Oracle loses appeal in $10 billion Pentagon cloud-computing contract dispute

Facade with logo at regional headquarters of software company Oracle in San Jose. A U.S. appeals court has rejected Oracle's challenge to the Pentagon's $10 billion cloud-computing contract.
Smith Collection—Gado via Getty Images

A U.S. appeals court rejected Oracle Corp.’s challenges to the Pentagon’s disputed $10 billion cloud-computing contract.

Oracle had raised a number of issues, including allegations of conflicts of interest with Inc., and claims the Pentagon violated its own rules when it set up the contract to be awarded to a single firm. The U.S. Court of Appeals for the Federal Circuit affirmed a lower court ruling that Oracle wasn’t harmed by any errors the Pentagon made in developing the contract proposal because it wouldn’t have qualified for the contract anyway.

Oracle was fighting its exclusion from seeking the lucrative cloud-computing deal, known as the Joint Enterprise Defense Infrastructure, or JEDI. The Pentagon awarded the contract to Microsoft Corp. in October over market leader Amazon Web Services. The project, which is valued at as much as $10 billion over a decade, is designed to help the Pentagon consolidate its technology programs and quickly move information to warfighters around the world.

Oracle argued that the Defense Department unfairly and unnecessarily tailored the contract requirements for Inc. and Microsoft. The company also alleged that the bidding process was fatally tainted by conflicts of interest, including former Pentagon employees who went on to work for Amazon after helping to craft the bid.

“Notwithstanding the extensive array of claims raised by Oracle, we find no reversible error” in the U.S. Court of Federal Claims’s decision to reject those arguments, Circuit Judge William Bryson wrote for the three-judge panel.

Representatives from the Pentagon, Amazon, Microsoft and Oracle didn’t immediately respond to requests for comment.

The ruling is a win for the Pentagon, which over the last three years has faced criticism from lawmakers, industry and even President Donald Trump over it’s decision to choose just one company for the lucrative cloud deal. The Defense Department has said picking one vendor for the project will reduce its technical complexity and security risks.

The Pentagon also faces vendor bias allegations in a separate lawsuit by Amazon Web Services, Amazon’s cloud unit, which is suing the Defense Department over claims the Pentagon failed to fairly judge its bid because Trump viewed Amazon Chief Executive Officer Jeff Bezos as his “political enemy.” Trump has long criticized Bezos over everything from the shipping rates his company pays the U.S. Postal Service to his ownership of the Washington Post, which heavily scrutinizes his administration.

A judge in that case has yet to rule on most of the substance of Amazon’s lawsuit. The Defense Department’s inspector general found in April that the contract award wasn’t affected by any interference from Trump, though it said its probe was limited by the White House.

The case is Oracle America Inc. V. U.S., 19-2326, U.S. Court of Appeals for the Federal Circuit (Washington).

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