Contractors Set to Protest Major JEDI Cloud Solicitation

Contractors fearful of getting shut out of the Defense Department’s massive upcoming cloud program known as Joint Enterprise Defense Infrastructure, or JEDI, are laying the groundwork to protest the request for proposal, attorneys say.

With $10 billion or more at stake, defense and information technology companies and contractor trade groups for months have been publicly agitating against the DOD’s plans to issue a single award. DOD officials announced in April that JEDI would be a single-award contract, which could place Inc.’s Amazon Web Services LLC and Microsoft Corp. as the strongest contenders.

Now, with the Pentagon’s final RFP set to be issued May 15, companies are eyeing bid protests as a new line of attack—one that, if successful, could force the DOD to alter its plans.

Companies weighing a protest need to consider several factors, attorneys say, including which venue to file the protest in; whether to file soon after DOD presents its case or closer to the time companies will issue their bids; and perhaps most importantly, what grounds to use, depending on changes DOD might make to the final RFP.

There is a possibility that DOD may relent at least somewhat in its final RFP, by allowing for multiple contractors to win a piece of the prize. If that happens, said one prominent contractor executive, the need to protest may dissipate.

Yet if DOD stays on its path toward a single main beneficiary, protests aren’t just possible but highly probable, attorneys say.

“There’s a significant risk of protest,” Roger Waldron, president of the Coalition for Government Procurement, told Bloomberg Government. “It’s so high-risk if you’re not in the game.”

Said another long-time contracts attorney in Washington, who isn’t directly involved with the JEDI procurement: “This is a huge contract, and a significant opportunity for all of the companies playing in this space. It’s potentially existential.”

‘Faster Access’

Over the last few months, several top Pentagon officials have defended a single-award approach to the JEDI contract. Defense Secretary James Mattis was the latest to do so at a Senate Armed Services Committee hearing on April 26.

According to a statement explaining the 2018 Consolidated Appropriations Act published in the March 22 Congressional Record, Mattis was directed to provide two reports to the congressional defense committees within 45 and 60 days of enactment of the bill, respectively.

At the April 26 hearing, David Norquist, DOD’s chief financial officer, said the agency would be submitting both reports to Congress by today. As of mid-afternoon, spokespeople for the House and Senate Armed Services committees, and for the DOD, didn’t reply to Bloomberg Government inquiries as to whether the reports had been sent.

In one of the reports, Mattis is expected to tell Congress exactly why a single cloud provider is the preferred solution.

“The report should also include justification, to include cost considerations, for executing a single award contract rather than creating an infrastructure capable of storing and sharing data across multiple cloud computing service providers concurrently,” according to the statement.

Client Conflict

DOD spokeswoman Michelle Baldanza declined to say exactly what would be contained in the reports to Congress. She said a “determination and findings” report would be part of the final RFP.

The Government Accountability Office has described determination and findings reports as written justifications that no other contract types are suitable.

“Even though the FAR [Federal Acquisition Regulation] does not require public release of the determination and findings (D&F) supporting the single award decision, in the interests of transparency, the Department will release this internal documentation with the final solicitation,” Baldanza told Bloomberg Government in a written statement.

Companies thinking about protesting can do so up until the bid deadline, which is typically 60 days after the final RFP is issued.

Would-be protesters have options in terms of venue and timing, said a long-time contracts attorney in Washington, who spoke on condition that he not be named.

Protests could filed at the DOD itself, the Government Accountability Office, or the U.S. Court of Federal Claims.

This attorney and another, each from firms known for their government contracts practices, said they have been approached by more than one contractor thinking of protesting the JEDI procurement—but were obligated to turn the business down because of conflicts with other firm clients that might also file protests.

The Public Interest

Federal regulations provide that no task or delivery order contract exceeding $112 million may be awarded to a single source unless several tests are met, including that only one source is qualified and capable of performing the work at a reasonable price, or, that a single award is “in the public interest.”

The Pentagon’s determination and findings document will need to meet such criteria, Angela Styles, a partner with the Bracewell law firm, told Bloomberg Government. Styles said she isn’t directly involved with the JEDI protest.

Styles said she’s seen these documents range from half-a-page to 10 pages.

One question protesters likely would ask is, is the final RFP too restrictive? If the terms inherently limit the competition to too few companies, said Styles, “you’re not allowing for full and open competition.”

Competitors of Amazon Web Services, which exclusively runs the cloud services for the CIA and other U.S. intelligence agencies, have said the DOD has wired AWS into the lead because the Pentagon will be restricting the competition to contractors that have met two specific security classifications.

Those classifications have only been met fully by AWS. They’ve also been partially met by Microsoft’s Azure Government operation.

Teaming Relationships

One prominent contractor official says JEDI protests aren’t a sure thing, and that regardless, they would be unlikely at least for some time after the final RFP is released.

The first two draft RFPs were “very complicated” and it’s unlikely the final version will be less so, Oracle Corp’s Senior Vice President for Government Affairs Ken Glueck told Bloomberg Government.

In addition, Glueck said, contractors will need to go through the nuances to see how the DOD is able to square its many statements that it wants a “single cloud,” and will award a single indefinite-delivery, indefinite-quantity contract—while at the same time stating in the second draft RFP that teaming relationships that include multiple cloud service providers are welcome.

In the end, said Glueck, Oracle officials are “concentrating less on protest possibilities and more on the best way to try to service the DOD with the best cloud technology in the market,” he said. “We are convinced that the competitive process will reveal to DOD that its single cloud approach is not the best way to modernize DOD technology or to provide the best, most accurate and timely information to the warfighter.”

Amazon’s ‘Superior’ CIA Offer

There is precedent for a single award to be given in response to a major cloud computing RFP—and for a protest to be filed in response.

The CIA selected Amazon and its $148 million offer to provide commercial cloud services instead of International Business Machines Corp.’s $94 million offer in 2012. Microsoft and AT&T Inc. also submitted unsuccessful bids.

IBM protested at the GAO, which ruled that it lacked sufficient information to conclude that the CIA evaluated offers on an equal basis, and recommended reopening the competition in June 2013. Amazon fought that decision, and convinced the U.S. Court of Federal Claims in November 2013 that it should be allowed to perform the contract.

The CIA didn’t commit any errors that were prejudicial to IBM. Amazon’s “offer was superior, and the outcome of the competition was not even close,” the court concluded.

By at least two recent accounts, the CIA appears happy with the venture. At an Amazon-sponsored event in Washington in June 2017, CIA’s CIO John Edwards said the Amazon deal “is the most innovative thing we’ve ever done.”