Amazon hasn’t yet filed its protest against the Defense Department. I’m betting it will before the Washington Nationals or Houston Astros sweep up the World Series confetti.
DoD surprised everyone who might’ve presumed the Joint Enterprise Defense Infrastructure, or JEDI, contract would go to Amazon.
But no. In one of those late Friday afternoon announcements, officials said they’d chosen Microsoft, not Amazon. Amazon, in a statement quoted in Defense One and other outlets, said “AWS is the clear leader in cloud computing, and a detailed assessment purely on the comparative offerings clearly led to a different conclusion.” That’s a pre-protest statement if I ever heard one. Although every tech company calls itself the leader in something.
Amazon and Microsoft were the last two contenders in a sweepstakes that’s generated a lot of heat. Long story short: Congressional committees, the Defense Office of Inspector General and Defense Secretary Mark Esper, to name a few, have combed through the award process like a school nurse hunting for head lice. Oracle Corporation, taken out of the running in an early down-select, has persisted in a lawsuit claiming the solicitation is flawed.
Boiled down, the central concern has been that the solicitation was wired for Amazon. That, via two employees who later went to work for Amazon. Contracting and IT observers, including me, also wondered why DoD didn’t simply pursue a multiple-award, indefinite-delivery, indefinite quantity deal. The Oracle case brought up that question. It also raised the question about how a single award for a constantly-evolving set of services could claim fixed-price status over the next 10 years.
The last jersey barriers to the award, though, crumbled away by Friday. Esper took himself out of the decision process, claiming he wanted to avoid the appearance of a conflict because his son had worked at IBM. He was probably anxious to get on with the Special Operations take-out of the ISIS guy. Then the DoD IG stated it hadn’t (yet) found a reason to stop an award.
Now the Pentagon is sort of in a damned-if-it-had, damned-because-it-didn’t position. If it had awarded to Amazon, the chorus would have sung, “See, I told you so!” In awarding to Microsoft, it’ll hear instead, “Well, you had no other choice considering everything that’s happened.”
In an Amazon protest case, though, its lawyers can’t dredge up the conflict of interest question, obviously. And it can’t dredge up a contention in the still-going Oracle suit — namely that the “gating” requirements leading to the down-select were flawed. Not after Amazon itself made it through the gate. Legally, Amazon must be super careful not to get the whole thing reopened to all of the original bidders. Instead, it’s got to make the case that, relative to Microsoft and only Microsoft, Amazon should have been considered the superior offer.
Arguments will get deep and technical. The fact is, both companies are perfectly capable of doing what the Pentagon needs with JEDI. But their approaches and technical offerings differ. For now, we must presume the selection is rooted in specific cloud services, pricing and other arcana of the competing offers. And anyhow, both companies already do extensive cloud business throughout the DoD and the armed services.
The purported $10 billion value of JEDI over 10 years is significant, but it’s not a market maker. Compare $1 billion per year to Amazon AWS revenues, running around $9 billion per quarter. Microsoft’s quarterly cloud revenues have reached around $11 billion.
Another, unrelated note: How rare it is to see such a large and mission-important contract going to contractors who also have retail contact with the public? That gave me a chuckle. I have no memory of ever buying anything from, say, Northrop Grumman. But for my micro-sized side business and the regular family computing, I recently chose Microsoft Office 365. When I needed a crucial adapter and cable for a new computer, I found them on Amazon.