Amazon’s Protest of DoD’s JEDI Cloud Computing Contract: A Legal Analysis

Amazon’s Protest of DoD’s JEDI Cloud Computing Contract: A Legal Analysis

Legal Sidebari

Amazon’s Protest of DoD’s JEDI Cloud
Computing Contract: A Legal Analysis
February 19, 2020
In October 2019, after an approximately two-year competitive bidding procurement process, the
Department of Defense (DoD) announced that it had awarded a Joint Enterprise Defense Infrastructure
(JEDI) cloud services contract to Microsoft Corporation. In November 2019, Amazon Web Services, Inc.
(AWS), the only other remaining bidder on the contract, filed a protest with the U.S. Court of Federal
Claims (COFC) challenging DoD’s award of the JEDI contract. AWS filed its protest under seal but
publicly released a redacted version the following month. AWS alleges that DoD committed “egregious,”
“substantial and pervasive errors” in selecting Microsoft over Amazon based on the technical aspects of
their proposals that, standing alone, warrant the court’s reversal of the award. However, in addition to
these merit-based arguments, AWS also argues that DoD’s failure to evaluate appropriately the technical
aspects of AWS’s and Microsoft’s bids was due to the improper “intervention of President Trump,
Commander in Chief of the U.S. Military and head of the Executive Branch, in the JEDI procurement and
award.” AWS alleges that the President’s intervention stemmed in part from the fact that AWS’ owner,
Jeffrey P. Bezos, also owns the Washington Post. On February 13, 2020, the COFC issued a preliminary
injunction barring DoD from moving forward on the contract during the litigation.
Congress may have a keen interest in the outcome of this litigation, in part due to the significant amount
of federal funds at stake—$1 million at minimum, but with the maximum potential of $10 billion over 10
years if all options are exercised. Additionally, the litigation could significantly affect DoD’s efforts to
modernize its computing infrastructure, which the agency has argued is directly related to its ability to
meet the country’s warfighting needs and maintain technological advantages over adversaries. This Legal
Sidebar outlines the JEDI procurement process and analyzes the legal arguments underlying AWS’s bid
protest.
Background
Federal procurement statutes and regulations—notably the Competition in Contracting Act of 1984
(CICA) and the Federal Acquisition Regulation (FAR), the government-wide regulation that generally
applies to acquisitions by DoD and other executive branch agencies—establish largely uniform policies
and procedures for how federal executive agencies acquire goods and services. The purpose of these
standards is “to deliver on a timely basis the best value product or service to the [government], while
Congressional Research Service
https://crsreports.congress.gov
LSB10410
CRS Legal Sidebar
Prepared for Members and
Committees of Congress

Congressional Research Service
2
maintaining the public’s trust and fulfilling public policy objectives,” such as the promotion of
transparency, fairness, and competition. For instance, agencies typically must conduct market research,
such as by issuing Requests for Information (RFI) from potential sources and other interested parties,
before soliciting bids and accepting proposals for procurements, and agencies generally must utilize
competitive procedures to acquire goods and services.
Federal law provides mechanisms for contractors to “protest” (i.e., object to) contract awards and
solicitations for failing to comply with federal law. Among other things, bid protests can allege violations
of law or regulation in how an agency solicits offers for a contract, cancels such a solicitation, awards a
contract, or cancels a contract. The COFC and its appellate court, the U.S. Court of Appeals for the
Federal Circuit (Federal Circuit), review final agency procurement actions in accordance with the
Administrative Procedure Act (APA) and will only set aside an agency’s action if it is “arbitrary,
capricious, an abuse of discretion, or otherwise not in accordance with the law.”
Overview of the JEDI Procurement Process
In September 2017, DoD announced its intent to acquire cloud computing technology to “support
unclassified, secret, and top secret information,” “to meet warfighter needs,” and “to maintain[] our
military’s technological advantage.” DoD conducted market research on its cloud computing needs and
the process by which those needs should be met through issuing an RFI. In March 2018, DoD issued a
memorandum outlining the Department’s cloud computing needs and an overview of its acquisition
strategy incorporating responses received from the RFI. Shortly thereafter, DoD issued a series of draft
Requests for Proposals (RFPs) from industry for the JEDI contract. In late July 2018, after assessing
hundreds of industry comments and questions received in response to the drafts, DoD issued a final JEDI
RFP, which established that DoD would select the bid that offered the best value to the government based
on nine factors. These included: six technological factors, such as the bidder’s ability to provide cloud
computing access in war zones and similar operationally difficult environments; a small business
participation factor; a demonstration factor in which the bidder demonstrates the ability to perform the six
technological factors with 24-hour’s notice; and finally a contract price factor.
DoD received proposals from Oracle America, Inc., International Business Machines Corporation (IBM),
AWS, and Microsoft. However, DoD eliminated IBM and Oracle from contention in March 2019 after
determining that their initial proposals were technically deficient. In the Spring and Summer of 2019,
DoD evaluated both Microsoft’s and AWS’s proposals under all nine factors and engaged in final
discussions with both companies. In October 2019, DoD awarded Microsoft the JEDI contract.
Amazon’s Merits-Based Allegations
In its bid protest, AWS alleges seven violations of law related to DoD’s award of the JEDI contract to
Microsoft. Counts One through Four are merit-based alleged violations of the APA. Under Counts One and
Two, AWS argues that DoD acted arbitrarily and capriciously by failing to evaluate fairly both AWS’s and
Microsoft’s proposals under the JEDI solicitation. According to AWS, “DoD . . . unreasonably, repeatedly
deviat[ed] from the RFP’s evaluation criteria in order to indicate falsely that Microsoft’s cloud solution is
in the same league as AWS’s market-leading solution,” and that, had DoD assessed the two proposals
rationally, “DoD would have awarded the JEDI Contract to AWS.” In Count Three, AWS alleges DoD acted
arbitrarily and capriciously in violation of the APA by taking “affirmative steps to deprive AWS of its
competitive advantage over Microsoft . . . [to] justify its award to a technically inferior competitor.” AWS
cites, among other issues, the fact that, absent any apparent technical justification for doing so, DoD
determined that AWS could not use the classified cloud apparatus it uses for other existing government
contracts for the JEDI proposal and failed to consider AWS’s past performance as required under the FAR.
In the heavily redacted Count Four, AWS alleges that DoD violated the APA by acting arbitrarily and

Congressional Research Service
3
irrationally when making its “best value for the government” decision due to “numerous prejudicial errors”
made when evaluating the proposals.
AWS’s Bad Faith-Based Allegations
AWS final three allegations relate to the President’s actions, which allegedly improperly and unlawfully
affected DoD’s JEDI procurement decisions to AWS’s detriment. In Count Five, AWS alleges that the
President’s “bias against AWS” prompted DoD procurement personnel to act arbitrarily, capriciously, and
unlawfully when evaluating AWS’s and Microsoft’s proposals, ultimately causing AWS to be “unfairly
deprived” of the JEDI contract. AWS alleges in Count Six that DoD violated acquisition laws and
regulations that prohibit conflicts of interest. These alleged conflicts of interest stem from “repeated”
instances of Administration personnel, such as former Defense Secretary Mattis, losing their jobs when
they “do not follow President Trump’s directives.” According to AWS, “[t]he fact that the [JEDI contract]
decision makers knew that their continued employment likely depended on selecting Microsoft” violated
both a criminal law, 18 U.S.C. § 208, and federal regulation, 5 C.F.R. § 2635.403(c), which bar DoD and
other federal employees from substantively taking part in government actions that would affect them
financially. Furthermore, AWS argues that DoD procurement personnel failed to evaluate both their and
Microsoft’s proposals impartially in violation of FAR § 3.101-1 or in accordance with the contract
solicitation’s evaluation standards in violation of FAR § 15.305. Finally, in Count Seven, AWS contends
that DoD violated an implied contract of good faith and fair dealing by failing “to consider all bids fairly
and honestly” through the alleged arbitrary, capricious, and irrational procurement actions.
To support these bad-faith allegations, AWS’s protest outlines, among other things, a series of negative
tweets and public statements the President directed at Amazon, Bezos, and the Washington Post, which
AWS argues was motivated in part from negative press coverage he has received from the Post. The
protest cites his references to the Washington Post as an “enemy of the people” that Bezos purchased to
use as a “tax shelter” and “lobbyist weapon.” The bid protest also cites a July 2019 press conference
during which the President stated that he was going to “be asking [DoD] to look very closely” at the JEDI
procurement process due to “tremendous complaints about the contract with the Pentagon and with
Amazon.” Two weeks after that press conference, newly confirmed Defense Secretary Mark Esper,
“announced that he ordered a re-review of the JEDI RFP process,” citing concerns about the procurement
process raised by “folks in the administration” and “people in the White House,” according to news
reports cited by AWS. As the President and Defense Secretary were making these statements, DoD
procurement personnel altered JEDI requirements in ways that AWS argues were detrimental to AWS’s
proposal and were not technically justified. AWS contends that these changes were made by DoD
employees who were “subject to the President’s influence on multiple fronts,” and that, “[n]o matter how
much [they] may have tried to discharge their duties impartially . . . no amount of compartmentalization,
segregation, or anonymization could have isolated the decisions-makers from the clear and unmistakable
conflict of interest that stemmed from the very highest levels of power in DoD.”
Legal Analysis
To succeed on its merits-based allegations, AWS would have to overcome the heavy burden of proof and
significant deference the COFC typically applies when evaluating negotiated “best value” contracts. As
the protestor, AWS holds the burden of proving that DoD violated the APA’s arbitrary, capricious, abuse
of discretion, or noncompliance with the law standard. The COFC generally will set aside a procurement
decision “if it lacked a rational basis or if the agency’s decision-making involved a clear and prejudicial
violation of statute, regulation or procedure.” The APA standard for bid protests is “highly deferential” to
the procuring agency. The level of deference is even greater in a negotiated, “best value” procurement like
DoD’s JEDI contract “because the contracting officer engages in what is inherently a judgmental process”
and “ha[s] substantial discretion to determine which proposal represents the best value for the

Congressional Research Service
4
government.” The court does not replace the reasoned judgment of contracting officers or provide relief
unless the protester has shown that a substantial mistake impaired the procurement process.
While the APA standard in this context is highly deferential to procurement officials, “such deference is
not unlimited. Whenever a procurement decision is without a rational basis or is based upon a clear
violation of law, that decision must be set aside.” This can occur, for instance:
when the agency entirely failed to consider an important aspect of the problem, offered an
explanation for its decision that runs counter to the evidence before the agency, or [the decision] is
so implausible that it could not be ascribed to a difference in view or the product of agency expertise.
The burden applicable to AWS’s bad-faith based allegations is arguably even higher. To succeed on these
allegations, AWS would have to show that procurement personnel acted contrary to law in violation of the
APA by exercising bad faith in awarding the contract to Microsoft. However, under COFC jurisprudence,
government personnel are presumed to act in good faith and overcoming that presumption requires a high
burden of proof based on “clear and convincing evidence[, which] has been described as evidence which
produces in the mind of the trier of fact an abiding conviction that the truth of a factual contention is
highly probable” [emphasis in original]. The Federal Circuit, in the 2002 decision Am-Pro Protective
Agency, Inc. v. United States, explained that proving bad faith in this context generally requires “evidence
of some specific intent to injure the plaintiff.” The Am-Pro court synthesized relevant case law, stating:
[I]n Gadsden v. United States, the court compared bad faith to actions which are “motivated alone
by malice.” In Knotts [v. United States], the court found bad faith in a civilian pay suit only in view
of a proven “conspiracy . . . to get rid of plaintiff.” Similarly, the court in Struck Constr. Co. v.
United States, found bad faith when confronted by a course of Governmental conduct which was
“designedly oppressive.” But in Librach [v. United States], the court found no bad faith because the
officials involved were not “actuated by animus toward the plaintiff.”
Despite these high burdens, the COFC granted AWS’s motion for a preliminary injunction preventing
DoD from moving forward on the contract during the litigation, which required a court determination that
AWS is likely to succeed on the merits of its claims. The parties in the litigation, including Microsoft as
intervenor, have jointly requested that the COFC rule on these allegations on an expedited basis. The
parties expect to submit all filings necessary to brief the court fully on the protest by early March.

Author Information

David H. Carpenter

Legislative Attorney

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff
to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of
Congress. Information in a CRS Report should not be relied upon for purposes other than public understanding of
information that has been provided by CRS to Members of Congress in connection with CRS’s institutional role.
CRS Reports, as a work of the United States Government, are not subject to copyright protection in the United
States. Any CRS Report may be reproduced and distributed in its entirety without permission from CRS. However,

Congressional Research Service
5
as a CRS Report may include copyrighted images or material from a third party, you may need to obtain the
permission of the copyright holder if you wish to copy or otherwise use copyrighted material.

LSB10410 · VERSION 1 · NEW