Bid protest for Pentagon’s cloud is put on hold after ‘new information’ emerges related to conflicts of interest


A federal judge temporarily halted a contentious legal battle involving the Pentagon and the cloud computing divisions of Amazon and Oracle on Tuesday, putting the litigation on hold until the Defense Department “reconsiders whether possible personal conflicts of interest impacted the integrity” of a not-yet-awarded $10 billion contract both companies are pursuing.

The decision by Court of Federal Claims Senior Judge Eric Bruggink comes at the request of the Defense Department, which filed a motion Tuesday morning requesting a stay on litigation. The Pentagon said in late January that it would look into whether Amazon Web Services (AWS) created a conflict of interest when it hired away one of the Pentagon’s procurement professionals.

But its decision to ask for a stay in the case apparently resulted from unspecified “new information” it received recently.

“New information not previously provided to DOD has emerged related to potential conflicts of interest,” Defense Department spokeswoman Elissa Smith said in an email. “As a result of this new information, DOD is continuing to investigate these potential conflicts.”

Smith did not respond to specific questions about the nature of that information or when it emerged. Representatives for Amazon Web Services and Oracle declined to comment on the stay.

The investigation is the latest turn in a long-running dispute over how the Pentagon should build its department-wide cloud computing network, known as the Joint Enterprise Defense Infrastructure, or JEDI. The Defense Department ignited a competitive frenzy among the major U.S. cloud providers last year when it announced plans to award the massive contract to just one company.

Whichever company wins would have the opportunity to build what would become the backbone of the U.S. military’s artificial intelligence capabilities. It would also be in a position to rapidly gain market share in the fast-growing public sector computing market, as many of the Pentagon’s older applications are subsumed by JEDI.

Almost from the start, the contract has been dogged by allegations that it is biased in favor of Amazon Web Services, which is seen as a front-runner in part because it has years of experience running classified networks for the CIA. Amazon founder Jeffrey P. Bezos owns The Washington Post.

Oracle, Microsoft and IBM have continually criticized the department’s decision to use just one provider, but Amazon executives have praised that approach. All four companies submitted bids, and an award had been expected in April.

In the meantime, Oracle and IBM have been trying to force the department to change course and bid out the contract to more than one firm. Both companies lodged pre-award bid protests last year, arguing that military procurement officers failed to adequately follow regulations. The protests were respectively denied and dismissed.

But Oracle followed up with another lawsuit, this time pointing a finger directly at Amazon Web Services and alleging “conflicts of interest” arising from the roles of two former Defense Department officials who had previous business relationships with Amazon.

One is Anthony DeMartino, a former chief of staff to the deputy secretary of defense who had previously worked for a business that counted AWS among its clients. Another is a Deap Ubhi, whose 15-month stint at the Defense Department was bookended by jobs at AWS.

Ubhi worked as a business development representative for Amazon before joining in August 2016 the Defense Digital Service, a new Defense Department unit responsible for building commercial technology practices into the military’s operations. While he worked at the Pentagon, he also separately ran a Silicon Valley-based start-up called TableHero, which used cloud-based software to help restaurants build their business online.

Ubhi publicly praised Amazon while he worked at the Defense Department, repeatedly referred to himself as an “Amazonian” and at one point claimed to be “leading the effort” to move the Defense Department’s computer systems to the cloud. For about seven weeks, he worked directly on early planning and market research for the JEDI contract, according to court documents.

In October 2017, he recused himself from the JEDI procurement process, citing “potential conflicts” over “further partnership discussions” in which his business might engage with Amazon. He left the Defense Department the next month and rejoined AWS.

Ubhi’s revolving-door career path ― and the possibility that his decisions as a government procurement officer were colored by his close affiliation with Amazon ― has been at the center of Oracle’s lawsuit.

Oracle also criticized the Defense Department’s efforts to vet Ubhi and screen for potential conflicts of interest, saying a Defense inquiry into the issue “spans less than one page” and “entirely ignored” Ubhi’s later employment at AWS.

The Defense Department and AWS both pushed back against Oracle’s claims, arguing that the company is engaged in a “broad fishing expedition” and regurgitating arguments it had made in its failed protest of the bid process.

“Oracle attempts to use Mr. Ubhi’s voluntary recusal as evidence of supposed bias, when in reality it demonstrates precisely the opposite: Mr. Ubhi acted specifically to avoid any potential conflict by voluntarily recusing himself from any JEDI activities before he eventually returned to AWS,” Amazon’s attorneys wrote in a court filing.

Throughout the litigation, Amazon has offered few public details regarding the circumstances of Ubhi’s hiring. An Amazon spokesman said in an email late last year that both of Ubhi’s positions at Amazon had been on the commercial side of the company’s business, not the public-sector business that pursues government contracts. The Amazon spokesman declined to make Ubhi available for an interview, citing pending litigation.

In a Jan. 23 court filing, the Pentagon’s attorneys said the Defense Department contracting officer overseeing JEDI was considering whether Amazon’s rehiring of Mr. Ubhi creates an [organizational conflict of interest] that cannot be avoided, mitigated, or neutralized.”

Julie Tate contributed to this report.





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