Oracle has appealed its claims court loss to the U.S. Court of Appeals for the Federal Circuit in yet another escalation in the Pentagon’s troubled acquisition of its general services cloud.
Oracle is appealing a decision from U.S. Court of Federal Claims Judge Eric Bruggink that said Oracle couldn’t be harmed during the Pentagon’s Joint Enterprise Defense Infrastructure cloud computing procurement because it didn’t meet contract requirements. But the ruling also said the Department of Defense did not accurately follow acquisition regulations in its decision to make the JEDI cloud a single award.
This time the lucrative enterprise cloud contract is being investigated by the Pentagon's inspector general.
“The Court of Federal Claims opinion in the JEDI bid protest describes the JEDI procurement as unlawful, notwithstanding dismissal of the protest solely on the legal technicality of Oracle’s purported lack of standing,” said Dorian Daley, Oracle’s general counsel, in a statement. “Federal procurement laws specifically bar single-award procurements such as JEDI absent satisfying specific, mandatory requirements, and the court in its opinion clearly found DoD did not satisfy these requirements."
The procurement process has been marred by controversy from the beginning, with Oracle filing a big protest to the Government Accountability Office shortly after the RFP was released last summer. After the GAO denied the protest, Oracle filed a lawsuit in the U.S. Court of Federal Claims. In late July, the claims court judge ruled against Oracle.
Oracle takes issue with the single-award structure of the contract, arguing that acquisition regulations require a contract of this size to be a multi-award. But it has also centered its argument around conflict-of-interest allegations against former AWS employees who worked for the DoD during the JEDI cloud procurement. In July, claims court Judge Erik Bruggink ruled that the individual conflicts of interests did not impact the procurement, though he did acknowledge that “they should not have had the opportunity to work on the JEDI cloud procurement at all." He called those employees in question “bit players” in the contract. Bruggink ultimately concluded that because Oracle did not meet the contract requirements, it could not be harmed by conflicts of interest.
“The opinion also acknowledges that the procurement suffers from many significant conflicts of interest,” Daley said. "These conflicts violate the law and undermine the public trust. As a threshold matter, we believe that the determination of no standing is wrong as a matter of law, and the very analysis in the opinion compels a determination that the procurement was unlawful on several grounds.”
Oracle’s appeal is just one more setback for the JEDI cloud, which is potentially worth $10 billion over 10 years. The JEDI cloud is supposed to serve as the Pentagon’s general services cloud, with up to 80 percent of its systems migrating over to it. In a statement, the DoD said the court decision confirms that the procurement has been fair.
“DoD is aware of Oracle’s intent to appeal and will review it along with the Department of Justice,” said DoD spokesperson Elissa Smith. “As DoD has asserted throughout this litigation, and as confirmed by the court, DoD reasonably evaluated and equally treated all offerors within the framework of a full and open competition. DoD’s priority remains delivering critically needed capabilities to the war fighter while protecting taxpayer resources.”
The JEDI cloud procurement is currently under investigation by the DoD inspector general and new Defense Secretary Mark Esper. Several members of Congress have expressed concern about the contract to White House.
Oracle, along with IBM, was eliminated from the cloud competition earlier this year. Only Amazon Web Services and Microsoft remain in consideration. The Pentagon decision is expected in the coming weeks and Dana Deasy, the Defense Department chief information officer, said in June that the source selection and court case are “two disconnected events.”
Amazon did not respond to a request for comment.
This story has been updated with a statement from the Department of Defense.