Law Street Media

Oracle Loses JEDI Appeal

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On Wednesday, the Federal Circuit issued an opinion denying Oracle’s appeal in its suit against the United States and Amazon Web Services, whereby Oracle challenged the Department of Defense’s (DoD) issuing of the $10 billion 10-year cloud-computing contract, entitled the Joint Enterprise Defense Infrastructure (JEDI), to Microsoft.

The suit went before Circuit Judges Newman, Bryson, and O’Malley; Circuit Judge Bryson issued the opinion. The Federal Circuit affirmed a lower court’s decision to reject Oracle’s protest finding that Oracle was not harmed by any potential errors the DoD made to develop the JEDI contract for a single entity instead of multiple providers, claiming that Oracle would not have qualified for the contract anyway because it did not satisfy several requirements. “Notwithstanding the extensive array of claims raised by Oracle, we find no reversible error in the Claims court’s decision,” Circuit Judge Bryson stated in the ruling.

In October Microsoft was awarded the contract over what was widely considered to be the market leader, Amazon Web Services, causing Amazon to sue the DoD, alleging that the Department failed to fairly judge the bid in part because of President’s Trump’s purported bias against Amazon and Amazon CEO Jeff Bezos; Amazon’s suit is still pending.

The JEDI contract is designed to help the DoD consolidate and improve its technology programs using secure cloud infrastructure. The contracting process has been entangled in conflict of interest claims. Specifically, Oracle averred that the DoD unfairly customized the requirements to suit Amazon and Microsoft and that former DoD employees went to work for Amazon after helping to create the bid.  

The DoD’s Inspector General stated that the Department followed all laws and regulations and that all of the bidders were fairly evaluated. Circuit Judge Bryson stated that “(t)he head of the agency—in this case, Under Secretary of Defense Ellen Lord—made a finding under section 2304a(d)(3)(B)(ii) that a single-source contract was permissible because the solicitation provides exclusively for firm, fixed price task orders, or delivery orders for services for which prices are established in the contract for the specific tasks to be performed.” The DoD also argued that choosing one vendor would minimize technical issues or security risks. The Federal Circuit stated that this reasoning was valid.

Oracle argued that the DoD “failed to properly balance the multiple-award preference against a single-award approach,” specifically claiming that it did not satisfy the exceptions. However, the lower court found that it did comply with the requirements and that the Department’s reasoning was logical; the Federal Circuit agreed with the lower court. Oracle insisted that if there were multiple providers the requirements would have been different and it may have qualified, but the DoD stated that its security minimums would not have changed, thus Oracle still would not have qualified; the courts agreed with the DoD’s position. The Federal Circuit found that the DoD “used competitive procedures”; thus, rejecting Oracle’s argument that the requirements were designed to only suit Amazon or Microsoft. The Federal Circuit found Oracle’s conflict of interest allegations “troubling,” but felt they “had no effect on the JEDI Cloud solicitation.” In sum, the Federal Circuit affirmed and held that Oracle was not harmed in the JEDI contract bid process or by alleged conflicts of interest because Oracle did not satisfy the requirements and would not have qualified to bid regardless.  

Oracle is represented by Arnold & Porter Kaye Scholer LLP. The Department of Justice’s Commercial Litigation Branch, Civil Division, represented the United States in the suit and Amazon Web Services was represented by Crowell & Moring, LLP with Gibson, Dunn & Crutcher LLP.

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