IBM, Oracle JEDI bids weighed, measured and found wanting: Amazon, Microsoft last standing in Pentagon cloud race

Possible 'ethical violations' found but no conflict of interest

Oracle and IBM are out of the running for the Pentagon's $10bn cloud contract after a departmental probe found no evidence a conflict of interest had affected the deal.

This comes after the Department of Defense (DoD) vowed to probe itself regarding the contract while a judge in a Big Red lawsuit against the deal froze Oracle's bid protest against the Joint Enterprise Defense Infrastructure (JEDI) contract.

Big Blue also launched a bid protest last year, which has since been dismissed. The firms both claimed the contract was uncompetitive and risked damaging innovation and the Pentagon's long-term security.

JEDI has been mired in controversy since the Pentagon revealed its plans to hand the deal – which could run for up to a decade – to one vendor.

Amazon has widely been seen as the front-runner in the race, leaving other vendors, chiefly Oracle and IBM, with a bitter taste in their mouths.

That is about to get worse as the DoD has said that only two candidates – Amazon and Microsoft – meet the minimum requirements, which state the winner be authorised to handle secret information within six months and top secret info within nine.

On top of that, the Pentagon said there were no damaging conflicts of interest relating to former staffer Deap Ubhi, who worked at the DoD for 18 months in between two roles at AWS – although it did find potential "ethical violations".

Big Red then challenged JEDI in the federal courts, saying the government had included "unduly restrictive" terms to limit the number of firms that could compete – which seems to have been borne out since Oracle hasn't made the bar.

Oracle also claimed the DoD had failed to properly investigate the potential conflicts of interest of Ubhi and another former DoD employee, Anthony DeMartino, both of whom it said had a hand in defining some elements of the JEDI contract.

The US government was adamant it had carried out the proper due diligence checks on the staffers' previous ties to AWS, and argued they had only been involved in the early stages, adding that Ubhi had recused himself when Amazon was sniffing around a company he owned.

Initially, the DoD said it wasn't necessary to investigate the rehiring of Ubhi because at the time AWS hadn't submitted a bid, but later admitted that it had opened a fresh probe once Amazon put in its proposal.

This investigation led to a stay in the case, but according to US news outlets, the DoD yesterday said the investigation had revealed no conflict of interest in the contract.

"The department's investigation has determined that there is no adverse impact on the integrity of the acquisition process," FedScoop reported DoD spokeswoman Elissa Smith as saying.

However, she also revealed the investigation had uncovered "potential ethical violations" by a former DoD staffer that had been referred to the DoD inspector general for further investigation.

The first oral hearing in the case was due last Friday, 4 April, but it didn't take place because of the stay. It isn't yet clear if the case will now be able to reopen - a new date for a hearing hasn't been set.

Either way, the delays mean that the contract is unlikely to be awarded before July. The department had originally hoped to name a winner by this month.

The Register has asked the four companies involved for comment. AWS and Oracle have declined to comment, and we'll update the story if we hear back from IBM and Microsoft. ®

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