Pentagon seeks to reconsider parts of $10B cloud contract given to Microsoft over Amazon

The Pentagon on Thursday said it hopes to reevaluate its decision to award a $10 billion cloud-computing contract to Microsoft over Amazon, court documents filed late Thursday show.

The surprising announcement is only the latest twist in a years-long saga over the lucrative contract, and it could signal a potential victory for Amazon, which is suing to halt or overhaul the contract after it was awarded to Microsoft last year.  

Amazon claims the process was improperly influenced by President Trump, who publicly and privately indicated that he did not want the contract to go to Amazon, which is owned by a frequent target of the president’s criticism, Jeff Bezos.  

In the U.S. Court of Federal Claims filings on Thursday, the Pentagon asked a federal judge for “120 days to reconsider certain aspects of the challenged agency decision.” 

“DoD [the Department of Defense] does not intend to conduct discussions with offerors or to accept proposal revisions with respect to any aspect of the solicitation other than price scenario,” the filing reads.

In a statement, an Amazon Web Services (AWS) spokesman celebrated the decision. “We are pleased that the DoD has acknowledged ‘substantial and legitimate’ issues that affected the JEDI [Joint Enterprise Defense Infrastructure] award decision, and that corrective action is necessary,” the spokesperson said.

The Court of Federal Claims case has attracted significant attention over Amazon’s inflammatory allegations about Trump, who reportedly said he wanted to “screw Amazon” by keeping the contract away from his rival’s company. Amazon has asked the court to depose Trump as well as Defense Secretary Mark Esper and former Defense Secretary James Mattis.  

But the bulk of Amazon’s argument relies on the technical details of the deal, as the tech giant claims the Pentagon unfairly changed how it was evaluating the award at the eleventh hour.

The Pentagon says it wants to reassess the technical details around its original evaluation, particularly around pricing.

“A remand here is in the interests of justice because it will provide the agency with an opportunity to reconsider the award decision at issue in light of AWS’s allegations, this Court’s opinion, and any new information gathered during the proposed remand,” the filing reads.

While the DOD’s request is a success for Amazon, the government said in the filing that Amazon plans to object to the motion, which focuses mainly on technical details and does not address the political interference issue. Amazon’s objection would likely function as an accountability mechanism to ensure the Pentagon broadens the scope of its reevaluation and sticks to what it hopes to do. 

The JEDI cloud-computing contract is currently on hold after the Court of Federal Claims judge ordered the Pentagon to halt work on it until the case is resolved.

Industry watchers were stunned by the Pentagon’s decision to award the contract to Microsoft last October, pointing out that Amazon seemed to be best-positioned to take on the task given its substantial work with the CIA. But Microsoft is also a popular cloud-computing partner for the federal government and the Pentagon has maintained that the company was simply best-equipped to create the DOD’s cloud infrastructure.

Microsoft has maintained that the Pentagon made the right decision. But the federal judge overseeing the case said earlier this month that Amazon is “likely to succeed on the merits” of one of its main arguments, saying the Pentagon erred in how it evaluated prices for competing proposals from the two tech companies. 

Updated at 9:09 a.m.