The Department of Defence announced the JEDI project, which aims to build a cloud computing platform to support weapons systems and classified data storage, in early 2018, saying that it would choose one company to handle the whole project. But Oracle and IBM have said that the process unfairly favoured Amazon.
Craig Holman, PhD, a government affairs lobbyist, believes that Amazon “has played the influence-peddling game expertly, if not ethically”, doing everything possible to have more influence over government policy:
“It has vastly expanded its lobbying expenditures by 400% over the last five years. Doubled its number of in-house lobbyists from 14 to 28. Moved its headquarters to the Washington, DC area so as to have a large and permanent presence on Capitol Hill. Financed a super PAC to help elect friendly lawmakers. It has made extensive use of the revolving door, hiring lobbyists with ties directly in government”, Holman said.
Tech giants Oracle, IBM, Amazon, and Microsoft competed for months for the DoD's lucrative winner-take-all contract, and Microsoft and Amazon Web Services were chosen as the two finalists.
Oracle says in its lawsuit that there is a potential conflict of interest and that Deap Ubhi, a former employee at a high-level Pentagon technology unit was working on the cloud contract that's favourable to Amazon while at the same time negotiating to sell his company to the tech giant.
“These claims are certainly extraordinary, and taxpayers deserve to see the evidence that Ubhi’s new job was (or was not) influencing decisions over at the Pentagon. Certainly, it’s important to review the evidence on whether or not Ubhi waited weeks to recuse himself from the JEDI program. If the Pentagon confirms that Ubhi didn’t report the Amazon contact/offer or promptly recuse himself, that would almost certainly be a violation of the Procurement Integrity Act and could lead to fines or imprisonment”, Ross Marchand, Director of Policy for the Taxpayers Protection Alliance said.
The government affairs lobbyist Craig Holman noted that Amazon may have crossed the legal line when also working with two DoD employees, Sally Donnelly and Anthony DeMartino:
“Donnelly was a former senior adviser to Secretary of Defence James Mattis, who was receiving large payments for her sale of a consulting firm that worked on behalf of Amazon at the same time that the Pentagon crafted a $10 billion contract that appears tilted in Amazon’s favour. DeMartino was also in Mattis’ inner circle and had previously worked for Amazon prior to government service”.
Holman explained that is very difficult to prove, as Donnelly and DeMartino say their role in the JEDI contract was minimal and the Pentagon confirms this:
“Both Donnelly and DeMartino should have recused themselves from working on the JEDI contract. It has not been proven yet whether they held any significant sway over development of the JEDI contract, but if they did, Donnelly and DeMartino would likely be held in violation of the conflict of interest law, which would have direct negative repercussions on the ability of Amazon to win the final contract”.
Beth Kindig, who analyses tech stocks and is based in San Francisco said that the accusations against Amazon “are irrelevant”, adding that “the best product and the best security” is what is important and “Microsoft is just as strong as Amazon if not potentially stronger”.
While commenting on Oracle's chances to prove a connection between Amazon and the DoD, Mrs Kindig called this more of a “tabloid gossip angle” and noted that crossover between government employees and technology employees is a normal occurrence, especially at such a high level:
“When you’re dealing with cloud infrastructure at that level, at that level of security, and that level of demand, there’s going to be crossover all the time with government employees and the tech employees, that's happening all the time. Facebook has a ton of prior White House officials at the executive level in their company, so I don’t think that that means the Pentagon contract is necessarily going to go to Amazon”, the tech stocks analyst explained.
“So what I would say is that now we're probably at a 50-50. They both have a lot going for them. Amazon has the history with cloud infrastructure as a service, but Microsoft is really an enterprise level software and hardware company, it’s mainly software of course, but it’s proven that it can succeed in the enterprise space for a long time when Amazon is more fragmented. If I were like the government and I were to decide from what I know about both of the companies, I would go with Microsoft”.
Craig Holman, in his turn, believes Amazon has the upper hand in winning the contract but hopes that in the end it will be split between tech firms:
“Perhaps the best outcome that Microsoft and Oracle and other competitors for the JEDI contract can hope for is that the allegations of wrong-doing will prompt the Department of Defence to rewrite the $10 billion contract so that multiple companies may be awarded portions of the contract”, the lobbyist concluded.
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