Tech

Oracle argues conflicts of interest with Amazon caused it to lose the $10 billion Pentagon cloud contract

Key Points
  • Appealing a lower court's decision, Oracle argues conflicts of interest of three Department of Defense officials with AWS "corrupted" the JEDI contract selection process.
  • Microsoft was recently awarded the $10 billion contract over Amazon.
  • The DoD could still see further legal challenges over the hotly contested contract.
Signage at the Oracle headquarters campus in Redwood City, California.
Michael Short | Bloomberg | Getty Images

One week after Microsoft was awarded a $10 billion cloud contract by the Department of Defense over Amazon, Oracle is reviving charges that the agency's conflicts with Amazon Web Services tarnished the process.

In an opening brief filed Friday appealing a lower court's stance that Oracle's claims of prejudice by the DoD did not affect its chances of winning the contract, Oracle argues that conflicts of interest of three DoD officials with AWS "corrupted" the process for selecting a contractor for its Joint Enterprise Defense Infrastructure (JEDI). According to the brief, "DoD was apparently unaware" of the officials' conflicts due to "lax oversight," and in one case, "deception" on the part of one of the officials.

Oracle alleges that two of the DoD officials were offered jobs at Amazon while they worked on the contract and that another was a former AWS consultant who worked on the JEDI project even though the agency's ethics office advised he recuse himself on matters involving AWS.

The DoD kicked Oracle and IBM from its considerations as of April when the the agency narrowed down its choices between Microsoft and market leader AWS. In its appeal, Oracle argues that a lower court correctly found that the DoD violated a law that prohibits the agency from awarding contracts of JEDI's kind and scale to a single entity, but that it was wrong to determine Oracle was not unfairly prejudiced by the violation.

Oracle argued that it was unfairly ruled out of the process based on the department's security criteria that effectively only allowed the largest cloud providers, Microsoft and Amazon, to compete.

The legal challenge may not be the last the Defense Department sees over the JEDI contract. Amazon is considering its own legal options after losing the bid, Bloomberg reported last week. Such a challenge could reference President Donald Trump's repeated criticisms and complaints of Amazon and its CEO Jeff Bezos. This summer, Trump questioned if the process was favoring Amazon, referencing complaints from Oracle, IBM and Microsoft.

"DOD is aware that Oracle has filed its appeal and will continue to review it along with the Department of Justice," a spokesperson for the department said in a statement. "As DOD has asserted throughout this litigation, and as confirmed by the court, DOD reasonably evaluated and equally treated all offerors within the framework of a full and open competition. The rulings from the GAO and U.S. Court of Federal Claims validated that DOD followed all the applicable acquisition processes for JEDI. As always, DOD's priority remains delivering critically needed capabilities to the warfighter while protecting taxpayer resources."

The spokesperson later added that the department consulted with the DoD Office of the Inspector General before the contract was awarded. The Inspector General did not find "evidence that they believed would prevent DoD from making a decision about the award of the contract," according to a separate statement.

Amazon did not immediately respond to a request for comment.

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