AMZN Amazon.com Inc

By John D. McKinnon 

WASHINGTON -- Defense Secretary Mark Esper said he would withdraw from reviewing the Pentagon's huge JEDI cloud-computing contract to avoid the appearance of a conflict of interest.

Mr. Esper said through a spokesman that he decided to remove himself from any decision-making because of his adult son's employment with one of the original bidders, although he is not legally required to do so.

"Out of an abundance of caution to avoid any concerns regarding his impartiality, Secretary Esper has delegated decision-making concerning the JEDI Cloud program" to Deputy Secretary David Norquist, the spokesman added. "The JEDI procurement will continue to move to selection through the normal acquisition process run by career acquisition professionals."

JEDI stands for Joint Enterprise Defense Infrastructure. The huge project is worth up to $10 billion over a decade for the winner of the competition.

The finalists are Amazon.com Inc. and Microsoft Corp. Several other firms were eliminated from the bidding. The Defense Department didn't immediately identify which company employed Mr. Esper's son.

The process for awarding the deal has been delayed by bid protests focusing largely on multiple conflict-of-interest allegations against Amazon, which the company has disputed. Critics have also said that JEDI's single-source approach might not be best for the military. A judge of the U.S. Federal Court of Claims rejected concerns about the deal earlier this year.

Mr. Esper's review began soon after President Trump voiced his own concerns about JEDI. Mr. Trump told reporters in July that he was "getting tremendous complaints about the contract with the Pentagon and with Amazon," which had been favored to win the contract. "They're saying it wasn't competitively bid," the president added.

Tuesday's statement from the Pentagon said that Mr. Esper had been reviewing JEDI as well as "the universe of options available to DoD to meet its cloud computing needs."

Mr. Esper has made it clear in previous statements that he would wait for a separate review by the Pentagon inspector general's office before reaching any conclusions. It remained unclear how and whether Tuesday's announcement might affect the decision-making timeline on JEDI.

Mr. Esper has made it clear in recent weeks that the Pentagon would move forward with some form of enterprise cloud solution. That will help the armed forces incorporate more artificial intelligence into operations, he has said.

Write to John D. McKinnon at john.mckinnon@wsj.com

(END) Dow Jones Newswires

October 22, 2019 17:28 ET (21:28 GMT)

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