Amazon wins stay on $10 bn US military contract for Microsoft

The temporary injunction, issued US judge Patricia Campbell-Smith, bars the Department of Defence from starting work on the contract known as JEDI as requested by rival Amazon Inc, according to a summary of the ruling available online.

A court notice announcing the injunction was filed on Thursday but details of the ruling weren’t available as the documents were sealed.

The Joint Enterprise Defense Infrastructure, or JEDI, cloud contract was awarded to Microsoft last October. The contract, which is intended to modernize the Pentagon’s IT operations, could be worth up to $10 billion for services rendered over as many as 10 years. 

Amazon, which has alleged vendetta by President Donald Trump to shut it out of the deal, is also seeking testimony from the president and other top officials on the reasons for awarding the $10 billion cloud computing contract to Microsoft.

Amazon has been saying that it was driven in part by Trump’s bias against the company. Trump often criticises Amazon and its CEO Jeff Bezos, who also owns The Washington Post, claiming the newspaper unfairly covers his administration.

Last month, Amazon’s cloud-computing arm, Amazon Web Services, filed a motion asking the court to pause Microsoft’s work on the $10 billion cloud contract.

Amazonn’s cloud-computing arm, Amazon Web Services, has been instructed to earmark $42 million for any “costs and damages” that could be incurred in the event that the “injunction was issued wrongfully,” the filing states. Amazon must file a notice with the courts indicating it has obtained the $42 million by 20 February. Microsoft and Amazon must respond to the filing by 27 February.

A CNBC report citing Frank Shaw, Microsoft’s corporate vice president of communications, as saying that the Department of Defense awarded the contact after a detailed and fair process for determining the needs of the defence forces.

“We are disappointed in today’s ruling and believe the actions taken in this litigation have unnecessarily delayed implementing DoD’s modernization strategy and deprived our warfighters of a set of capabilities they urgently need. However, we are confident in our award of the JEDI cloud contract to Microsoft and remain focused on getting this critical capability into the hands of our warfighters as quickly and efficiently as possible,” Department of Defense spokesperson Lt Col Robert Carver said.

Last month, AWS filed a formal motion asking the court to pause Microsoft’s work on the JEDI cloud contract, claiming the evaluation process included “clear deficiencies, errors and unmistakable bias.” The court granted that motion on Thursday.

Court documents filed last December alleged Trump launched “behind-the-scenes attacks” against the company, which caused it to lose out on the cloud contract. AWS has called for the Defense Department to terminate the award and conduct another review of the submitted proposals.

Earlier this week, Amazon said in newly unsealed court documents that it’s looking to depose Trump, Defense Secretary Mark Esper and former Defense Secretary James Mattis as part of its protest of the JEDI cloud contract award. Amazon argues that it needs to hear from Trump to learn the scope of his involvement in the bidding process.

Amazon’s top spokesperson Jay Carney told CNBC on Wednesday that the company is protesting the decision to make sure the award process was “free of political interference.”

Microsoft has been staffing up in preparation for working on the JEDI project, despite Amazon’s protest. The company made attempts to lure talent from defense contractors and other companies, while there were numerous job openings for people with security clearances. Brad Smith, Microsoft’s president and chief legal officer, told CNBC that the company was “moving even faster” since the JEDI contract was awarded.