Trump vs. Amazon: Judge Orders Delay In JEDI Contract Amid Challenge To Microsoft

A federal judge Thursday sided with Amazon (AMZN), ordering a halt to work on a $10 billion cloud-computing Pentagon contract awarded to Microsoft (MSFT) until a challenge can be adjudicated.

The sealed ruling involves the 10-year Joint Enterprise Defense Infrastructure – JEDI – cloud-computing network. The project had been scheduled to go live Friday.

Judge Patricia E. Campbell-Smith ordered Amazon to deposit $42 million with the court to cover any damages should the case be decided in Microsoft’s favor.

“While we are disappointed with the additional delay we believe that we will ultimately be able to move forward with the work to make sure those who serve our country can access the new technology they urgently require,” Frank X. Shaw, Microsoft’s vice president of corporate communications, said in a statement. “We have confidence in the Department of Defense, and we believe the facts will show they ran a detailed, thorough and fair process in determining the needs of the warfighter were best met by Microsoft.”

Pentagon spokesman Lt. Col. Robert Carver said the Defense Department would have no comment.

Amazon, which had been considered a frontrunner for the contract, filed suit in the Court of Claims after the contract was awarded in November, alleging President Trump’s interference in the evaluation process was unfair. The suit alleges Trump waged a behind-the-scenes campaign against Amazon because of a grudge against owner Jeff Bezos, who also owns the Washington Post.

Defense Secretary Mark Esper recused himself from the contract process, citing his son’s employment with IBM.

Amazon says the Pentagon made numerous errors in its evaluation process.

The JEDI project already is a year behind schedule in part because of an earlier challenge filed by Oracle (ORCL) after the Pentagon named Amazon and Microsoft the finalists for the contract. The Pentagon considers the cloud-computing project essential for national security. The Pentagon estimates the latest challenge will cost as much as $7 million a month.

“Delaying implementation of a cloud solution will negatively affect DoD’s efforts to be victorious in contested environments and retain global influence over our near-peer competitors,” Air Force Lt. Gen. Bradford Shwedo said in a court filing. Shwedo is in charge of command, control, communications and cyberinitiatives at the Defense Department.

Much of the military currently works with computer systems designed in the 1980s and ‘90s that have trouble interfacing with each other.