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Amazon

Pentagon cloud-computing contract sought by Amazon faces new hurdle

By John D. McKinnon , Kate O'Keeffe The Wall Street Journal
Published

The Pentagon hopes to use cloud computing to harness advanced technologies for the country's military. (Reuters)

WASHINGTON — A federal judge delayed a lawsuit over a massive Pentagon cloud-computing contract Amazon.com Inc. was favored to win so the government could investigate what it said was “new information” on possible conflicts of interest in the procurement process.

Senior Judge Eric Bruggink of the U.S. Court of Federal Claims ordered the stay on Tuesday “while the Department of Defense reconsiders whether possible personal conflicts of interest impacted the integrity of the JEDI Cloud procurement,” according to his order.

The order followed a sealed motion seeking the stay by the Defense Department, which is overseeing the Joint Enterprise Defense Infrastructure cloud, or JEDI, program that could be worth up to $10 billion.

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The contract was expected to be awarded this spring. Rival Oracle Corp. sued to halt the process until the government thoroughly investigates Oracle’s claims of alleged conflicts, which center on a former government employee who worked at Amazon before and after playing a role in the Pentagon’s procurement process.

The Defense Department largely dismissed conflict of interest claims earlier, making Tuesday’s motion to seek the stay a potential turning point.

“DoD can confirm that new information not previously provided to DoD has emerged related to potential conflicts of interest,” Pentagon spokeswoman Elissa Smith said in a statement. “As a result of this new information, DoD is continuing to investigate these potential conflicts.”

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Steven Schooner, a professor of government procurement law at George Washington University, said the Defense Department’s request for a delay appears to be a win for Oracle, at least in the short term. “If Oracle’s goal is to derail, or for that matter, delay the JEDI procurement, then this has to be viewed as good news” for the company, Mr. Schooner said.

Amazon and Oracle declined to comment on the judge’s ruling.

Click here for more from The Wall Street Journal, where this story was first published.