Oracle Takes Gloves Off in JEDI Lawsuit
Large government contract awards invariably draw protests from losing bidders hoping to gum up the works and perhaps gain a piece of the action on appeal.
The Defense Department’s huge cloud contract has taken these legal maneuverings to a new level with several pre-award protests and now a federal lawsuit filed by Oracle alleging that Pentagon officials are violating federal procurement laws. The Joint Enterprise Defense Infrastructure (JEDI) contract is estimated to be worth $10 billion over ten years.
Oracle (NYSE: ORCL), which has moved aggressively into the public cloud sector, followed a failed protest with the Government Accountability Office with a lawsuit file late last week with the U.S. Court of Federal Claims in Washington. With protesters assuming Amazon Web Services (NASDAQ: AMZN) has the inside track to win the JEDI contract, Oracle raised the stakes with a filing in federal court asserting that DoD’s plans for a single-source award violate U.S. acquisition regulations.
Oracle’s attorneys also unveiled a gloves-off approach in arguing the JEDI contract solicitation is riddled with conflicts of interests that unduly favor AWS. The filing unsealed on Monday (Dec. 10) contains a series of internal messages denigrating AWS competitors, including Microsoft.
IBM (NYSE: IBM) is also protesting the single-source contact award, arguing that “JEDI’s primary flaw lies in mandating a single cloud environment for up to 10 years,” IBM asserted in a recent blog post. Google (NASDAQ: GOOGL) dropped its JEDI bid in October. Microsoft (NASDAQ: MSFT) has also criticized the structure of the JEDI cloud procurement. All are fierce competitors to AWS in the public cloud market.
Dismissing DoD claims for an expedited, single-source procurement, Oracle asserted in its filing that “Congress has prohibited the very contract approach DoD has implemented.”
The petition argues that Congress established two requirements for large “indefinite delivery/indefinite quantity” contracts. They include: multiple contract awards “to the maximum extent practicable”; and a prohibition against a single-source award for contracts valued at more than $112 million. (A federal agency would have to satisfy one of four possible exceptions to acquisition regulations, such as U.S. national security, to justify a single-source contract.)
DoD procurement officials invoked an exemption to U.S. procurement rules in justifying a single-source award, describing the JEDI contract as requiring a “firm, fixed price” solicitation That refers to established prices for “the specific tasks to be performed,” DoD argued.
Oracle countered that the services sought in the JEDI contract solicitation differ sharply from DoD’s fixed-price exemption. Instead, the court filing argues that the cloud services sought in the JEDI contract “exist in a near constant state of change.”
Nevertheless, “DoD has persisted with [a solicitation] seeking a single vendor to provide the IaaS and PaaS cloud services (unclassified to classified, mundane to forward deployed) intended to host 80 percent of DoD's applications across a ten-year contract,” Oracle’s attorneys argued.
Aside from arcane government contracting language, the court filing also discloses alleged conflicts of interest by a JEDI program manager known by the cloak-and-dagger handle “Deep Ubhi.” The filing asserts that the program manager identified only by the user name of his Slack account previously worked for AWS and has vigorously promoted DoD’s single-source approach to the JEDI contract.
Oracle’s filing includes disparaging remarks about AWS competitors for the cloud award as well DoD procurement officials. Referring to one official who spoke favorably about Microsoft, an internal Slack message declared, “We’ve got some real dum dums in here….”
If and when AWS responds to our query about Oracle’s filing, we will update this story.
Citing Oracle's lawsuit, the General Accountability Office on Wednesday (Dec. 12) dismissed IBM's pre-award protest of the planned single-source JEDI contract, noting that Oracle's filing makes assertions similar to IBM's. Hence, GAO deferred to the court.
--Editor's note: This story has been updated.