Judge’s Ruling Clears Way For Pentagon Technology Contract

A federal judge has ruled that a large technology contract from the Department of Defense can be awarded after finding that the agency structured the contract in accordance with the law. The contract had been held up by allegations from Oracle Corp. (NYSE: ORCL) that the contract was unfairly biased due to conflicts of interest. Those allegations were deemed unfounded.

The contract at the center of the dispute is the joint enterprise defense infrastructure, or JEDI, contract. The JEDI contract is meant to bring the military into the modern era of cloud computing, allowing it to store and crunch vast amounts of classified data. The technology can also be used for strategic war games, war planning, and enhancing fighting capabilities. The $10 billion contract is considered the one of the largest technology contracts from the Pentagon in history.

The Pentagon plans to award the project to only one cloud vendor. In April, the Pentagon determined that only Microsoft and Amazon had the ability to deliver the project, even though Oracle and IBM had also bid on the project. Before the bidding window ended, Oracle formally complained about the decision and the measures the Pentagon used to evaluate bidders.

Oracle complained that the way the Pentagon structured JEDI favored Amazon Web Services, the largest cloud services provider. Oracle also argued that a little-known entrepreneur, Deap Ubhi, who worked for Amazon before he joined the Pentagon worked on JEDI before he returned to Amazon and was central to the Pentagon’s decision to hire a single cloud provider. Investigations determined that Mr. Ubhi did not improperly influence the contract.

When Oracle’s allegations were dismissed by the Pentagon’s internal reviews, then by the Government Accountability Office, the company escalated its claims to the United States Court of Federal Claims. Federal Claims Court Judge Eric Bruggink found that the previous findings “were not arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law.” The ruling clears the way for the Pentagon to choose between Amazon and Microsoft for the project. The contract is expected to be awarded in late August.