By: Paul Emanuelli
This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its April 2020 report entitled Report on the Joint Enterprise Defense Infrastructure (JEDI) Cloud Procurement, the U.S. Department of Defense (DoD) Inspector General presented the results of its review into allegations of political interference and ethical misconduct related to the JEDI Cloud procurement. By way of background, as the report noted, in July 2018, the DoD issued a Request for Proposals (RFP) to obtain cloud computing services. The RFP stated that the contract would have a maximum value of $10 billion, over a potential 10-year performance period, if the DoD exercised all option periods. Furthermore, as the Inspector General summarized, two of the losing proponents challenged the contract award, and two elected officials from the U.S. House of Representatives asked the Inspector General to investigate the process used to develop the specifications over concerns of bias:
August 6, 2018, Oracle of America, Incorporated (Oracle) challenged the terms of the RFP in a protest filed with the Government Accountability Office. On October 10, 2018, International Business Machines Corporation (IBM) filed a similar protest with the Government Accountability Office. On October 22, 2018, Representatives Steven Womack and Tom Cole, U.S. House of Representatives, sent a letter to the DoD OIG requesting an investigation of the processes the DoD used to develop the JEDI Cloud procurement requirements and the RFP. Representatives Womack and Cole expressed concern that some requirements were written to favor one specific contractor.
As the Inspector General summarized, media reports, and letters submitted by the losing bidders to its office, alleged that the specifications were rigged due to connections between the winning bidder and DoD officials and alleged that the misconduct by government officials compromised the fairness of the process:
In addition to the Representatives’ letter, various news articles reported similar allegations. For example, among many others, a Fox News article stated that according to one of the competitors for the JEDI Cloud contract, “the process was rigged from the beginning due to connections between Amazon and DoD officials…” An article in Bloomberg stated that it had obtained a copy of a 33-page “salacious” dossier that portrayed “a web of conflicts to cast doubt on the integrity of the cloud procurement,” with allegations that “Defense Department officials participated in shady activities, all of which gave Amazon an edge.”
Between March 2019 and October 2019, the DoD OIG received similar allegations in a series of complaint letters that Oracle, one of the JEDI Cloud contract competitors, sent to the DoD OIG. These letters alleged that former DoD officials engaged in ethical misconduct related to their financial disclosures, their participation in the JEDI Cloud procurement, or their post-Government employment, which Oracle alleged affected the JEDI procurement.
The Inspector General also noted, others alleged that the former government employees who subsequently went to work for the winning bidder gave that bidder an unfair advantage in the bidding process:
On July 25, 2019, Senator Marco Rubio, in a letter to the Secretary of Defense, expressed concerns that Mr. Gavin and Mr. Ubhi were allegedly involved in the JEDI Cloud procurement and did not recuse themselves during their separate employment negotiations with Amazon. Senator Rubio further asserted that both Mr. Gavin and Mr. Ubhi might have accepted employment with Amazon before leaving the DoD and their roles in the JEDI Cloud procurement.
Notwithstanding this flurry of allegations, the Inspector General ultimately concluded that the award of a single contract, rather than multiple contracts, complied with relevant federal laws, that the RFP specifications were not unnecessarily restrictive, and that the evaluation was conducted in accordance with the RFP rules:
The DoD’s decision to award the JEDI Cloud contract to a single contractor was consistent with applicable law and acquisition standards. The Procuring Contracting Officer determined that Federal Acquisition Regulation 16.504 required a single-award contract for the JEDI Cloud because a single-award contract would result in more favorable terms and conditions, including price for the DoD; the expected cost of administration of multiple contracts outweighed the expected benefit of making multiple contract awards; and multiple awards would not be in the best interests of the Government. We concluded that the procuring contracting officer’s determination to use a single-award contract was in accordance with the Federal Acquisition Regulation and was reasonable. We also concluded that the Undersecretary of Defense for Acquisition and Sustainment’s authorization for a single-award contract was consistent with applicable law.
In addition, we concluded that the JEDI Cloud requirements in the Request for Proposal were reasonable and based on approved requirements, essential cloud capabilities, DoD cloud security policy, and the Federal Risk and Authorization Management Program guidance. In addition, we concluded that the DoD’s inclusion of gate requirements was reasonable and did not overly restrict competition. We also concluded that the DoD conducted the JEDI Cloud source selection in compliance with the FAR, the DoD Source Selection Procedures, the JEDI Cloud Source Selection Plan, and the Request for Proposals, Sections M1 – Basis for Award and M2 – Evaluation Process. We concluded that the source selection team’s evaluation of the contractors’ proposals was consistent with established DoD and Federal source selection standards.
The Inspector General ultimately dismissed the allegations of improper interference by White House staff or senior DoD officials since the identity of the evaluators was not known to either group, which protected those evaluators from the alleged outside interference:
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 regarding their decision on the award of the contract by any DoD leaders more senior to them, who may have communicated with the White House. We interviewed the personnel involved in the factor evaluation and source selection processes, including factor and selection board chairs, the Source Selection Authority, and the Procuring Contracting Officer. Most of their identities and involvement in the procurement award were unknown to White House staff and even to the senior DoD officials. None of these witnesses told us they felt any outside influence or pressure for or against a particular competitor as they made their decisions on the award of the contract. These witnesses also told us that public statements from the President and “media swirl” about the contract did not directly or indirectly influence the integrity of the procurement process or the outcome of the JEDI Cloud source selection.
Yet, these media reports, and the reports of President Trump’s statements about Amazon, ongoing bid protests and “lobbying” by JEDI Cloud competitors, as well as inaccurate media reports about the JEDI Cloud procurement process, may have created the appearance or perception that the contract award process was not fair or unbiased.
While the Inspector General ultimately dismissed the allegations of bias and interference, this case study serves as a useful reminder that biased specifications and improper interference can compromise the integrity of a competition. It also underscores the importance of protecting evaluation teams from interference to ensure the integrity and defensibility of their evaluation and award decisions.
