DoD

Pentagon IG finds JEDI contract didn’t violate law, but ethical questions remain

The Department of Defense’s inspector general found that the procurement of its controversial multi-billion dollar enterprise cloud contract was “consistent with applicable law and acquisition standards,” according to a final report released April 15.

The long-anticipated report on the Joint Enterprise Defense Infrastructure (JEDI) cloud contract, which was awarded to Microsoft over Amazon Web Services in October, found that while the Pentagon didn’t violate the law with the contract structure, it did make several mistakes along the way, including ethical violations by employees and sharing Microsoft’s proprietary information with Amazon.

In its investigation, the IG reviewed whether the DoD’s decision to award the JEDI cloud to a single vendor was appropriate, whether the solicitations were “consistent” with applicable standards, if the source selection process was fair, whether the DoD violated the regulation by disclosing proprietary Microsoft information to Amazon, if the White Hose improperly influenced the final decision and whether the DoD employees engaged in ethical misconduct.

The inspector general’s investigation didn’t evaluate whether the award of the JEDI cloud contract should’ve gone to Microsoft or Amazon.

Improper influence investigation

Central to the JEDI conflict were allegations that President Donald Trump interfered in the contracting process, trying to sway the decision away from Amazon. In its investigation, the inspector general was unable to “definitively” determine both the extent to which the White House communicated with senior Defense Department officials and the nature of communications about the procurement, because of assertions of executive privilege.

The assertion “resulted in several DoD witnesses being instructed by the DoD Office of General Counsel not to answer our questions about potential communications between White House and DoD officials about JEDI,” the IG wrote in a news release.

While it’s unclear what the White House’s communication with senior DoD’s officials was, the IG determined that DoD officials that ultimately made the decision award didn’t communicate with the White House.

“Most of their identities and involvement in the procurement award were unknown to White House staff and even to the senior DoD officials. None of them told us they felt any outside influence or pressure as they made their decisions on the award of the contract,” the IG wrote.

No members of the source selection team told the inspector general that they were influenced to choose Microsoft or Amazon, the report said.

This is consistent with statements from Pentagon chief information officer Dana Deasy, who said at his confirmation hearing in October that the source selection committee was anonymous and insulated from external pressure. At the time, however, Deasy didn’t deny any allegations of pressure from the White House.

In several interviews with Defense Department officials, the DoD lawyers prevented witnesses from answering inspector general questions about communication with the White House.

Despite numerous reports detailing President Donald Trump’s anti-Amazon statements, including a book that says Trump directed former Defense Secretary Jim Mattis to “screw” Amazon, the inspector general did not find any evidence that “any DoD official based any action or decision related to the JEDI Cloud procurement” on Trump’s statements or communication with the White House or president. Mattis told the IG that he “did not recall” the president give him such direction. The IG wrote that it could not confirm or contradict the claim.

In a statement, Lt. Col. Robert Carver, a Pentagon spokesperson, praised the results from the IG report.

“The Inspector’s General final report on the JEDI Cloud procurement confirms that the Department of Defense conducted the JEDI Cloud procurement process fairly and in accordance with law," Carver said. “The IG’s team found that there was no influence by the White House or DoD leadership on the career source selection boards who made the ultimate vendor selection. This report should finally close the door on the media and corporate-driven attacks on the career procurement officials who have been working tirelessly to get the much needed JEDI Cloud computing environment into the hands of our frontline warfighters while continuing to protect American taxpayers.”

Amazon Web Services, which challenged the DoD’s decision to award the contract to Microsoft in the Court of Federal Claims, has made improper political influence central to its allegations in its suit. The company requested it be allowed to depose the president and several senior DoD officials involved in the JEDI process. A federal judge has temporarily halted the DoD’s work on the cloud after the court found it was likely that the DoD erred on some technical evaluations of Amazon’s offerings.

In a statement, an AWS spokesperson said the IG report lacks important information pertaining to the White House’s role in the award decision and doesn’t address the merits of the award decision to Microsoft.

“This report doesn’t tell us much. It says nothing about the merits of the award, which we know are highly questionable based on the Judge’s recent statements and the government’s request to go back and take corrective action," the spokesperson said. "And, it’s clear that this report couldn’t assess political interference because several DoD witnesses were instructed by the White House not to answer the IG’s questions about communications between the White House and DoD officials. The White House’s refusal to cooperate with the IG’s investigation is yet another blatant attempt to avoid a meaningful and transparent review of the JEDI contract award.”

Esper’s JEDI review, recusal and contract award

After his confirmation in late July, Secretary of Defense Mark Esper announced a review of the JEDI cloud contract, which led to allegations that the review was politically motivated following a Washington Post report that the White House instructed Esper to review the contract.

In the Post story, Esper said that his review was in response to several complaints from members of Congress about the award and correspondence with “administration officials.” Esper told the IG in an interview that the administration members were Secretary of State Mike Pompeo and Treasury Secretary Steven Mnuchin. Pompeo, the former CIA director, and Esper discussed the CIA’s cloud computing experiences, while Mnuchin offered to discuss his experience with cloud computing in the private sector. Esper said he didn’t recall ever discussing the issue.

Esper told the inspector general that the decision to initiate the review was entirely his own decision. The Defense Department lawyer present for the interview with Esper wouldn’t allow him to answer questions about his correspondence with the White House about JEDI.

Esper’s review consisted of five briefings, attended each time by Esper, Deputy Secretary David Norquist, Deasy and Ranks. All witnesses interviewed told the IG that the meetings were informational, not contractor-specific. Ranks told the investigators that the “question of which competitor would win the eventual contract award was never a topic of Secretary Esper’s review.”

“Our review of the read-aheads and other materials used to brief Secretary Esper in the sessions described above indicated that they were informational in nature,” the IG wrote. “They did not contain any recommendations, or ask for any decisions or directions from Secretary Esper. None of the materials discussed specific capabilities of the JEDI contract competitors, or provided any confidential DoD source selection information.”

Deasy told investigators that the White House never asked for, nor did he share, any information about the review with the White House.

The secretary recused himself from the decision Oct. 25, 2019, citing his son’s employment at IBM, which was an early bidder for the contract. The contract was awarded days later.

According to Esper, Norquist briefed the White House before the public announcement but after the DoD made the award decision internally. According to Ranks, the DoD told the White House it was making an award but didn’t disclose what contractor won.

Ethics violations

The inspector general also investigated allegations of ethical misconduct against seven DoD employees involved in the JEDI procurement, including Mattis. The IG only substantiated claims against two employees, Deap Ubhi and Stacy Cummings.

The inspector general found that Ubhi, a former Amazon employee who worked on the JEDI procurement for the department until leaving for Amazon again, failed to disclose that he had started negotiating a return to Amazon while working on the beginning stages of the JEDI procurement in 2017. He lied to Amazon and DoD officials about his negotiations with Amazon three times, the IG found, but his work in the early stages of the cloud was “not substantial” and “did not provide any advantage” to Amazon.

The IG also found that Stacy Cummings, principal deputy assistant secretary of defense for acquisition and deputy assistant secretary of defense for acquisition enablers, held between $15,001 and $50,000 worth of stock in Microsoft while working on JEDI-related issues. The IG found that Cummings role did not influence the award to Microsoft.

Because of Cummings’ stock holdings, the IG recommends that the DoD CIO’s office review its Cloud Computing Program Office’s procedures for uncovering and mitigating conflicts of interest. The IG wrote that the recommendations remain unresolved after the DoD didn’t respond to the recommendations provided in a draft report.

Disclosure of proprietary information

The IG report also found that the Defense Department improperly disclosed proprietary information about Microsoft’s offering to AWS during the post-award debriefing, in which the DoD explained its award decision. The de-briefing occurred before Amazon sued in the Court of Federal Claims.

“By disclosing Microsoft’s proprietary information, the DoD also potentially provided AWS an unfair advantage in the cloud services marketplace,” the inspector general wrote.

In a statement, Microsoft spokesperson Frank Shaw said that its clear the Pentagon awarded JEDI properly.

“It’s now apparent that Amazon bid too high a price and is seeking a do-over so it can bid again,” Shaw said. “As the IG’s report indicates, Amazon has proprietary information about Microsoft’s bid that it should never have had. At this stage, Amazon is both delaying critical work for the nation’s military and trying to undo the mistake it made when it bid too high a price.”

Update: This story was updated with a statement from Amazon.

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