Pentagon watchdog sets phasers to none, clears $10bn JEDI contract process but leaves door open for lawsuits

There is no evidence of wrongdoing or undue influence in the Pentagon’s controversial $10bn JEDI cloud contract award to Microsoft, the Defense Department’s internal watchdog has concluded.

Despite two years of argument in which the world’s largest tech companies have hurled accusations of corruption, incompetence and presidential malice, a 317-page report [PDF] by the DoD’s inspector general argues that the procurement process was followed, and gives it a clean bill of health.

It does however find two Defense officials guilty of ethical misconduct: one, Stacy Cummings, for holding between $15,000 and $50,000 in Microsoft stock and not recusing herself from discussions; and a second, Deap Ubhi, for failing to disclose that he had accepted a job offer from Amazon while overseeing the project, and then “lied three times to Amazon and DoD officials about his negotiations with Amazon for employment.”

Despite these failings, the report concluded that the two officials did not impact the final decision. Other officials, who have been the subject of several congressional complaints and media reports, were cleared of acting inappropriately.

The report repeatedly notes that it did not review the actual applications or their subsequent evaluation but only whether the process followed was fair. That means that a legal effort to halt the award, filed by Amazon, may still move forward. Although the report also complicates that case when it notes that Amazon’s claim is based on confidential information that was accidentally leaked to it by a DoD official.

The report notes that “13 unredacted Microsoft TEB [technical evaluation board] reports” were added to an email sent to Amazon - seemingly in error - along with its own, as part of a feedback process after the award was decided.

Amazon used the details in those reports to argue that the DoD had made some mistakes in evaluation and applied for an injunction. The judge took a look and concluded “that Amazon is likely to demonstrate that the DoD erred in its evaluation of a discrete portion of Microsoft’s proposal for this price scenario” and granted the injunction.

Here comes Trump

The report also goes into some detail over the most political aspect to the whole controversy: where President Trump personally intervened to prevent Amazon from winning the contract because of his personal animus toward Amazon CEO Jeff Bezos.

"CNBC reports that President Trump stated he received 'tremendous complaints' and would 'take a close look at' the JEDI Cloud procurement," the report notes.

In addition, in a book written by the chief speechwriter to the-then defense secretary James Mattis, retired Navy Commander Guy Snodgrass, it was alleged that Trump had told Mattis to “screw Amazon” out of the contract and that Mattis had relayed this information to a team overseeing the JEDI contract, while noting that he will ignore the recommendation.

The “screw Amazon” comment is given significant scrutiny in the report with the inspector general’s team speaking to everyone in the room when it is claimed it was said. The author of the book says he stands by his version “100 per cent” but everyone else suffers from a bout of amnesia.

From the report: “Secretary Mattis told us that he ‘cannot confirm’ the former staff member’s account and added, ‘I don’t recall the President’s words on this [JEDI].’ We then asked Secretary Mattis if the President told him that he [the President] did not want Amazon to win the contract. Secretary Mattis stated: I don’t recall that. It could have happened but I just don’t recall those words.”

The other people in the room (Mattis’ chief of staff Kevin Sweeney, Admiral Craig Faller, DoD Deputy General Counsel Paul Koffsky and Assistant Secretary of Defense for Legislative Affairs Robert Hood) also “failed to recall” the conversation. But, the report notes pointedly, that when they were asked very direct questions including “Did Secretary Mattis say that President Trump told him to ‘screw Amazon’ by locking them out of JEDI, or words to that effect?” - they were instructed not to answer by their lawyer.

Executive privilege

The report also notes that the White House refused to provide any information over the JEDI contract and internal discussions claiming executive privilege. Instead the White House outlined a process that would require the watchdog to send written questions.

The inspector general decided not to bother “because there was no assurance as to which questions would be answered, it would unduly delay the report, it would not allow for an interview and inevitable follow up questions, and it would not assure that we would be receiving full information from the witnesses.”

Ultimately, it decides to wrap up the “screw Amazon” comments by noting: “We were unable to fully corroborate or contradict Mr. Snodgrass’ account” and argues that even if Trump did instruct Mattis to make sure Amazon did not get the contract, his efforts “did not influence Secretary Mattis’ actions as they related to the JEDI Cloud procurement.”

It goes on: “In addition, no witness provided evidence that Secretary Mattis or any other DoD official acted in a way that disadvantaged Amazon or advantaged another contractor.”

As to the contract itself: early on Oracle filed several objections to the process, in particular complaining that it was a sole-winner contract, rather one that would be spread across different companies, and that so-called “gate criteria” that had to be met in order for any bid to move forward unfairly favored Amazon.

The report digs into those issues too and concludes that the single-winner approach was consistent with DoD policies (there is some lengthy but unsatisfying justification by the DoD on this point), and that the gate criteria - including high availability and failover, and “elastic usage” i.e. the ability to rapidly ramp up - were perfectly reasonable.

It also notes, having looked at the evaluation documents, that none of the main bidders were kicked out of the process because of these criteria, with the clear implication that the complaints are moot.

Mess

The report identifies a whole range of external complaints: from the bidders themselves, to media outlets identifying conflicts of interest, to Congressmen, to the White House. The issue became such a headache that the DoD invited no less than 28 Congressmen to the Pentagon to walk through the process and answer questions (only four turned up).

There was also an August 2019 meeting between the DoD and four White House officials. And the DoD and White House report having been swamped by lobbyists. The Secretary of Defense recused himself because his son works at IBM - one of the four bidders - a conflict of interest that he was probably happy to flag given the furor around it.

Internally, officials were confident there were doing the right thing and were following the right procedures despite the noise around the contract. They dismissed the criticisms, controversies and “media swirl” around JEDI - caused in large part by Trump’s public pronouncements and corporate lobbyists leaking dirt - as having “created the appearance or perception that the contract award process was not fair or unbiased.”

The report concludes that the people actually making the decision were not swayed by the hub-bub. “None of these witnesses told us they felt any outside influence or pressure for or against a particular competitor as they made their decisions on the award of the contract.”

So is that it? Has the most controversial US government IT project of the past decade come about because of a few presidential tweets and critical press reports? Pretty much, although the man who was chasing a job at Amazon while also steering a $10bn contract that Amazon was a main contender may get a black mark on his record.

“We recommend that the DoD Chief Information Officer incorporate a record of Mr. Ubhi’s misconduct into his official personnel file,” the report notes. “We also recommend that the DoD Chief Information Officer notify the DoD Consolidated Adjudications Facility of Mr. Ubhi’s misconduct with regard to any security clearance he may hold or seek in the future.”

Well, what did you expect? An independent report laying bare the corruption of the military-industrial complex? Everything is fine. Everyone can go about their business. Move along, move along. ®