(Bloomberg) – A federal judge named Microsoft Corp. temporarily prevented from working on a $ 10 billion Pentagon cloud computing contract after Amazon.com Inc. asked for the delay. This was a surprising win for the company as it questions the validity of the award allegations that President Donald Trump intervened.
The government cannot execute the contract “pending further court orders,” as judge Patricia Campbell-Smith of the United States Court of Justice ruled. The judge ordered Amazon to pay $ 42 million in security, the minimum amount that the government had requested in the event of a delay. The judge’s full opinion was published under Siegel.
It is unusual for the U.S. federal court to stop working on a contract because of government objections. The verdict is a win for Amazon, which faced a tough struggle to lift the award, procurement experts said.
“The judge clearly sees some merit in Amazon’s challenge for Microsoft’s award.” said Charles Tiefer, professor at the University of Baltimore School of Law.
Pentagon spokesman Robert Carver said in a statement that the ruling unnecessarily delays the implementation of the cloud contract and “deprives Warfightern of a number of skills they urgently need.”
Microsoft spokesman Frank Shaw said the company was “disappointed” with the verdict and reaffirmed that the Pentagon’s procurement process was fair. A representative from Amazon did not respond to a request for comment.
Microsoft shares even fell 1% to a low of $ 182.87 before closing less than 1% according to the report. Amazon shares in negative territory rose less than 1%.
Microsoft won the Pentagon’s Joint Enterprise Defense Infrastructure (JEDI) cloud contract in October, which was valued at up to $ 10 billion in a decade. Amazon Web Services, Amazon’s cloud computing division, filed a lawsuit in November alleging that the Department of Defense hadn’t fairly judged its offer for the contract because Trump’s Amazon chief executive officer, Jeff Bezos, was his “political enemy”.
Amazon had previously asked the U.S. federal court for permission to interview Trump and leading Pentagon politicians for additional evidence that could show that political interference cost the company the cloud deal. Leaders Amazon wants to drop include Trump, former Secretary of Defense James Mattis, Secretary of Defense Mark Esper and Dana Deasy, Pentagon Chief Information Officer.
The e-commerce giant’s lawsuit records a laundry list of comments and actions by Trump and the Department of Defense showing that the Pentagon is giving in to political pressure when the contract is awarded to Microsoft. In one case, Amazon quotes in a book by former Mattis speechwriter Guy Snodgrass claims that Trump instructed Mattis in the summer of 2018 to “fool Amazon” by excluding it from the offering. Mattis criticized the book.
However, government lawyers argued in a file released on Wednesday that Amazon’s request to remove Trump was “particularly bold” and unnecessary because the company had not provided enough evidence to support its claims of bias.
The government also urged the court to reject Amazon’s request to temporarily block contract work, arguing that such a pause would jeopardize national security and drain taxpayers’ money. In government records, government lawyers estimated that if monthly payments were delayed, it would cost taxpayers between $ 5 and $ 7 million.
The Pentagon’s JEDI project aims to consolidate the department’s cloud computing infrastructure and modernize its technology systems. The Pentagon has already started identifying programs that could be transferred to the JEDI cloud environment.
(Updates with comments from procurement experts from the third paragraph)
– With the support of Tony Capaccio, Susan Decker and Spencer Soper.
To contact the editors responsible for this story: Sara Forden at [email protected], Jon Morgan
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