Pentagon watchdog says White House didn't influence decision to deny Amazon $10 billion cloud contract

Key Points
  • The Pentagon's Office of the Inspector General on Wednesday released findings from its review of the JEDI cloud contract. 
  • In the 313-page report, the office said it found no evidence to suggest that the White House intervened in the cloud computing contract's award process. 
  • However, the inspector general noted in the report that it had limited cooperation from White House officials throughout its review and, as a result, it could not complete its review of allegations of ethical misconduct. 

In this article

President Donald Trump speaks with Satya Nadella, Chief Executive Officer of Microsoft, and Jeff Bezos, Chief Executive Officer of Amazon during an American Technology Council roundtable in the State Dinning Room at the White House in Washington, DC on Monday, June 19, 2017.
Jabin Botsford | The Washington Post | Getty Images

The Defense Department's inspector general found the $10 billion JEDI cloud contract, which was awarded to Microsoft, doesn't appear to have been influenced by the White House, according to a new report issued Wednesday. 

However, the inspector general noted in the report that it had limited cooperation from White House officials throughout its review and, as a result, it could not complete its assessment of allegations of ethical misconduct. 

Microsoft was awarded the contract on Oct. 25. In November, Amazon Web Services, Amazon's cloud computing unit, filed a lawsuit in the U.S. Court of Federal Claims protesting the JEDI decision. The company argues that President Donald Trump's bias against Amazon and its CEO Jeff Bezos influenced the Pentagon to give the contract to Microsoft.

The JEDI deal drew immediate scrutiny because Trump became involved and he often criticizes Amazon and Bezos. Trump's influence over the deal came into focus when a book charting then-Defense Secretary James Mattis' tenure at the White House claimed the president told Mattis to "screw Amazon" out of the contract.

The new 313-page report summarizes findings from a review of the Joint Enterprise Defense Infrastructure, or JEDI, cloud computing contract, conducted by the Defense Department's Office of the Inspector General. The JEDI contract is intended to modernize the Pentagon's IT operations and could be worth up to $10 billion for services rendered over as many as 10 years. 

The inspector general said it did not find evidence that the Defense Department's JEDI contract evaluation and award process was pressured by "any DoD leaders more senior to them, who may have communicated with the White House."

Department of Defense spokesperson Lt. Col. Robert Carver told CNBC in a statement that the inspector general's report confirms the Pentagon's JEDI cloud procurement process was conducted "fairly and in accordance with the law."

"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," Carver said.

Frank Shaw, Microsoft's corporate vice president of communications, told CNBC in a statement: "The Inspector General's report makes clear the DoD established a proper procurement process. It's now apparent that Amazon bid too high a price and is seeking a do-over so it can bid again. 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." 

Last June, the Pentagon inspector general began an evaluation of the Defense Department's handling of the JEDI contract. As part of its review, the inspector general's office interviewed a number of personnel involved in the evaluation who communicated with the White House. The inspector general said none of those officials reported feeling "any outside influence or pressure for or against a particular competitor" as they made their award decision. 

But the inspector general warned that the review was not definitive.

"We could not review this matter fully because of the assertion of a 'presidential communications privilege,' which resulted in several DoD witnesses being instructed by the DoD Office of General Counsel not to answer our questions about potential communications between White House and DoD officials about JEDI," the report states. "Therefore, we could not definitively determine the full extent or nature of interactions that administration officials had, or may have had, with senior DoD officials regarding the JEDI Cloud procurement."

An AWS spokesperson suggested the report doesn't reveal all that much.

"It's clear that this report couldn't assess political interference because several DoD witnesses were instructed by the White House not to answer the IG's questions about communications between the White House and DoD officials," the spokesperson wrote in an emailed statement to CNBC. "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 inspector general's office reviewed the Pentagon's decision to award the contract to a single company and found that it was reasonable.

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