Bitter contracting fights are nothing new in Washington, yet they rarely sink to the level of personal innuendo and nastiness that have colored the cloud-computing competition.
A salacious dossier, a mystery client with an alias — they’re all part of the dirty-tricks campaigns unleashed over the last 10 months as some of the U.S.’ technology giants battle to win a $10 billion cloud-computing contract that the Pentagon plans to award to a single company, Bloomberg reports.
Allegations of a corrupt procurement process have been directed at Pentagon officials and company managers, primarily at Amazon.com, the front-runner for the contract known as JEDI, which involves transitioning massive amounts of Defense Department data to a commercially operated cloud system. Microsoft, International Business Machines and Oracle are the biggest names jockeying against Amazon, though there’s no evidence they are behind the mudslinging.
Those companies do, however, vigorously oppose the Pentagon’s winner-take-all approach, arguing that it will amplify security risks and lock the agency into a single technology provider for many years.
One Oracle critic, Floyd Price, a former Pentagon spokesman who has been an Amazon consultant, says he sees the hand of Oracle, with millions of dollars’ worth of defense business on the line, behind the 33-page anti-Amazon dossier circulating in Washington, D.C.
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Kenneth Glueck, the senior vice president who oversees Oracle’s government relations in D.C., wouldn’t respond to the allegation but said the company’s interest is in competing for the contract “with the best, next-generation cloud technology at the best price.”
Bitter contracting fights are nothing new in D.C., yet they rarely sink to the level of personal innuendo and nastiness that have colored the cloud-computing competition. Companies such as Lockheed Martin and Boeing have been known to vie for a multibillion-dollar contract one month and bid together the next.
Not this time. One version of the dossier, which was obtained by Bloomberg, suggests that corporate executives, including one at Amazon, engaged in improper personal relationships and that Defense Department officials participated in shady activities, all of which gave Amazon an edge.
The document relies on photos, charts and public records in an attempt to portray a web of conflicts to cast doubt on the integrity of the cloud procurement. It does contain certain accurate information regarding connections between industry executives and Defense Department officials, but offers no real proof that those relationships corrupted the process.
The dossier, for example, implies that Sally Donnelly, a top aide to Defense Secretary Jim Mattis, unfairly shaped the contract in favor of Amazon Web Services, the Seattle company’s cloud unit. AWS had been a client of Donnelly’s at a company she owned but sold just before she went to work for Mattis.
Donnelly’s lawyer, Michael Levy, said she had nothing to do with the contract. “She played no role, and exercised no influence, in connection with any government contract, including — as the Department of Defense has confirmed repeatedly — the JEDI contract,” Levy said.
The document was shopped around by RosettiStarr, a Bethesda, Maryland-based private-investigations company, according to Nextgov, a government information-technology website. An article posted on the Nextgov website in August said RosettiStarr declined to reveal who paid for the dossier’s compilation. RosettiStarr didn’t respond to Bloomberg requests for comment or a copy of the dossier.
Some of the allegations verge on the preposterous, suggesting, for example, that an Amazon executive’s son’s Facebook friendship with the entrepreneur who bought Donnelly’s company constitutes evidence of corruption.
“I have been in and around this market for 30 years,” said Stan Soloway, who was a deputy undersecretary of defense under President Bill Clinton and is now president of a D.C.-area consulting firm, Celero Strategies. Having read news articles about the document, he said: “I’ve never seen anything like this dossier, these allegations and all these rumors.”
A spokesman for Amazon Web Services denied the company had an unfair advantage. “We don’t comment on rumors or speculation,” a Microsoft spokeswoman said. IBM declined to comment.
Pentagon spokeswoman Heather Babb said in a statement that the procurement “has been open and transparent, and followed a thorough, data-driven process involving robust industry feedback.” Babb also said Donnelly wasn’t involved at all and that “no vendors have been preselected.”
The nastiness began months before the Defense Department had even released the final solicitation for the contract in July with a name evoking “Star Wars”: the Joint Enterprise Defense Infrastructure cloud.
Floyd, the Oracle critic who was an executive at Donnelly’s firm, SBD Advisors, started fielding questions from reporters about the dossier in the spring and concluded that someone was waging an undercover campaign. It seemed the goal was to show that Donnelly and her firm somehow had rigged the cloud contract for Amazon, Floyd said. And at first glance, their role might raise questions.
From January 2017 to February 2018, Donnelly was one of Mattis’ most-trusted advisers. She previously had run the D.C. office for the U.S. Central Command when Mattis ran Centcom in the Barack Obama administration. Her associate at SBD Advisors, Anthony DeMartino, joined her at the Pentagon. Both disclosed that SBD had been a paid consultant to Amazon. They helped craft messaging and marketing strategies in 2016 for potential Defense Department cloud-computing deals, Floyd said. DeMartino declined to comment.
Seven months into Donnelly’s 13-month tenure at the Pentagon, Mattis visited Amazon’s Seattle headquarters, where he met with Chief Executive Officer Jeff Bezos.
Three months later, the Pentagon indicated that it wanted its massive cloud contract to go to a single company. And once the formal solicitation appeared, it contained technical capabilities that only Amazon had achieved, such as having clearance to host secret data within six months of receiving the award.
But the dossier skips or plays down important facts, and misconstrues others. It assumes, for example, that Donnelly still had a stake in her company when she went to work for Mattis, based on her financial disclosure form showing she had received partial payment for it.
After subsequently receiving additional payments, she updated her disclosure form to reflect that. Donnelly also reported her past work for Amazon. She has now left the Pentagon and started a new consulting firm.
Because of their previous Amazon work, Donnelly and DeMartino would have needed conflict-of-interest waivers if they were going to be involved in decision-making on the JEDI procurement. They didn’t seek waivers, according to the Pentagon. Since Donnelly wasn’t involved in the project, her lawyer said, she never felt the need for a waiver.
The dossier also leaves out that Amazon had already won a $600 million cloud contract from the Central Intelligence Agency in 2013, showing that the Seattle-based company can manage and keep secure sensitive government data.
In the spring and summer of 2018, Floyd suspected the anti-Amazon effort took a more ominous turn. He said former interns of SBD Advisors were contacted via LinkedIn and peppered with questions about the firm’s work with Amazon. The people who contacted the interns had no other internet presence beyond their LinkedIn profiles, leading Floyd to suspect they were fake.
In May, Floyd said, things got truly bizarre. A tall, stocky man turned up unannounced at his firm’s offices in downtown D.C. The young man introduced himself as an employee of a Maryland security company and said his client, a wealthy Middle Easterner, needed help with some technology challenges.
At first, Floyd said, he didn’t doubt the visitor’s intentions, even when he started asking about past Amazon work by Floyd’s company and its connections to former Pentagon officials. Floyd later learned the visitor had given him a fake email address and that no one by that name worked for the Maryland security firm he supposedly represented. Floyd now thinks the man was an operative investigating Donnelly’s old firm as part of the smear campaign.
Allegations and innuendo continue to swirl around the JEDI bid, which is proving to be one of the Pentagon’s most controversial technology procurements. Now all eyes are on which company will win the prize. A decision is expected by April 2019.
“For the winner, it’s a major opportunity to establish a foothold in the federal market. So it’s not surprising that incumbents would fight tooth and nail to protect their business,” Bloomberg Government analyst Chris Cornillie said in an email. “That said, the extent to which the competition has gotten personal would seem unusual for an IT contract.”
— Bloomberg News