Amazon Challenging Pentagon-Microsoft Contract

Amazon.com Inc. (NASDAQ: AMZN) is challenging the awarding of a huge Pentagon cloud computing contract to Microsoft Corp. (NASDAQ: MSFT) in court. The company announced the filing of a notice to the U.S. Court of Federal Claims over the Joint Enterprise Defense Infrastructure (JEDI) contract this week. Amazon claims there was “unmistakable bias” and “political influence” in the selection process.

The JEDI contract, worth up to $10 billion, is to help the Defense Department modernize outdated computer systems for the military. The department is expected to spend around $40 billion on cloud services over the next few years. Microsoft’s victory in the contracting process could establish it as the first choice for government agencies and lead it to replace Amazon as the dominant player in the cloud computing industry.

The selection of Microsoft as the winner of the contract was surprising to some. Amazon had been considered the front-runner for the contract as the country’s biggest cloud computing provider. Amazon has also built cloud services for the Central Intelligence Agency. Amazon has said it believes it “is uniquely experienced and qualified to provide the critical technology the U.S. military needs.”

The company now says there should be an examination of whether political bias helped Microsoft win the bid. President Donald Trump has openly criticized Jeff Bezos, the chief executive of Amazon, on numerous occasions over the years. The president has publicly claimed Amazon has been avoiding taxes and putting other retailers out of business. Bezos also owns The Washington Post, which the president has accused spreading “fake news.”

Experts on federal contracting say it would be improper for a president to intervene in the awarding of a contract. Amazon’s protest will now prompt an internal Pentagon review expected to take 45 to 60 days. The decision is likely to be taken to court by the loser.