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Pentagon Wins Lawsuit Over Massive Cloud-Computing Contract

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07/12/2019 | 12:08pm EST

By Ryan Tracy

A federal judge declined to throw a roadblock in front of a massive Pentagon cloud-computing contract, granting a legal victory to Amazon.com Inc. in its bid to secure the deal and a loss to competitor Oracle Corp.

Senior Judge Eric Bruggink of the U.S. Court of Federal Claims on Friday ruled against Oracle, which had sued to protest a Defense Department decision last year to move forward with the bidding process for a contract to provide the military cloud-computing power. The contract is estimated to be worth up to $10 billion. The Pentagon has said it plans to award the contract by the end of August.

In a three-paragraph order, the judge rejected Oracle's allegations that potential conflicts of interest weren't properly investigated. He backed the government's findings that the procurement process was proper and in accordance with the law.

"This is a clear win for Amazon and [founder Jeff] Bezos," analysts at Wedbush Securities said in a note to clients Friday. Microsoft Corp. is also in the running for the contract.

A spokeswoman for Oracle declined to address the litigation Friday but said the company stands ready to work with the government on cloud computing.

A spokesman for Amazon Web Services, the Amazon subsidiary bidding on the deal, said it stands ready to support the Defense Department's mission. "Despite the many attempts by others to distract and delay, today's ruling reaffirms what we've said all along, that Oracle's claims were meritless and a desperate attempt to distort the facts," he said in a statement.

A Defense Department spokeswoman had no immediate comment. A representative for Microsoft declined to comment.

The contract for the program known as Joint Enterprise Defense Infrastructure, or JEDI, was originally expected to be awarded this past spring, but was delayed after allegations of conflicts of interest, in part involving a former Pentagon employee who worked at Amazon both before and after working on cloud computing for the government.

The Wall Street Journal earlier this month reported on meetings between former Defense Secretary Jim Mattis and Amazon executives including Mr. Bezos. Both Amazon and the Pentagon have said the contract didn't involve any special treatment.

The deal is also facing hurdles in Congress. A bill passed by the House on June 19 stipulates that no funds be spent to move data to the JEDI cloud until the Defense Department explains how it plans to later transition to multiple cloud providers, the government's stated preference.

Write to Ryan Tracy at ryan.tracy@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
AMAZON.COM -1.22% 1861.64 Delayed Quote.0.75%
MICROSOFT CORPORATION -1.01% 165.04 Delayed Quote.4.65%
ORACLE CORPORATION -1.66% 54.07 Delayed Quote.2.06%
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