Pentagon IG Can’t Rule Out White House Influence on JEDI Cloud Contract
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By Frank Konkel,
Executive Editor, NextgovAPRIL 15, 2020
A 300-page IG investigation reveals multiple ethics violations and refusal by Defense Department General Counsel to let senior officials comment on communications with the White House.
The Defense Department’s inspector general said it was unable to determine whether White House influence affected the award of the Pentagon’s multibillion-dollar Joint Enterprise Defense Infrastructure cloud contract because several officials asserted a “presidential communications privilege.”
The IG report released Wednesday dives into the allegations of technical requirements favoring certain companies, ethical impropriety and pressure from the Trump administration that plagued the contract since the department announced its plans for an enterprisewide cloud in 2017. The department selected Microsoft in October over Amazon Web Services, which is challenging the decision in an ongoing federal court case.
The IG investigation did not review the merits of either company’s proposals. Rather, it reviewed the Defense Department’s decision to award the contract to a single commercial cloud provider, its technological requirements, its source selection process and “whether it was influenced by outside pressure.”
Auditors concluded the Pentagon’s decision to award the contract to a single company “was reasonable” and in line with the Federal Acquisition Regulation. Auditors further supported the Pentagon’s source selection plan and evaluation process, stating it was “consistent with established DoD and Federal source selection standards.”
However, the IG said it could not issue a definitive answer regarding allegations of White House influence because seven senior officials—including Defense Secretary Mark Esper and Defense Deputy Secretary David Norquist—asserted “presidential communications privilege” at the instruction of the Defense Department Office of General Counsel.
“We could not review this matter fully because of the assertion of a ‘presidential communications privilege,’ which 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. Therefore, we could not definitively determine the full extent or nature of interactions that administration officials had, or may have had, with senior DoD officials regarding the JEDI Cloud procurement,” the audit states.
According to the IG, the evidence it was able to review—including more than 80 interviews and 32 gigabytes of emails and documents—suggested Defense personnel making the procurement decisions “were not pressured” by senior leaders or the White House to pick Microsoft over Amazon.
Defense officials who were interviewed consistently said they did not feel pressured by Trump’s public animosity against Amazon owner Jeff Bezos or Amazon. Defense Department Chief Information Officer Dana Deasy, who headed the procurement, told investigators public comments reported in the press “did not in any way” influence his actions regarding the procurement, and he “never once felt pressured from the White House, the staff, the president, the secretary, the deputy secretary, even Congress for that matter.”
The audit suggests media reports and lobbying efforts tilted the public’s and some lawmakers’ perceptions about the JEDI cloud contract.
“Yet, these media reports, and the reports of President Trump’s statements about Amazon, ongoing bid protests and ‘lobbying’ by JEDI Cloud competitors, as well as inaccurate media reports about the JEDI Cloud procurement process, may have created the appearance or perception that the contract award process was not fair or unbiased,” auditors wrote.
Auditors substantiated ethical misconduct by two former Defense employees involved in the JEDI contracting process but said neither influenced the process. Deap Ubhi, auditors said, failed to disclose employment negotiations and job acceptance with Amazon in late 2017 while he worked for the Defense Department on “early involvement” with the JEDI cloud initiative. However, auditors said Ubhi’s action were “misconduct, his minimal contributions to the JEDI procurement process” didn’t impact the source selection. Investigators also substantiated allegations against Stacy Cummings, who formerly served in a senior acquisition-related Defense position. Cummings “violated her ethical requirements by improperly participating in a particular matter related to the JEDI procurement while owning stock in Microsoft valued between $15,001 and $50,000,” auditors said.
Auditors found nothing to substantiate allegations of ethical misconduct into other senior defense officials propagated by various media entities. Those officials included former Secretary of Defense Jim Mattis; Mattis’ former senior advisor Sally Donnelly, former Chief of Staff to the Deputy Secretary of Defense Anthony DeMartino, former Director of Cost Assessment and Program Evaluation Robert Daigle, and former Deputy Assistant Secretary of the Navy for Command, Control, Communications, Computers, Intelligence, Information Operations and Space Victor Gavin.
“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,” Pentagon spokesperson Lt. Col. Robert Carver. “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.”
JEDI Battle Continues
The IG report references ongoing litigation between Amazon and the Defense Department over its JEDI award to Microsoft. Investigators determined the “DoD improperly disclosed source selection and proprietary Microsoft information to Amazon” after the JEDI award. In addition, the Defense Department “failed to properly redact the names of the DoD source selection team members”—federal officials who are supposed to be kept secret from the public—“in source selection reports that were disclosed to Amazon and Microsoft.” The IG recommended the Defense Department implement several acquisition changes for future contracts that exceed $112 million in value.
However, the IG did not review submissions from either company and the court battle for JEDI continues.
In March, the judge in the case granted Amazon’s motion to halt work on the contract, stating the company was “quite likely” to prove the Pentagon made an evaluation error in JEDI. In response, Justice Department attorneys for the Pentagon asked the judge for a 120-day remand to “reconsider its evaluation” and take corrective action on JEDI. Amazon has asked the judge to force the Defense Department to take broader corrective action, a motion Pentagon attorneys and Microsoft dispute.
As the court case lingers on, both companies have grown more vocal in their public statements, and both seized on portions of the IG report Wednesday to plead their case. Amazon, which alleges political interference played a role in Microsoft’s JEDI award, said the White House’s refusal to allow certain Defense officials to answer IG questions furthered their case.
“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,” an Amazon 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.”
Microsoft viewed the IG report differently. In a statement, Microsoft said the audit supported the Pentagon’s acquisition approach with JEDI and accused Amazon of attempting to secure a “do-over” with proprietary information the Defense Department mistakenly provided.
“The Inspector General’s report makes clear the DoD established a proper procurement process. It’s now apparent that Amazon bid too high a price and is seeking a do-over so it can bid again,” said Microsoft spokesperson Frank Shaw. “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.”
The judge could render a decision on the motions for corrective action in the coming weeks, though a final decision in the case could take months.
Editor’s note: This story was edited to include statements from Amazon and Microsoft.