Watchdog review finds Pentagon's $10B cloud contract to Microsoft was legal

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The Pentagon’s move to award a cloud computing contract estimated to be around $10 billion to Microsoft was in line with legal and government purchasing standards, according to a review by a government watchdog released on Wednesday.

The review by the Defense Department's inspector general comes after Amazon – long viewed as the primary candidate to run the Pentagon’s Joint Enterprise Defense Infrastructure project, known as JEDI – cried foul after the contract went to Microsoft last October and filed a lawsuit against the State Department.

The project will store and process vast amounts of classified data, allowing the U.S. military to improve communications with soldiers on the battlefield and use artificial intelligence to speed up its war planning and fighting capabilities, but work on it has been halted as the lawsuit proceeds.

The judge presiding over the bid protest in the U.S. Court of Federal Claims said in March that Amazon’s challenge likely had merit on some technical grounds involving pricing.

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The review released Wednesday by the Defense Department's inspector general did not draw a conclusion about whether Microsoft was appropriately declared the winner.

Rather, it looked at whether the decision-making process was proper and legal. It also examined allegations of unethical behavior by Pentagon officials involved in the matter and generally determined that any ethical lapses did not influence the outcome. The review also sought to determine whether the White House influenced the Pentagon's decision, as Amazon has alleged.

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The report said that although it appears there was no such White House pressure, the reviewers could not definitely determine the full extent of White House interactions with the Pentagon's decision-makers.

“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 said.

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“However, we believe the evidence we received showed that the DOD personnel who evaluated the contract proposals and awarded Microsoft the JEDI cloud contract were not pressured ... by any DOD leaders more senior to them, who may have communicated with the White House,” the report said.

Amazon has asserted that the bidding was improperly influenced by President Trump’s dislike of Amazon and its CEO, Jeff Bezos. Bezos owns The Washington Post, a news outlet often criticized by Trump.

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A Pentagon spokesman, Lt. Col. Robert Carver, said the inspector general's report shows that the contract award process was fair and legal.

“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.

The Associated Press contributed to this report.