BLOG: Court of Federal Claims Denies Oracle Protest of JEDI Contract: Is This It For Oracle?

July 26, 2019

By Lauren Brier
Practice Areas: Government Contracts Law and Litigation & Dispute Resolution

The Department of Defense (“DoD”) first released the Joint Enterprise Defense Infrastructure (“JEDI”) cloud contract on July 26, 2018. One main purpose of the JEDI contract, as listed in the DoD’s published “Determination and Findings,” was to acquire foundational commercial cloud technologies that would “enable war fighters to better execute a mission that is increasingly dependent on the exploitation of information.” With this purpose in mind, the DoD made a controversial decision to move forward with a single-award approach to procure its cloud technologies, a critical decision that has since stymied the JEDI procurement. Most recently, the U.S. Court of Federal Claims dismissed a pre-award protest of the DoD’s decision to make a single-source award, which has since allowed the JEDI contract to move forward. Microsoft and Amazon are the only two viable offerors that remain capable of receiving the award. The DoD’s decision to award to only one of these large vendors could form a trend for agencies to move away from multicloud strategies. It will be important for cloud vendors to keep an eye on whether JEDI succeeds in its base period, as it will likely shape other agencies decisions on whether a single-award approach for future cloud strategies is a trend worth following.
 
Back in August of 2018, Oracle Corp. filed a formal pre-award protest with the Government Accountability Office (“GAO”), challenging the DoD’s $10 billion JEDI cloud contract. Oracle’s protest, inter alia, challenged the DoD’s decision to award the contract to a single company, claiming in part that a sole source award was anti-competitive and ran against the U.S. government’s best practice of full and open competition. In addition, Oracle claimed the DoD failed to properly consider potential conflicts of interest related to the procurement and Amazon Web Services. Underlying this argument was a belief amongst cloud industry leaders that Amazon Web Services was the predetermined awardee for JEDI, specifically due to the cloud contract it currently holds with the Central Intelligence Agency (“CIA”). The DoD defended its decision to pursue a single-award approach, claiming it was consistent with applicable statutes, and in particular, avoided creating an unnecessarily complex infrastructure prone to cyberattacks across multiple vendors. Ultimately, the protest was denied by the GAO. GAO concluded, inter alia, that DoD’s decision to move forward with a single-source award was consistent with applicable statutes and that Oracle’s conflict of interest allegations were unfounded. Further, GAO concluded that the DoD provided “reasonable support for all of the solicitation provisions that Oracle contended exceeded the agency’s needs.”
 
Despite GAO’s decision denying the protest, on or around December 6, 2018, Oracle filed its protest with the Court of Federal Claims (“COFC”); reiterating its challenges to the procurement, while ramping up its claims of conflict of interest against Amazon. In its filings before the COFC, Oracle alleged more facts pertaining to various DoD procurement officials and their seemingly unsavory connections to Amazon Web Services. Oracle also claimed it was removed from competition based on unfair “gate criteria” included in the procurement and that only two large cloud companies – Microsoft and Amazon – could satisfy such criteria, further restricting competition. Throughout months of back and forth briefing and oral argument, the DoD’s position did not change. Rather, DoD officials remained staunch in their belief that the procurement ensured a fair and open process.
 
On July 12, 2019, a little less than a year after the release of the final RFP, COFC Senior Judge Eric Bruggink issued a two-page ruling granting the DoD’s motion for judgment on the administrative record. Judge Bruggink’s cursory ruling, which is to be followed up by an impending supplementary opinion, succinctly found that the gate criteria were enforceable, and that Oracle’s inability to satisfy such criteria prevented Oracle from alleging other possible errors in the procurement process. Further, Judge Bruggink found Oracle’s claims of organizational conflict of interest did not impact the procurement. In conclusion, Judge Bruggink deferred entry of final judgment pending the issuance of his supporting opinion.
 
Now with Judge Bruggink’s supplementary opinion pending, many wonder whether Oracle is going to appeal Judge Bruggink’s decision to the Federal Circuit. Oracle will be hard pressed to make a decision soon considering its loss of future business with DoD, and the fact that DoD recently confirmed its plans to issue an award toward the end of August. Meanwhile, the ring is set for Microsoft and Amazon to duke it out, depending on whichever one is denied this lucrative project. No matter what happens, it will be months before any company begins performance on the JEDI contract as it is highly likely that a post-award protest will be filed by one of these soon-to-be unhappy juggernauts.
 
For more information on this topic, please contact a member of PilieroMazza’s Government Contracts Group or Claims and Appeals Group.
 
Lauren Brier, the author of this blog, is a member of the Firm’s Government Contracts Group.
 
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