Judge blocks Microsoft from working on Pentagon’s $10B JEDI contract pending Amazon’s lawsuit

The Pentagon. (Flickr Photo / David B. Gleason cc2.0)

A federal judge has paused work on a hotly contested cloud contract that the Defense Department awarded to Microsoft in November. The decision issued Thursday is a victory for Amazon, which is asking the court to re-open bidding for JEDI, the $10 billion Joint Enterprise Defense Infrastructure project that the Seattle tech titans are warring over.

Amazon is on the hook for $42 million if “future proceedings prove that this injunction was issued wrongfully,” according to the court docket. The ruling itself is under seal.

Amazon sued the federal government when Microsoft emerged as the surprise winner of the JEDI contest last year. Amazon claims President Donald Trump’s personal animus toward the company improperly influenced the outcome of the JEDI competition.

It would have been much more difficult for Amazon to prevail in the case had Microsoft been allowed to get started on the contract while the matter was adjudicated. The judge would have to factor in the lost costs of restarting bidding on a contract that was already underway.

“While we are disappointed with the additional delay we believe that we will ultimately be able to move forward with the work to make sure those who serve our country can access the new technology they urgently require,” said Frank Shaw, Microsoft’s corporate vice president of communications, in a statement. “We have confidence in the Department of Defense, and we believe the facts will show they ran a detailed, thorough and fair process in determining the needs of the warfighter were best met by Microsoft.”

Beyond the $10 billion the Defense Department plans to spend on JEDI over the next decade, the reputations and ancillary business associated with the contract are at stake. The JEDI project will migrate the Defense Department’s IT infrastructure to the cloud, creating a globally available and responsive network, and providing ongoing monitoring of issues like bugs and breaches. The system must be fortified with enhanced cyber defenses and robust encryption.

Amazon was long seen as the frontrunner for the project until  Trump expressed concerns about the fairness of the bidding process. Over the summer, Trump told reporters that he was “getting tremendous complaints about the contract with the Pentagon and with Amazon … they’re saying it wasn’t competitively bid.” A few weeks later, his defense secretary, Mark Esper, launched a review of the procurement process, delaying the conclusion of the contest. Then the DoD surprised many by awarding JEDI to Microsoft.

The injunction is just one of several big asks from Amazon in the legal challenge, which is proceeding in the U.S. Court of Federal Claims. Earlier this week, Amazon asked the court to compel Trump and several current and former Defense Department officials to sit for depositions in the case.

Can Amazon really depose Trump? Explaining the tech giant’s rare legal move in $10B cloud dispute

“President Trump has repeatedly demonstrated his willingness to use his position as President and Commander in Chief to interfere with government functions – including federal procurements – to advance his personal agenda … the question is whether the President of the United States should be allowed to use the budget of the DoD to pursue his own personal and political ends,” an Amazon spokesperson said in a statement.

It would be highly unusual for a sitting president to sit for a deposition, particularly in a civil case, but Amazon says extraordinary times call for extraordinary circumstances.

“I think if you do the truly objective and detailed apples-to-apples comparison of the platforms, you don’t end up in the spot where that decision was made,” said Amazon Web Services CEO Andy Jassy at the 2019 re:Invent conference. “Most of our customers tell us that we’re a couple of years ahead, both with regard to functionality and maturity. And I think you end up with a situation where there’s a significant political interference.”

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