Microsoft: Amazon AWS lost the DoD JEDI contract because of its high pricing

April 16, 2020
Microsoft JEDI DoD

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Yesterday the Inspector General for the Department of Defense released a report about the JEDI contract. Inspector General found that DoD’s decision to award the contract to Microsoft was consistent with applicable law and acquisition standards. You can read more details on the report here.

Microsoft yesterday published a blog post to share its views on Amazon’s litigation on the award of the contract. Here’s the summary of the blog post:

  • A company like Amazon that bid high and lost, now get a do-over, especially now—as the IG’s report makes clear—Amazon received additional proprietary information about Microsoft’s bid that it should never have had. That’s what Amazon wants.
  • Companies seeking to do business with the federal government offer their best price from the beginning. They can’t offer a higher price in the hope they’ll win the bid anyway, and then turn around and ask to bid again if they lose.
  • Microsoft won the JEDI contract because the Department of Defense found that we offered “significantly superior” technology at a better price.
  • Amazon now wants no “constraint on the offerors’ ability to revise their pricing.” This, according to the government, is a “a transparent effort to undercut Microsoft on price, now that [Amazon] has a target at which to aim.”
  • Government’s brief says the following: “That AWS now regrets its pricing strategy is no reason to allow AWS a do-over, after it gained significant information about its competitor’s pricing, enabling it to use the currently prevailing information asymmetry to underbid its competitor in an effort to secure the contract.”
  • Now that Amazon has this retained knowledge of Microsoft’s proprietary information, a complete re-do can only hurt Microsoft and benefit Amazon.
  • The JEDI procurement has lasted more than two years. The DoD reviewed Microsoft’s bid against eight distinct evaluation factors and 55 individual sub-factors. The department subjected its products and services to four individual test scenarios, which were composed of more than 78 individual steps. The result? Microsoft were rated equal or superior to Amazon in every evaluation factor.
  • There is a simple explanation for Microsoft’s victory – the strength of our technology, and our willingness to listen to and respond to our potential customers.
  • Microsoft invested significant time and engineering resources into its products, to demonstrate for DoD that it is capable of meeting their criteria at the best price point.
  • Amazon would have you believe that it lost the award because of bias at the highest levels of government. But Amazon, alone, is responsible for the pricing it offered.  
  • As the government explained in its brief: “AWS and Microsoft each had a fair chance to build pricing for the entire procurement, based on their overall business pricing.”  Amazon did build its pricing for the entire procurement, and it wasn’t good enough to win.  And now it wants a re-do.  That’s not good for our war-fighters.  That’s not good for confidence in public procurement. That’s not good for anybody but Amazon.

Source: Microsoft

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