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Amazon Prepares to Go to War With Trump Over JEDI Award

By Lou Whiteman – Feb 10, 2020 at 2:25PM

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The tech giant believes the president improperly interfered to prevent Amazon from winning a $10 billion Pentagon contract.

Amazon.com (AMZN -0.54%) is ready to go to war with Washington to try to overturn a $10 billion government cloud computing contract award, asking the U.S. Court of Federal Claims for authorization to depose President Donald Trump, Secretary of Defense Mark Esper, and former Defense Secretary James Mattis as part of its attempt to prove Trump intervened in the awarding of the Joint Enterprise Defense Infrastructure (JEDI) contract.

The Pentagon's October award of the JEDI contract to Microsoft (MSFT -0.97%) raised some eyebrows at the time, as Amazon was considered the front-runner by most analysts. Amazon in November filed suit to try to reverse the award, claiming that Trump's long-standing feud with Amazon and its CEO Jeff Bezos caused him to get involved and steer the contract to Microsoft.

Graphic illustration of a secure tech cloud.

Image source: Getty Images.

Defense contractors routinely filed protests over major winner-take-all awards and have a decent track record in overturning decisions or at least reopening competitions. That said, it would be unheard of for a company to depose a sitting president over a contract dispute, and it seems unlikely the court would allow Amazon to depose Esper either.

The Pentagon did not comment on the request, although the department has defended its decision to choose Microsoft on industrial grounds and said there was no political interference. Microsoft CEO Satya Nadella has repeatedly argued that his company won because it offers a more complete set of tools for the government, including its hybrid computing platform, artificial intelligence work, and data management tools.

Microsoft also partnered with Oracle after that company was eliminated from the JEDI competition, a shrewd move that likely helped it to the win. Critics of the Pentagon's JEDI approach had argued the government would need to spend millions to simply redesign legacy Oracle databases to move the data to the cloud. With Oracle on board, Microsoft was able to offer a more seamless transition from the legacy systems to the cloud.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and Microsoft and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft. The Motley Fool has a disclosure policy.

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