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Oracle Loses Final $10B JEDI Cloud Contract Appeal

The long-running battle focusing on the military’s relationship with Amazon Web Services continued even after Amazon lost the potentially $10 billion enterprise cloud transformation contract to Microsoft, and launched its own challenge to the DoD’s procurement process.

Oracle has lost its final legal challenge to the process by which the U.S. Department of Defense solicited proposals, and rejected vendors, for the potentially $10 billion JEDI cloud transformation contract.

The United States Court of Appeals for the Federal Circuit released a decision Wednesday finding no grounds to reverse a lower court’s ruling, “notwithstanding the extensive array of claims raised by Oracle” of an illicit procurement process designed to favor Amazon Web Services.

The appellate decision in the lawsuit filed initially against the federal government, then voluntarily joined by AWS as a co-defendant, removes one potential impediment to implementation of the military’s massive Joint Enterprise Defense Infrastructure cloud transformation initiative that Microsoft has tentatively won, but remains in legal limbo.

Oracle declined to comment on the ruling.

[Related: Microsoft Looks To Forge JEDI-Style Cloud Deals With Foreign Governments: Report]

While Oracle’s arguments against the government squarely focused on claimed improprieties involving AWS, AWS in turn is fighting its own legal battle—initiated after the lower court ruling in the Oracle case—against the government to block the award to Microsoft.

A military re-evaluation prodded by Amazon’s challenge, which argued interference from President Donald Trump corrupted the procurement process, could come any day now.

More than a year ago, U.S. Court of Federal Claims Judge Eric Bruggink ruled against Oracle, and in favor of the government and AWS, which joined the case to protect its own interests.

Bruggink found the decision to pursue a single cloud vendor for the award was justified by the military’s specific needs, and not in violation of a federal law intended to promote large federal contracts broken up to multiple vendors.

Bruggink also wrote that DoD procurement officers could enforce a specific “gate criteria” for ”high availability and failover”— one that Oracle argued exceeded the military‘s needs. Oracle conceded it could not meet that threshold when it submitted its bid a year earlier, the judge noted.

Oracle argued to the appellate court the criteria was unreasonable in light of the Pentagon’s actual needs, and unfairly restricted competition.

“We are even more removed from a detailed assessment of the needs of the procurement than the Claims Court and therefore are even more hesitant to override the agency’s judgment as to its needs,” wrote Judge William Curtis Bryson for the three-member appellate panel.

The appellate court also found no reversable error as to how Bruggink handled Oracle’s claims that conflicts of interest involving three military officials with ties to AWS--Deap Ubhi, Anthony DeMartino, and Victor Gavin—corrupted the process.

The lower court did identify improprieties around those relationships, but it concluded they did not affect the process by which gate criteria were crafted, bids were solicited for JEDI, and Oracle, as well as IBM, were first eliminated from contention because of their failure to meet those criteria.

The three judges who heard the appeal did not agree with Oracle’s interpretation of a case it offered as legal precedent for a reversal.

“We therefore reject Oracle’s argument that the conflicts of interest in this case invalidate the solicitation regardless of whether they had any effect on the procurement,” Bryson wrote.

In response to that decision, a Defense Department spokesperson said: “the Court of Appeals for the Federal Circuit (CAFC) affirmed the Court of Federal Claims decision rejecting Oracle’s pre-award protest of the JEDI Cloud solicitation. The CAFC ruling does not contradict what other independent inquiries found with respect to their reviews of DoD’s approach to a single-award JEDI Cloud contract. CAFC also upheld the lower court’s determination as to the Department’s conclusion that none of the alleged conflicts of interest had an impact on the integrity of the procurement.”

In Amazon’s separate case challenging Microsoft’s win, Judge Patricia E Campbell-Smith, who sits on the United States Court of Federal Claims, granted a temporary restraining order back in February preventing Microsoft from moving forward with task orders and substantial implementation work.

After that ruling, Judge Campbell-Smith allowed the military a period of remand to “reconsider certain aspects” of how it evaluated bids from both companies—the judge stopped her own evaluation after identifying a single flaw involving nearline storage capabilities.

Military officials have not made clear the extent of their evaluation, though they have resisted looking again at any other of the eight criteria in the RFP that JEDI bidders were required to meet, even though AWS argues six were improperly evaluated.

Pentagon CIO Dana Deasy said at the end of July that “very public” process in which the judge asked military officials to look at a single section of the RFP solicitation would be wrapped up by the end of August. The military later requested another 30 days to finish that work.

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