Amazon Says Bid for Pentagon Cloud Deal Was Cheaper, Better

(Bloomberg) -- Amazon.com Inc. said the Defense Department wrongfully awarded a highly lucrative cloud computing contract to Microsoft Corp. even after it proposed a cheaper and technically superior bid for the deal.

In an amended complaint that was filed Oct. 23 and unsealed on Tuesday, the e-commerce giant claimed that during a re-evaluation of revised bids from both companies, the Pentagon underrated Amazon’s advantages and ignored key contract requirements. Amazon spokesman Drew Herdener said in a statement that it offered “the lowest-priced bid by tens of millions of dollars.”

“The net result -- a technical reevaluation in which Microsoft marginally came out on top -- is riddled with errors even more egregious than those that plagued the initial award,” Amazon said in the filing.

Amazon Web Services, Amazon’s cloud unit, filed a lawsuit in November 2019 alleging that political interference by President Donald Trump cost the company the deal. Amazon said in the suit that the Defense Department failed to fairly judge its bid because Trump viewed Amazon’s Chief Executive Officer Jeff Bezos as his “political enemy.”

The contract, known as the Joint Enterprise Defense Infrastructure, or JEDI, is valued at as much as $10 billion over a decade.

As part of that lawsuit, Amazon argued that Microsoft’s bid failed to comply with a government requirement in one of its pricing scenarios.

Earlier this year, Judge Patricia Campbell-Smith said it was likely Amazon’s “chances of receiving the award would have increased” if it weren’t for the Pentagon’s errors in evaluating the pricing proposals. In April, she granted a request from the government to revisit the contract and allow bidders to revise their proposals.

In September, the Defense Department reaffirmed its decision to award the deal to Microsoft.

Amazon’s lawsuit alleges the company’s bid offered the Pentagon superior technology, including better tactical-edge devices, which offer cloud-computing services to remote locations, and more robust data centers.

“We had made clear that unless the DoD addressed all of the defects in its initial decision, we would continue to pursue a fair and objective review, and that’s exactly where we find ourselves today,” Herdener said.

Microsoft spokesman Frank Shaw said in a statement that Amazon realized it bid too high the first time and then amended its bid to achieve a lower price.

“However, when looking at all the criteria together, the career procurement officials at the DoD decided that given the superior technical advantages and overall value, we continued to offer the best solution,” Shaw said.

The Pentagon didn’t immediately respond to a request for comment.