US defense chief rejects Amazon's accusations of bias in cloud contract

Credit: REUTERS/POOL

By Phil Stewart

SEOUL, Nov 15 (Reuters) - U.S. Defense Secretary Mark Esper on Friday rejected any suggestion of bias in a Pentagon decision to award Microsoft Corp MSFT.O an up to $10 billion cloud computing contract, after Amazon.com Inc AMZN.O announced plans to challenge it.

"I am confident it was conducted freely and fairly, without any type of outside influence," Esper told a news conference in Seoul.

Amazon says that politics got in the way of a fair contracting process. President Donald Trump has long criticized Amazon and its founder Jeff Bezos.

In a company-wide meeting on Thursday, Amazon Web Services' chief executive Andy Jassy said it would be challenging for a U.S. agency to award a contract objectively when the president is disparaging one of the contestants, according to an Amazon spokesman.

Amazon was considered a favorite for the contract, part of a broader digital modernization process of the Pentagon, before Microsoft emerged as the surprise winner.

In October, Esper removed himself from reviewing the deal due to his son's employment with one of the original contract applicants, IBM Corp IBM.N. IBM had previously bid for the contract but had already been eliminated from the competition.

Esper's said he was unaware of Amazon's specific accusations. His remarks followed a question about whether Trump asked the Pentagon to "bypass Amazon" for the contract.

A challenge to the Defense Department's award announced last month was widely expected by legal experts, analysts and consultants, especially after Trump publicly derided Amazon's bid for the high-stakes contract.

Trump had said in August that Amazon's bid for the Joint Enterprise Defense Infrastructure Cloud, known as JEDI, contract was under review by his administration after complaints from other companies.

In a new book, retired Navy commander Guy Snodgrass, who served as a speech writer to former Defense Secretary Jim Mattis, said Trump called Mattis and directed him to "screw Amazon" by preventing it from bidding on the JEDI contract, according to an excerpt of the book.

"We’re not going to do that," Mattis later told other Pentagon officials, according to the excerpt.

"This will be done by the book, both legally and ethically."

(Reporting by Phil Stewart Editing by Muralikumar Anantharaman, Robert Birsel)

((phillip.stewart@thomsonreuters.com; 1-202-898-8398; Reuters Messaging: phillip.stewart.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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