Amazon Could Challenge Loss of $10 Billion Pentagon Cloud Deal as Early as Next Week

Amazon's challenge to the US Defense Department's award announced Friday is widely expected.

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Amazon Could Challenge Loss of $10 Billion Pentagon Cloud Deal as Early as Next Week
Highlights
  • Amazon has been considering options for protesting the award
  • Trump has repeatedly taken swipes at Amazon
  • Amazon has not responded to requests for comment on its next steps

If Amazon.com decides to fight the Pentagon's decision to award a highly contested $10 billion (£7.78 billion) cloud computing contract to Microsoft, it could act as early as next week.

A challenge to the Defense Department's award announced Friday is widely expected by legal experts, analysts and consultants, especially after President Donald Trump publicly derided Amazon's bid for the high-stakes contract.

In July, Trump said the administration was reviewing Amazon's bid after complaints from other companies. Before then, Amazon was widely considered to be a front-runner. Trump has repeatedly taken swipes at Amazon and its founder Jeff Bezos, who owns the Washington Post.

For over a year, the acrimonious contract-award process for the Joint Enterprise Defense Infrastructure (JEDI) contract, set off a showdown among Amazon, Microsoft, Oracle and IBM and involved conflict of interest allegations, legal challenges and intense lobbying.

In a statement, Amazon Web Services said it was "surprised about this conclusion." A person familiar with the matter told Reuters the company is considering options for protesting the award. The company did not respond to requests for comment on its next steps.

Reuters spoke to several legal experts who said the company primarily has two options. It could go to the US Government Accountability Office (GAO) - a legislative branch of the government that offers auditing services, which could offer an immediate stay. Amazon could also go to the U.S. Court of Federal Claims, which could allow it to strengthen its case through discovery.

Amazon has three calendar days to request a debriefing: a process in which the government explains to Amazon why it was unsuccessful and shares details on the evaluation process, said Michael Hordell, an attorney who works with Barnes and Thornburg LLP.

The debriefing could also get extended by a few days if the Defense Department allows additional questions after offering an explanation - a move the agency has allowed in the past, several attorneys said.

After the Pentagon has answered Amazon's questions, the company has five calendar days to file a "protest" with the GAO, Hordell said.

If the company is not happy with the GAO's decision, Amazon could also go to the United States Court of Federal Claims, the attorneys said. It could even skip going to the GAO altogether, they said.

Another option for Amazon is to file a protest with the Department of Defense, but all attorneys Reuters spoke to said that is highly unlikely.

An Automatic Stay
If Amazon goes to the GAO, it can get an "automatic stay of performance," said Franklin Turner, an attorney with McCarter & English LLP.

That gives the GAO 100 days to make a decision, Turner said.

If the company goes to the court, it does not get an automatic stay and has to file a preliminary injunction: an order that may be granted before or during trial, with the goal of preserving the status quo before final judgment.

The court, on the other hand, allows for "discovery": a process which allows an aggrieved party to obtain evidence by requesting additional documents and depositions.

The direction of the company's legal fight could further be decided by a set of documents and evidence that the Defense Department will need to offer the company after Amazon files its protest.

If Amazon does not receive all the documents and evidence it wants, the company could either file a supplemental protest at the GAO or could go to court, the attorneys said.

Amazon is likely to fight the decision if only to show it is serious about its government contracting business, some of the attorneys and analysts said.

Down the road, the company is likely to focus on winning cloud contracts from the Central Intelligence Agency, which is looking to ramp up its reliance on the cloud, with plans to solicit tens of billions of dollars of work from tech companies next year.

Amazon already has a $600 million contract with the CIA.

© Thomson Reuters 2019

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