likely did not have an impact on the department’s final decisions. The OIG also said the department’s acquisition processes for JEDI — including the decision to award the contract to a single vendor — were “reasonable” and “consistent with applicable law.”

On another key question: whether the White House inappropriately interfered with the procurement, OIG officials said they could not come to any definitive conclusions, because the Trump administration had asserted a “presidential communications privilege.” In response, Pentagon lawyers instructed Defense officials not to talk with the IG about any discussions they may have had with the White House about JEDI.

However, regardless of any senior-level discussions that may have happened, the IG concluded they did not appear to have had an influence on the DoD procurement officials who made the final contract decision.

In a statement, the Pentagon said it saw the new report as a vindication of its actions throughout the acquisition process.

“The inspector’s general final report on the JEDI Cloud procurement confirms that the Department of Defense conducted the JEDI Cloud procurement process fairly and in accordance with law,” said Lt. Col. Robert Carver, a Pentagon spokesman. “The IG’s team found that there was no influence by the White House or DoD leadership on the career source selection boards who made the ultimate vendor selection. This report should finally close the door on the media and corporate-driven attacks on the career procurement officials who have been working tirelessly to get the much needed JEDI cloud computing environment into the hands of our frontline warfighters while continuing to protect American taxpayers.”

‘Extraordinary pressure’ led to improper disclosures

But according to the report, the department violated procurement regulations by sending AWS 13 separate technical evaluation board reports that contained sensitive information about Microsoft’s JEDI proposal. The disclosure appears to have been accidental, and happened partly because of a series of miscommunications between contracting officials and Pentagon lawyers, who were heavily involved in advising acquisition decision makers in the final days before the contract was awarded last October.

Another factor that led to the disclosure was the department’s decision to debrief both companies in writing — and on the same day they made the contract award. Defense officials, on the advice of their attorneys, made that decision because they wanted to start the bid protest “clock” immediately, and because lawyers suggested that debriefing the companies in person would create too much litigation risk.

Those attorneys believed oral debriefings were a bad idea “mainly because of how parties in procurements of this size, magnitude and publicity … don’t tend to use [an oral debriefing] in the manner in which it’s intended,” one of the lawyers told the OIG. “They try to trick the [contracting officer] and the government [into] saying something they don’t mean, that they can then use against [the government] in litigation.”

However, an internal review by the department found the decision to go the written debriefing route “’created extraordinary pressure on the contracting team’” and did not allow for the proper amount of time that all the tasks required,” according to the IG report.

The department only discovered its mistake when Amazon replied with its own written questions, and contracting officials realized the company must have had access to parts of Microsoft’s proposal. Once the Pentagon notified Amazon the documents were sent in error, AWS said it would find and destroy them, but that at least 71 of its employees had already read them.

Most employees cleared of alleged ethics violations

The inspector general began its JEDI investigation last year after receiving complaints from members of Congress and the Pentagon itself about alleged ethical violations by several current and former DoD employees who had dealt with the contract.

The final report found no evidence of wrongdoing by most of the officials the OIG investigated, including former Defense Secretary James Mattis, former Mattis advisor Sally Donnelly, former Navy official Victor Gavin, former Cost Assessment and Program Evaluation director Robert Daigle, and Jason DeMartino, the former chief of staff to the deputy secretary of Defense.

But two other officials did commit ethics violations, and potentially violations of federal law, according to the IG.

Deap Ubhi, a former product director for the Defense Digital Service who worked on the early stages of JEDI, allegedly lied to Defense officials about his reasons for returning to work for AWS, his former employer. The IG found Ubhi also failed to disclose that he had started employment negotiations with Amazon in September 2017, while he was still working on JEDI.

But investigators came to essentially the same conclusion the Court of Federal Clams did last year when it ruled against an Oracle lawsuit that had also raised conflict of interest claims regarding Ubhi: his behavior was unethical, but didn’t determine the course of the procurement.

“Although Mr. Ubhi’s cloud actions from September through October 2017 violated the [Joint Ethics Regulation] and the [Federal Acquisition Regulation], his minimal and limited contributions were largely discarded and did not affect the conduct or outcome of the JEDI Cloud procurement,” according to the report.

The IG also found ethics violations on the part of Stacy Cummings, a career procurement expert who now serves as the deputy assistant secretary of Defense for acquisition enablers.

Investigators said Cummings participated “personally and substantially” in high-level Pentagon discussions about JEDI in August and September of 2019 while Defense Secretary Mark Esper was conducting a review of the contract. Those activities violated the Joint Ethics Regulation, the IG said, because Cummings owned more than $15,000 in Microsoft stock at the time.

“She also did not notify her supervisor about her Microsoft holdings when she was asked to participate in the particular matter, and she did not request ethics advice regarding her financial stake in Microsoft,” according to the report. “Instead, she participated in the meetings, briefings and activities related to JEDI, and did not disqualify herself until [a Pentagon attorney] belatedly discovered her financial interest in Microsoft and raised the issue.”

In a written response, Cummings said she never tried to conceal her stock ownership — indeed, she reported it on ethics disclosure forms — and did not have any direct involvement in procurement decisions for JEDI.

“For these and related reasons, I disagree that my participation would have had a direct and predictable effect on my personal financial interest,” Cummings wrote. “I did not receive source selection  sensitive  material,  participate in the procurement  itself, or perceive my role in these meetings as affecting which company would receive the contract or whether to procure this contract in the first place.”

The IG agreed Cummings’ actions didn’t affect the final award decision, but said she never should have participated in JEDI at all because she could have been in a position to influence the value of her Microsoft stock.

The OIG referred its findings on Cummings and Ubhi to the U.S. Attorney for the Eastern District of Virginia, but prosecutors declined to file criminal charges in both cases.

No clear evidence of political interference

On the question of whether the White House or President Donald Trump tried to interfere with the contract, the IG said it’s impossible to know for sure, because attorneys insisted that senior Defense officials, including  Esper, declined to answer questions about their communications with the White House.

The Pentagon’s Office of General Counsel (OGC) said they could not talk to investigators on those issues because of what OGC said was a “presidential communications privilege.” The inspector general strongly disagreed with that legal analysis.

“The DoD OIG is part of the executive branch and therefore distinct from other entities outside the executive branch that may seek such privileged information.  We also cited to the Inspector General Act of 1978, as well as DoD issuances, regarding the DoD OIG’s authority to investigate matters related to DoD operations, such as the award of the JEDI contract,” according to the report. “ Despite our investigative authorities and our assurances to safeguard the information, DoD OGC officials restated that they did not control the privilege, and that the White House had not authorized the secretary,  deputy secretary or other DoD officials to disclose to the DoD OIG communications between the White House and DoD officials related to the JEDI contract.”

But even without that key testimony, there are reasons to doubt some of the allegations of presidential interference that have circulated in the media over the past year.

For example, former Secretary Mattis said he could not recall a purported conversation in which the president was alleged to order him to “screw Amazon” out of the contract. Both Mattis and former Deputy Defense Secretary Patrick Shanahan told investigators that, as far as they could recall, the president had never raised the topic of JEDI in any of their conversations with them.

In interviews, current Defense officials did testify that they had briefed at least two White House officials about JEDI: Acting White House Chief of Staff Mick Mulvaney and Deputy National Security Advisor Charles Kupperman.

But officials said those discussions stuck strictly to questions like why the department needed an enterprise cloud and how it was going to secure it, not who was going to win the contract.

“They only knew what had been reported publicly that we had down-selected to two, and they knew  through the public media that we had down-selected to Amazon and Microsoft,” Dana Deasy, the department’s chief information officer told investigators. “[B]ut at no time when I met with them did they ever ask me about strengths or weaknesses, pros or cons, or ask me to state an opinion on one vendor over the other vendor.”

And the inspector general concluded that whatever discussions may have happened among senior officials and the White House, they did not affect the career employees who made the final award decision.

“We believe the evidence we received showed that the DoD personnel who evaluated proposals and made the source-selection awarding Microsoft the JEDI Cloud contract were not pressured about their decision on the award of the contract by any DoD leaders more senior to them, who may have communicated with the White House,” OIG officials wrote. “Most of their identities and involvement in the procurement award were unknown to White House staff, and even to the senior DoD officials.  None of them told us they felt any outside influence or pressure as they made their decisions on the award of the contract.”

Sen. Jack Reed (D-R.I.), the ranking member on the Armed Services Committee, said it was “novel” for the administration’s to invoke privilege to prevent a department’s senior officials from talking with its own IG.

He called the report “troubling and incomplete,” and suggested that the dispute over what witnesses could discuss was related to the White House’s recent decision to remove Glenn Fine from his positions as the recently-appointed chairman of the Pandemic Response Accountability Committee, and as the official performing the duties of the DoD inspector general, a position Fine has held for the past five years.

“Mr. Fine’s removal now appears connected to his willingness to do his job and ask hard questions,” Reed said. “The White House’s assertion of some kind of ‘communications’ privilege is part of a pattern of refusing to answer questions and ethical lapses by a president who wants no independent oversight and is firing inspectors general left and right.”

Amazon officials raised a similar complaint.

“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 company said in a statement.

Aside from the brief press statement the Pentagon issued Wednesday, the Defense Department has not commented on the detailed findings in the new OIG report, despite having been provided with a draft copy in advance — the usual practice for federal inspectors general.

“The responsible officials did not respond to the recommendations on the draft version of this report. Therefore, the recommendations are unresolved,” the IG wrote. “We request that the appropriate officials provide comments on this final report.”

Litigation over JEDI continues

And Wednesday’s report — though highly anticipated — is not the final word on legal issues surrounding the JEDI contract. It is still the subject of two federal court cases.

In one, Amazon has asked the Court of Federal Claims to overturn the JEDI award because of numerous alleged improprieties in the source selection process. Among other factors, the company claims, DoD gave Microsoft an unfair advantage because it allowed it to submit a bid that included  cloud storage approach that should have been disallowed under the terms of the contract.

A federal judge issued a preliminary injunction last month that agreed with Amazon’s contention on those narrow grounds, and in response, DoD has asked the court for permission to take corrective action to address the court’s concern by partially reopening the contract.

Microsoft, Amazon and DoD are still exchanging legal motions over how expansive DoD’s corrective action should be, and the court has not yet ruled on whether the lawsuit should be paused while the Pentagon reconsiders portions of the JEDI award. Amazon wants the court to force DoD to reevaluate its source selection decision in a much broader way than the Pentagon has proposed.

In a statement Wednesday, Microsoft said the new IG report bolsters the position its lawyers and the Defense Department have already taken in federal court: that the two bidders should only be reexamined on a narrow range of issues, because AWS now has insights into the winning Microsoft bid that would give it an unfair advantage if the aperture is too wide.

“It’s now apparent that Amazon bid too high a price and is seeking a do-over so it can bid again,” said Frank Shaw, a Microsoft spokesman. “As the IG’s report indicates, Amazon has proprietary information about Microsoft’s bid that it should never have had. At this stage, Amazon is both delaying critical work for the nation’s military and trying to undo the mistake it made when it bid too high a price.”

In a separate case, the Court of Appeals for the Federal Circuit is considering the earlier bid protest lawsuit Oracle lost at the Court of Federal Claims, when that company challenged the JEDI contract before an award had been made.

Among the issues in that litigation, Oracle is still challenging DoD’s original decision to make JEDI a single-award contract. The company was disqualified from the final round of bidding for JEDI, but contends it could have won work under the contract if the Pentagon had structured it for multiple awardees.

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