By John D. McKinnon 

WASHINGTON -- The Pentagon's star-crossed JEDI cloud-computing project has taken yet another turn, raising the potential for further delays.

A federal judge has already halted work on the Joint Enterprise Defense Infrastructure over allegations of contract irregularities. Now the Pentagon is seeking a halt to court proceedings, saying it wants time to rethink some aspects of the project.

The Pentagon awarded the contract, expected to be worth up to $10 billion over a decade, to Microsoft Corp. -- triggering a lawsuit challenging the decision by rival bidder Amazon.com Inc.

The Pentagon's move to pause the court proceedings opens the door to possible changes in the deal.

But lawyers for rival Amazon.com Inc. plan to oppose the move, according to court documents filed this week by the Department of Defense as part of its move to pause court proceedings. Amazon is worried that it might ultimately serve only to allow the Pentagon to shore up its case for letting Microsoft proceed with the contract, worth up to $10 billion over a decade.

Amazon said it was pleased by what it said was the Defense Department's acknowledgment that the contracting process was flawed.

"We look forward to complete, fair and effective corrective action that fully insulates the re-evaluation from political influence and corrects the many issues affecting the initial flawed award," an Amazon spokesman said.

Meanwhile, the Pentagon's proposed reconsideration of parts of the contract represents the latest in a series of complications and delays for the controversial JEDI project, which has been in development since at least 2017.

Amazon's cloud unit, Amazon Web Services, or AWS, was long considered the favorite to win the huge contract, but lost out to Microsoft in a decision that Amazon contends was tainted by political influence from President Trump.

In response to Amazon's bid protest, a judge of the U.S. Court of Federal Claims decided last month to halt work on the massive project.

Judge Patricia Campbell-Smith said that Amazon was likely to prevail on one of its arguments -- that the Pentagon had improperly evaluated the two companies' price proposals for certain information storage, giving Microsoft an unfair advantage.

AWS is expected to file a response explaining what it says is its concern that the re-evaluation may not adequately address all of the other errors, bias and deficiencies it has raised.

In contrast, Microsoft lawyers said they would not oppose the Pentagon's proposal, according to the Defense Department motion.

"We believe the Department of Defense made the correct decision when they awarded the contract," said Microsoft spokesman Frank Shaw.

"However, we support their decision to reconsider a small number of factors as it is likely the fastest way to resolve all issues and quickly provide the needed modern technology to people across our armed forces."

The Pentagon said it disagreed with the court's decision last month, but that it must "address the findings in the court's order with the intent of ensuring our warfighters will get this urgent and critically needed technology as quickly and efficiently as possible"

The Pentagon says the contract award was fairly determined.

In addition to the complaint over the disputed pricing factor, Amazon's complaint alleges a number of technical errors by the Pentagon in considering the two firms' bids.

Mr. Trump has blamed Amazon founder Jeff Bezos for unfavorable coverage of his administration in the Washington Post, which Mr. Bezos bought in 2013. The Post says its editorial decisions are independent.

Another frustrated bidder, Oracle Corp., had alleged before the award that Amazon benefited from conflicts of interest among some Pentagon officials that worked on the deal. The Pentagon as well as another Federal Claims Court judge concluded that those alleged issues had no material impact on the outcome. But some of the issues remain under investigation by the Pentagon's inspector general.

 

(END) Dow Jones Newswires

March 13, 2020 17:43 ET (21:43 GMT)

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