Technology

Amazon pauses Microsoft’s $10 billion Pentagon contract as trial proceeds

A judge has issued a temporary injunction against the Pentagon’s Joint Enterprise Defense Infrastructure (JEDI) cloud contract, preventing the contract from moving forward until a lawsuit from Amazon is resolved.

Amazon has claimed that it lost out on the $10 billion contract because of President Donald Trump’s personal animosity toward Amazon CEO Jeff Bezos and The Washington Post, which Bezos owns. Amazon argued that the process of granting the contract had “clear deficiencies, errors and unmistakable bias.”

The judge’s decision is sealed, so we don’t know the reasoning behind it. A redacted version of the decision is set to be made public in two weeks after both parties have reviewed the document for competition-sensitive information.

Pentagon spokesman Lt. Col. Robert Carver said in a statement that the DoD was “disappointed” with the ruling and that “the actions taken in this litigation have unnecessarily delayed implementing DoD’s modernization strategy and deprived our warfighters of a set of capabilities they urgently need.” He added that the agency was “confident” in its awarding of the JEDI cloud contract to Microsoft.

Trump has been feuding with Bezos since early in his term, at one point threatening to upend Amazon’s relationship with the US Postal Service. Some of the hostility may stem from Bezos’ ownership of The Washington Post, which has vigorously reported on the excesses of the Trump administration. Earlier this month, Bezos traded barbs with White House adviser Peter Navarro over an unrelated conversation about counterfeit products on Amazon.

Trump said in July that he was looking into the contract following complaints about the bidding process, giving rise to widespread concerns about political influence in the procurement decision. The contract was awarded to Microsoft in October.

In a deposition filed yesterday, a Pentagon official said any delay in implementing the new system would be immensely expensive for the government, estimating “financial harm of between $5 and $7 million dollars every month that performance of the JEDI contract is delayed.”

Amazon may end up on the hook for that money if the company loses its case. As part of the order, the company is “directed to provide security in the amount of $42 million for the payment of such costs and damages as may be incurred or suffered in the event that future proceedings prove that this injunction was issued wrongfully.”

Amazon is hoping to force Trump to weigh in on the trial directly, seeking to compel the president, former Defense Secretary James Mattis, and current Defense Secretary Mark Esper to testify in the case. The judge has not ruled on the motion to depose, and it remains unclear whether that will happen.