Pentagon's $10 Billion JEDI Contract Clears One Protest; Second Protest Pending

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A subsequent bid protest filed by IBM remains up in the air for the Pentagon’s $10 billion cloud contract.

The Government Accountability Office Wednesday denied a pre-award bid protest filed by the tech company Oracle in August over the Pentagon’s Joint Enterprise Defense Infrastructure cloud contract, worth up to $10 billion over 10 years.

Oracle’s protest argued three main points: the Pentagon’s decision to award JEDI to a single company went against statute, the terms of the contract restricted competition and the agency failed to consider potential conflicts of interest related to the acquisition.

In its decision, GAO denied the protest on each of those three grounds. The decision was issued under a protective order that limits disclosure of possible proprietary or sensitive information until parties agree on a public version to release.

“GAO’s decision concludes that the Defense Department’s decision to pursue a single-award approach to obtain these cloud services is consistent with applicable statutes (and regulations) because the agency reasonably determined that a single-award approach is in the government’s best interests for various reasons, including national security concerns, as the statute allows,” GAO said in a press statement.

“GAO’s decision also concludes that the Defense Department provided reasonable support for all of the solicitation provisions that Oracle contended exceeded the agency’s needs. Finally, GAO’s decision concludes that the allegations regarding conflicts of interest do not provide a basis for sustaining Oracle’s protest,” GAO added.

The decision is a blow for Oracle, which successfully protested another large Pentagon cloud contract in May. That contract was worth up to $1 billion, but paled in size compared to JEDI.

Oracle submitted a bid in October for JEDI, as did competitors including IBM, Amazon Web Services and Microsoft. IBM also submitted a pre-award bid protest against JEDI—the protest came two days before the deadline to submit bids and two months after Oracle’s protest. GAO’s ruling noted that “Oracle’s and IBM’s protests could not be resolved concurrently.” A ruling on IBM’s protest is due Jan. 18.

The Pentagon’s JEDI contract will put a commercial company in charge of hosting and distributing mission-critical workloads and classified data to warfighters around the globe in a single cloud computing environment. The contract has generated significant competition between industry titans that has taken place in public and private.

The Defense Department previously aimed to have some JEDI operating capabilities by mid-2019, but it is not clear how the acquisition will be impacted by protests. Bidding companies could file another GAO protest after the Pentagon makes its decision, or could dispute the decision in the U.S. Court of Federal Claims.

In a statement, Oracle spokeswoman Deborah Hellinger said the company remains "undeterred in our commitment to bring tremendous value and flexibility to our customers, including the Department of Defense."

"Oracle believes that both the warfighter and the taxpayer benefit most from a rigorous and truly competitive process.  Oracle’s JEDI bid represents a forward-thinking, next generation cloud focused on security, performance, and autonomy and a move away from the legacy cloud infrastructure that seems to be favored in the RFP," Hellinger said. "We are convinced that if given the opportunity to compete, DoD would choose Oracle Cloud Infrastructure for a very substantial portion of its workloads because (Oracle) delivers the best, most performant and most secure product available at the best price.”

Editor's note: This story was updated to include comment from Oracle.