President Trump is facing growing pressure to step in and halt his favorite corporate punching bag, Amazon, from securing a historic, $10 billion contract to lead the Pentagon’s 21st century cloud computing efforts.
With Amazon rival Oracle Corp. expected to argue in court Wednesday that the entire bidding process has been marred by conflicts of interest and secret meetings, key lawmakers are pressing Mr. Trump to personally insert himself into the process and push for a better deal — and perhaps to ensure the massive contract is split among multiple companies.
The contract fight centers on one of the biggest procurement projects of the Trump presidency to date: a secure computing cloud to handle the massive data, encryption and storage needs of the world’s biggest and most technologically sophisticated military bureaucracy.
Private defense analysts say the establishment of a sweeping cloud system is crucial to the military’s modernization and its preparations for the next generation of combat. The JEDI contractor will play a central role in ensuring that troops in the field have real-time access to classified data.
Analysts say Mr. Trump would be well within his rights to intervene and demand some changes to the structure of the Defense Department’s Joint Enterprise Defense Infrastructure program, better known as JEDI. The JEDI contract, expected to be awarded as soon as August, would cover the storage and processing of huge amounts of classified Pentagon data, and the winner would be linked in an unprecedented high-tech partnership with the U.S. military.
Pentagon officials have defended their handling of the contract process and have expressed concerns that a lengthy legal battle over the contract could have negative effects as rivals such as China and Russia boost their own military technological prowess.
“From the beginning, the enterprise cloud initiative has been open, transparent and full,” Pentagon spokeswoman Elissa Smith told The Washington Times on Tuesday.
Because of the size and scope of the job, only two companies, Amazon and Microsoft, have bid on the project. The Pentagon plans to award the entire contract to just one firm, but critics say that approach is deeply flawed and warrants Mr. Trump’s involvement.
“I do not understand the Pentagon’s insistence on limiting competition,” Rep. Steve Womack, Arkansas Republican, said in a recent letter to the president. “I do not want to see one dollar wasted and I do not want our military to be deprived of the best technology available. Unfortunately, in its current state, the JEDI program would do just that.
“I believe that our warfighters deserve the best capability possible and that the taxpayers deserve the best value possible, and I respectfully request your personal attention to this matter,” he continued.
Sen. Ron Johnson, Wisconsin Republican, also reportedly sent a letter to the president raising concerns about how the process has been handled.
Oracle Executive Vice President Ken Glueck, in an interview with the internet news site Business Insider, accused Amazon of promoting a “false debate” by pushing the idea that a single-contractor cloud is the preferred way to go.
“This one-size-fits-all idea is, I think, limited to JEDI and promoted by Amazon because it fits Amazon’s needs,” Mr. Glueck said.
Amazon officials have had some harsh words of their own for their chief rivals, Oracle and Microsoft, as the contract fight progresses.
Oracle’s legal challenge is “replete with mischaracterizations and over-exaggerations,” Amazon said in court filings ahead of Wednesday’s hearing.
Lawmakers’ objections are twofold. First, they argue that it’s a mistake to give the entire contract to one company and that the Defense Department would be better served by splitting its cloud storage needs among multiple companies.
Second, they argue that the Pentagon wrote the rules in a way that effectively discouraged competition and kept major firms from bidding.
One of the companies shut out of the process, California-based Oracle, is expected to argue this week that Pentagon officials expected and wanted to award the contract to Amazon all along. The company will present its case Wednesday in the Court of Federal Claims and likely will point to email contacts and meetings between Amazon and Pentagon officials as proof that the process has been unfair.
Amazon has steadfastly denied any insider or improper dealings with Defense Department officials, and the Pentagon has flatly rejected the notion that it has favored any one company throughout the process.
Few doubt that Amazon is fully capable of handling the Pentagon’s needs, and proved itself after winning a key CIA cloud contract in 2013, but there are fears that the JEDI agreement would take the company’s massive power in the U.S. economy to a whole other level.
“This is not your grandfather’s internet,” Daniel Goure, vice president of the Lexington Institute, a defense-oriented think tank, told The Associated Press. “You’re talking about a cloud where you can go from the Pentagon literally to the soldier on the battlefield carrying classified information.”
Mr. Trump has been an outspoken critic of Amazon, whose corporate empire includes The Washington Post, its founder Jeff Bezos and the company’s outsized influence on the U.S. economy. The president has charged that Amazon rips off American taxpayers by using the U.S. Postal Service as a low-cost “delivery boy” for millions of its packages.
The White House has been reluctant to get involved in the JEDI case, but analysts say the president wouldn’t necessarily be out of line if he demanded changes to the contract’s terms or the structure of how it is awarded.
“It depends on how the president steps in,” said Mark Cancian, senior adviser at the Center for Strategic and International Studies and a former official in the Defense Department and the Office of Management and Budget.
“There are three things in play. One is the requirements for the project, the next one is the structure of the contract — Do you give it all to one company? — and the third one is the selection: Who gets the contract?” said Mr. Cancian, a retired Marine Corps colonel. “The first two are fair game for the president. It’s unusual for the president to get involved in Defense Department acquisition to that degree, but it’s happened in the past.”
Picking companies, or blocking one in particular, Mr. Cancian said, would be an entirely different story. If the president steps in to stop Amazon from winning the contract, it would surely spark a formal complaint with the Government Accountability Office and “would almost certainly win,” Mr. Cancian said.
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