Amazon Web Services, Inc. (Amazon) has claimed in a lawsuit in the United States Court of Federal Claims that unlawful intervention by President Donald Trump deprived it of a $10 billion decade-long contract with the Department of Defense (DoD) for a cloud computing system known as the Joint Enterprise Defense Infrastucture (JEDI). Long considered the favorite, Amazon nevertheless lost the award to Microsoft Corp. in a competitive bidding process that Amazon claims was arbitrary and capricious and tainted by President Trump’s open feud with Amazon company founder Jeffrey Bezos.
Dan Kelly, Alexander Major and Franklin Turner, nationally recognized commentators and practitioners in the federal bid protest arena, will unpack what we know about Amazon’s case, and discuss the possible grounds, laws and regulations governing mandates for competitive contracting by federal agencies.
Alexander Major, Partner and Co-Leader of Government Contracts & Export Controls Practice Group, McCarter & English LLP
Franklin Turner, Partner and Co-Leader of Government Contracts & Export Controls Practice Group, McCarter & English LLP
Moderator: Daniel Kelly, Partner, Government Contracts & Export Controls Practice Group, McCarter & English LLP
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Operator: Welcome to The Federalist Society's Practice Group Podcast. The following podcast, hosted by The Federalist Society's Administrative Law and Regulation Practice Group, was recorded on Tuesday, January 21, 2020 during a live teleforum conference call held exclusively for Federalist Society members.
Wesley Hodges: Welcome to The Federalist Society's Teleforum Conference Call. This afternoon's topic is titled “Amazon's Case Against President Trump: Did DoD Unfairly Give Microsoft the Right to be the JEDI Master.” My name is Wesley Hodges and I'm the Associate Director for Practice Groups at The Federalist Society.
As always, please note that all expressions of opinion are those of the experts on today's call.
Today we are very fortunate to have with us a great panel to discuss this topic, and our moderator is Dan Kelly, who's a Partner in the Government Contracts & Export Controls Practice Group at McCarter & English. After our speakers have their remarks, we will have time for your questions, so please keep in mind what you'd like to ask for the later parts of the call. Thank you very much for sharing with us today. Dan, the floor is yours.
Dan Kelly: Thanks so much, Wesley. And we're happy to be here. Pleased to introduce two of my partners, Alex Major and Franklin Turner who lead Government Contracts & Global Trade Practice at McCarter & English. It's fair to say that Alex and Franklin have a great deal of experience in bid protest, which is what this matter is about, and I'm very anxious to hear their comments and concerns with regard to the award to Microsoft and the protest by Amazon. So we're the Government Contracts guys. We have had the pleasure of doing one of these teleforums before. We talked about DoD's encroaching arm with regard to cybersecurity mandates on its government contractors and the entire DoD supply chain. That continues and remains an ever-interesting topic. And I'd ask you to check our website at mccarter.com on recent events concerning cybersecurity.
But here, today, we're talking about one of the largest contracts the DoD has ever issued and that is a $10 billion, 10-year contract called the Joint Enterprise Defense Infrastructure contract, JEDI. I'm sure you may have some Star Wars jokes during the course of this hour. It was issued, the contract was issued to Microsoft by means of an announcement that took place on October 25th. I think the award was made about 10 days before that. I thought we could start maybe by talking about the nature of the contract itself, what DoD, the Department of Defense is seeking, and then the rules governing DoD and going out and procuring these services. So, Alex, do you want to take a shot at describing the initiative that DoD began back in September to upgrade its Cloud computing?
Alex Major: All told, what DoD is trying to do, is they are trying to bring into house, or under one roof, all of its cloud computing. As everybody probably knows, or as a lot of people know, especially in the government contract space, what's been going on since around 2010, 2012, the whole concept of Cloud First, the government has really been pushing for more and more express and explicit use of cloud services. This has been, probably, a long time coming. It's been a long time being fought. The concept here is to try to bring in a service under one program, under one mechanism: cloud services for the entire Department of Defense. In this spectrum of, like as you were saying, one of the largest programs contemplated by DoD today.
Dan Kelly: And that would house, not only unclassified information, but secret and top-secret information. And as I understand it, they're asking for enhanced and advanced data analytic capabilities, like machine learning and artificial intelligence. It's a really complex contract. Is that fair to say?
Alex Major: Extremely. And what's interesting about anything like that is, anytime you're dealing with any sort of IT infrastructure, I mean, that's what you're talking about, especially for something, you're looking at the IT backbone of the Department of Defense. They need to make sure that whatever they receive is not only effective with today's technology, but receptive of what's coming down the road and down the pike.
So right now, it's something that the DoD has often struggled with, in terms of making sure that they had, one, I'm going to say unified infrastructure, architecture that they can plug and play. It's been something that the service has been dabbling from my time back in the military, all the way to today. So they're still working on trying to integrate, not only the new stuff, but also the old stuff, so that everybody across all services are happy. And as anybody that deals with the Department of Defense knows, that is a very, very wide swath of people and interests.
Dan Kelly: Even though this is a big whopper of a contract, DoD is still bound by the same statutes and regulations which govern the procurement of goods and services for anything it might attempt to procure. So I thought it might make sense, for the listeners, for us to talk about what the rules are. Because it's a violation of those rules that Amazon is now asserting, and it's challenged this award to Microsoft. So, Franklin, you want to give us a little bit of background on the Competition in Contracting Act. And in particular, the form of procurement or of solicitation that was used in this case.
Franklin Turner: So the Competition in Contracting Act is known, I think, affectionately as CICA, for the folks who work with it every day. And the purpose of it is to ensure free and open competition. And ultimately the goal that the Department of Defense wants, or any procuring executive agency, is to receive the best value from the competitors, right? Now there are exceptions to free and open competition. There's sole source contracting, which is not the subject of today and which I won't really get into. But this was a competition that was open to qualified offerors, to qualified companies who were governed by the requirements of the Federal Acquisition Regulation at Part 15. And the goal here, as I said, is for the government to get the best value.
Now what does best value actually mean? That's a question that, I think, is asked just about every time the government issues a source selection under FAR Part 15. The purpose of a best value procurement is for the government to get the right mix, in the government's view, of whatever the actual requirement is of the expertise from the offerors to serve the most effective solution for the government, right, to provide the most effective solution. And there is no absolute answer as to what constitutes the best value. It's a subjective assessment. It's a tradeoff. When the government looks at an offeror's proposal, they evaluate it against the criteria set forth in the solicitation, which here, there were nine separate evaluation factors, I believe. And they decide which proposal, for lack of a better term, really hits the mark with respect to each of the factors. Then the factors vary widely from solicitation to solicitation. In this one, as I said, there were nine, including the price, and then all sorts of other things. Everything from the technical aspect, to the logical isolation and secure data transfer capabilities, to tactical edge, to small business participation approach, etc.
Dan Kelly: Let's break that down a little bit. So when Alex mentions Part 15, he's talking about Part 15 of the Federal Acquisition Regulation, which is codified at Title 48 of the Code of Federal Regulations. The government doesn't necessarily have to use Part 15 there. It can, as Franklin mentioned, issue a sole source procurement. It can use Part 14, which is called sealed bidding, where price is the only determinative factor, as long as the offerors, or the bidders, are responsible contractors. But in this case, they've chosen Part 15. So under Part 15, does the lowest price win?
Franklin Turner: No. Not all the time. There's a lot of law out there, and we'll talk about the various fora later, where you actually see this law come out. It comes out, primarily at 2:4. It's either going to be a GAO, which is the Government Accountability Office, or the Court of Federal Claims. Those are the primary, for law, that interprets the extent to which the government conducted a best-value acquisition in the, quote/unquote, "right way." It does not have to be the lowest price, at all, Dan. It can be a higher price, higher technically rated offeror. That's entirely consistent with a procurement under FAR Part 15.
Dan Kelly: Right and the solicitation, or the RFP, the request for proposals in this particular procurement that was issued back in July of 2018, the solicitation in sections L and M, those are the sections which deal with how the government is going to actually procure the services and goods that are identified in the scope of work in the solicitation. There was a definitive statement that technical factors would be more important than price. I mean, one thing that bid protest lawyers focus on, and what the lawyers representing Amazon have focused on in their 120 -- what is it, 103-page complaint they filed with the Court of Federal Claims, is focused on the particular way in which the government said that it was going to evaluate each of the offers, and whether, in fact, they abided by the rules that they set out in the solicitation, itself. That's always a driving force when it comes to lawyers examining whether there's a protestable offense and the road map for preparing a brief and challenging a procurement.
But I want to dig a little bit deeper, in terms of how this thing unfolded, which is the use of a competitive range determination, which is available under Part 15 of the FAR. Alex or Franklin, you want to take a whack at explaining what a competitive range determination means?
Franklin Turner: Essentially, when the government conducts a competitive range decision, what they're doing is they're narrowing the field of capable offerors that appear to basically meet the core requirements of the solicitation. And it's used for a variety of different reasons, but the primary reason is so the government can effectively work with the offerors and evaluate the offerors as they move through the process, that in the government's view, have a legitimate shot at actually providing what it is the government wants. And in this specific procurement, there were essentially two phases.
You had phase one, where the Department of Defense conducted an evaluation of each offeror pursuant to Factor 1 in this RFP, which is the Gate Evaluation Criteria. And the purpose of that criteria was, basically, to ensure that the JEDI Cloud that is being proposed by each offeror was capable of providing all of the services that the Department of Defense wanted that were set forth, basically, in a performance work statement, which is an attachment to this massive solicitation, and which would ultimately be referenced in the JEDI contract.
The other primary purpose is to ensure that the offerors actually understand the requirement. It's easy in the DoD space, actually in the government space, writ large for companies to submit broad capability statements, or proposals that say, we're going to comply with everything. We understand what we're doing here, etc. It's quite another thing for those proposals to actually reflect the granular technical understanding of what it is the government wants. This work is so highly specialized, it's so highly unique, that a competitive range determination here was, I think, and I think most folks in the industry would say, was something that the government needed to do, made sense for them to do it, and that's exactly what they did. And they conducted the determination, I believe in April 2019. And the pool of competitors there was effectively narrowed to just Microsoft and Amazon.
Dan Kelly: So the litigants that are in this bid protest case, and I say litigants because the suit is against the United States of America, but Microsoft, as the awardee is permitted to intervene and will obviously participate in the protest, itself.
Alex Major: Back in April, when this competitive range was identified, that actually spawned additional litigation by those people, those companies, that weren't chosen and selected. One of those, primarily, was Oracle. And that continues to this day. So that's still proceeding. Whenever you have those sort of competitive range determinations, you also, possibly, key into other litigants. So, yes, right now we're talking about the actual award, but I think it's important to recognize that other people are still fighting this fight, specifically Oracle, where they asked at some point, or basically have asked the courts to eliminate Amazon from the procurement, as well.
Dan Kelly: Yeah, that's a great point and it's also a point about the nature of, sort of, the bleak house like conditions that can occur in bid protest world, where decisions can be made to go back to the drawing board. Those decisions can be challenged, and you can have an initial bid protest morph into litigation that may go on for years. And the result, delayed for years.
Alex Major: I can't believe, Dan, you made a Dickens reference when we're talking about --
Dan Kelly: I did. I wanted to make a Lucas reference, but I made a Dickens reference.
Franklin Turner: So here, we've got an award announce on the 25th. A little bit more on procedure and how an award works. One interesting take on in all this, which was of some excitement, I think, to folks like us, who do this for a living, is that DoD, as a result of, I think it's the 2018 National Defense Authorization Act, enhanced the rights of disappointed bidders following their notice of an award to someone else. And one of those enhancements was it put more teeth in, what's called, the debriefing practice, or right, that exists under Part 15.
Dan Kelly: One of you guys want to talk about what debriefing is and how it was enhanced and how Amazon tried to take advantage of that?
Alex Major: A debriefing is, essentially, when you get to go to the government, whether it be, any agency it might be, and request a very brief rundown of exactly maybe why you were, or weren't, chosen. And so it allows the contractor, and again, you can receive a debriefing as the recipient of an award, but it allows the competitor and competitors to see how they were assessed. See how well they did. So it's a report card, if you will, in many areas. Enhanced debriefing was an effort by the government to try to figure out a way to eliminate protest. Franklin and I've dealt with this on a number of occasions, and I know you have as well, Dan. In my opinion—Franklin you can, I think we might have a differing opinion here—the enhanced plus award debriefing right, I think have a better sound to it than they actually do, in terms of effect. Franklin, would you agree with that?
Dan Kelly: One of them is the ability within two days of the debriefing, itself, to ask questions. And the government is forced to respond to those questions within a certain amount of time, the awarding agency. And the ability to file a protest is delayed until those questions have a response. Is that right?
Franklin Turner: Yes. Right. That's a very good summary, there, Dan. The purpose of an enhanced set of debriefing regulations is to ward off filing the protests under the theory that, if the offeror receives more granular information about why it wasn't selected, then it's not going to go through the protest process, because it'll be satisfied that the government actually conducted the evaluation in a correct way. I think Alex is absolutely right in terms of the enhanced set of regs, essentially, not providing much relief because still tells a very one-sided story. When you file a protest -- and I think this is a good opportunity to sort of explain the traditional protest process, and I think we can start, essentially, from the award date here, if you think about what happened.
On October, I think it was the 25th, there was the announcement that Amazon was the unsuccessful offeror. At that point in time, the company had a variety of choices, in terms of how it was going to move through the protest process. If it wanted to move through the protest process, at all. In this case, the first thing you should do, under FAR Part 15, if you have a negotiated acquisition, which is exactly what FAR Part 15 is, is to ask for the debriefing. This debriefing was not conducted in person. I think it was delivered -- and you tell me if I'm wrong here, Alex. I think it was the same day that they received the award notice. Didn't they also get the debriefing?
Alex Major: Yeah, Amazon received a written debriefing notice the same day.
Franklin Turner: Right. Then they submitted, I believe, something like 265, I think is the right number, separate questions relating to, essentially, how they were evaluated in the way that they were, why they were evaluated that way. They sent in those questions, and then they were unsatisfied with the answers that came back from the government. The experience -- as Alex said, you know we do this an awful lot and have a lot of experience in this space. Most folks on the government side are not going to give competitors an awful lot of information in terms of why they lost. They'll go through, basically, why their proposal was evaluated in the way that it was. They're supposed to answer reasonable questions set forth by the offeror who was unsuccessful. Often times, what the government does, though, is provide non-answers. They'll say, "Well thank you for your question, we can't tell you that information." They can't give any information, even under the enhanced set of regs for this procurement, they couldn’t give granular information about Microsoft’s solution. They couldn't explain, from a functional standpoint, why it was that Microsoft won, in terms of granularity. Like, what exactly about their proposal was superior in the eyes of the Department of Defense.
Dan Kelly: We know that the agency had a scorecard, right? And we know that the agency identified specific evaluation factors, and sub-factors, that it was going to look at and use that scorecard to grade both Amazon and Microsoft on their performance in each of these factors for purposes of making the best value determination. But the frustrating thing, I assume, for Amazon, and for many of our clients who find themselves in this space as the disappointed bidder, is that you're not entitled to see any of the information with regard to how the awardee in this case was graded. Do I have that right?
Alex Major: Yes.
Franklin Turner: That's exactly right. And it's why you file a protest if you really want to get in to figure out what it is the agency did. And there's three typical protests for here, right? There's the agency, then there's the GAO, and then there's the Court of Federal Claims.
Dan Kelly: What is the GAO?
Franklin Turner: The GAO is the Government Accountability Office. It is the watch dog agency of the federal government. They actually have a special procurement law unit that is staffed by lawyers, by specialists, who are sort of de facto administrative law judges, who are vested with responsibility to adjudicate these protests.
Most companies, by and large, will file a protest at the GAO because you get, if you file within the right times frames, you can get an automatic stay of performance, meaning that the contract award is effectively halted. You can get a resolution in 100 days, which is prescribed by statute and which is lightning speed in the world of government contracting. You know, those of you who interact with the federal government, from a litigation standpoint, or really any other standpoint, I think would likely agree that the government can sometimes move at a glacial pace.
That is not the case at the GAO. What effectively would happen at the GAO is you file the outside counsel that you retain, which is strongly advisable here, because any time you ever file a protest, if you want to win, you should work with someone who really understands these regulations, because it's very highly regulated. The decisions often turn on nuances of bid protest law. And to really understand what it is you're going to do, you should treat this, basically, like a full legal brief.
Alex Major: Yeah, one of the things, too, that's kind of unique about bid protests, for those that don't practice in the area—and this is often very, very challenging for clients, especially if new to the contract space recognized—is that because of that very thing that we were talking about, or you were talking about earlier, Dan: the integrity of the competitor's data needs to be retained.
So that means that if there is going to be a bid protest, the government is not, because they can't answer those questions, one of the reasons they can't answer a lot of the questions that, you know, our disappointed bidders want, is because they need to make sure that they do not provide proprietary information to competitors. So in the same respect, when you have a bid protest, what you're actually doing is, you're literally putting the defense and prosecution of your case into your lawyer, or your representative's hands. And then you need, you the company, you the disappointed bidder, need to step away from it, have to step away from it, because as your advocate, we can look at the other side's materials and we can see how the government chose and didn't choose, or elected to avoid certain requirements, but we can't show that back to our client, because we're seeing the competitor's information.
So one of the things that Franklin is describing here, is it's often really, really hard for a lot of maybe commercial companies that are dabbling in the federal procurement space, or maybe companies or small businesses that aren’t necessarily familiar with this process because you are literally blind. All you know is what limited information, or whatever like we saw with JEDI complaint, redacted information that is able to be released to you. So that's always really challenging for our client.
Dan Kelly: And it's very difficult, in cases like this, where the determinations can be highly technical. I just add, sort of as a footnote, that the lawyers can retain an outside expert to assist them and get access to that information. But yet, it can't be a person who is connected with the company. So the company places in the hands of the lawyers the ability to go forward and do this protest, but the lawyers are really muzzled when it comes to talking about the particular aspects of the way in which it was evaluated, the source selection material, and also the information contained in the proposal and other submissions by the competitor that won the award.
I'd say one more thing about GAO, which is a reason why most people go to GAO, in addition to getting a decision in 100 days, is that by filing within a certain limited period of time following award, the Competition in Contracting Act affords a bidder, what's called, an automatic stay. The agency cannot proceed with the contract until the bid protest is decided. Now, there's some exceptions to this, but here, I think we can end our discussion with GAO, because the lawyers for Amazon decided not to go to GAO. They decided to go to the Court of Federal Claims. Perhaps you guys can talk about that avenue for relief and how this is unfolded, procedurally, on FAR, and then we can get to the merits of the actual case.
Alex Major: Absolutely. So the Court of Federal Claims is obviously a very different forum. You have a different timeline. You're talking about a real court, at this point. You're talking about --
Dan Kelly: Many Federalist Society members have been appointed to the Court of Federal Claims, so I'm glad you call it a real court.
Alex Major: Well, I'm just saying as opposed to, you know, working with the GAO and the administrative positions there. So, at the Court of Federal Claims, bid protests take on a little but different tenor, a little bit different texture.
Dan Kelly: Can you just sue in district court? Can you sue in any federal district court? Or is this the only court available, if you want to go to court, as opposed to GAO?
Alex Major: It's going to depend, if you're looking at the procurement side of things, yes. You're going to need to stay with the Court of Federal Claims. And then you can appeal through the federal circuit. We have seen, on rare instances, of district courts coming in to play. But it's generally not against the United States government. Generally it's going to be some tangential element related to a contract, but not necessarily specific to the procurement of the procurement choices.
Dan Kelly: Right, and there are jurisdictional limitations. I mean, the government has immunity and you can only sue the government when it decides to waive that immunity. And by statute, it has waived the immunity, with respect to bid protests, to only these specific four that we've been talking about.
Alex Major: Right. So with the GAO, it is going to be, it's going to be usually, we've seen it normally with larger matters. Matters like the JEDI case. Or, if there is a situation, on the GAO side of the things, if it's a --
Dan Kelly: You mean the Court of Federal Claims.
Alex Major: No, no, no. On the GAO side of things, for just a minute.
Dan Kelly: Got it.
Alex Major: You indicated about the stay. Oftentimes, an SNT might either miss that deadline or they might not have acted in a manner that was quick enough to necessarily protest in front of the GAO. In those situations -- and there are a lot of decision points to be made here, in terms of timing, in terms of requirements, in terms of wants, in terms of needs, in terms of the appetite of the adjudicators. But as a result of many of those factors, often which are business decisions, or business indecisions, in some respects, the choice can be going to the Court of Federal Claims. The reason being is you have more time to bring your protest.
Now there's some difficulties in delaying a protest decision, or a decision to protest. Namely, if the government has started acting on the contract, or is proceeding against award of that contract, you run into situations where the government is probably, or excuse me, the court is going to be less likely to award the protest, or they're going to affirm the protest. Because the government is already proceeding. The government is already going forward with its process.
There's also some unique differences specific to the GAO. There are no specific statute of limitations for the filing of the bid protest with the CFC, so you do have some time. We don't recommend delaying too much, otherwise you, like I said, you have a contract in action that's going to be hard to turn around.
Also, unlike the automatic stay at the GAO, the CICA automatic stay has no application to the Court of Federal Claims bid protest. So in order to stop performance in front of the Court of Federal Claims, you need to literally file provisional injunctive relief. So a temporary restraining order, a preliminary injunction, that sort of stuff. So we're talking more in the line of what, I think, most lawyers have recognized as -- like in a civil hearing, and recognizing that.
Now, the Court has its own rules, so you need to make sure that you're following the rules, like any local rule of the government, excuse me, of federal court. And then you're going to be getting into the actual process. And we can talk about that in a little bit.
But the actual, when push comes to shove, the actual process of a protest before the Court of Federal Claims is going to be a little bit different than maybe the back and forth people normally recognize in front of a U.S. district court. So you're generally going to have the protester that files a complaint, the government will, obviously, respond, and the intervener. And I don't know if we've talked about the intervener. But when we're talking about the intervener, in this capacity, what we're talking about is the awardee. So in terms of what we're talking about, in terms of JEDI, obviously the protester is Amazon. The government is the Department of Justice acting on behalf of the Department of Defense. And the intervener would be Microsoft. They'll respond, generally, maybe, with a loose answer. Basically saying, “You’re wrong.” And then they'll move. So they'll move for judgement on the administrative record. The protestor, then, would reply and respond to the cross motion, as well. And then will see the government and the intervenor also reply.
So what this tries to do is this tries to cut to the quick, recognizing that any federal contract action, any sense of federal contract effort, obviously has this air about it of requirements and needs, or some urgency. So what this process tries to do, by doing what I would consider the traditional district court back and forth, and going to discovery, and all this other stuff, while it's still available -- while it's still available, there are processes in place within the Court of Federal Claims that allows the process to move forward much, much faster. Not as fast as the GAO, but much faster than one would see in the normal district court.
Dan Kelly: And just one side question, I know with GAO, when you file a protest, oftentimes lawyers will get involved from the agency, itself, for purposes of assisting the contracting officer in rebutting the allegations. And those are in-house lawyers within the particular agency. But when you file with the Court of Federal Claims, who are the lawyers that represent the United States of America in that case?
Alex Major: That's going to be the Department of Justice. They have their own civilian non-criminal attorneys.
Dan Kelly: So it's a completely different group. Of course, they're well-schooled and have done protests before, but you get a different group of lawyers when you file the Court of Federal Claims.
So let's talk about this case. The case has made headlines throughout the world because it is framed around -- first of all, the complaint was filed in early December. December 9th. It did not seek a temporary restraining order or preliminary injunctive relief, at the time. There's a footnote which said that the first page of the complaint, which is publicly available. It's redacted. It's heavily redacted, but there's a lot of meat, still, that's available for the public to look at. The complaint said that they were not seeking a TRO because the DoD had agreed not to proceed the performance of the contract until, at least February 11th. The government's brief is due today. But we've learned, which we can talk about in a minute, that Amazon has actually announced that it is filing, I believe on January 24th, that's in a few days from now, a motion for a preliminary injunction, or TRO, which we expected.
But the complaint made world headlines because it is framed around a theory of bias. Bias on the part of the President of the United States and his ongoing feud with Jeff Bezos, the owner of Amazon. And if you turn to look at the complaint, you'll see a catalog of statements, some of which are quite colorful, that President Trump has made in connection with Amazon. And they juxtapose that with various comments that were made in the industrial press about how Amazon was, by far, the most qualified company to actually perform this work. That, in fact, they were the only qualified company to perform this work. These weren't statements made by government officials, but they describe it as a general consensus within the industry, as a whole. And I'll just tick off a few of these statements that they attribute to Trump, which they say, improperly influenced this procurement.
They go back to Trump, as a candidate in February of 2016 saying that Amazon will have problems if he becomes President. That they're getting away with murder. That they're rigging the system. That Mr. Bezos is a tool for political power against him and he won't be able to get away with it. And then they quote an article in Vanity Fair, where sources said that President Trump became obsessed with Mr. Bezos after he was elected and was determined to fudge him. That's not the word that he used, but that's right there in the complaint. And since the procurement was announced, the complaint alleges that the President has spoken openly, not only against Amazon and Mr. Bezos, but also with respect to Amazon's eligibility for this contract and whether it should get this contract, and that he would be looking -- asking the Pentagon to look, specifically, at the complaints registered against Amazon.
Now, we could go on. There are a number of other comments. The complaint is framed around this. But because Amazon is well represented, the complaint doesn’t simply rely on those for purposes of challenging the procurement. So maybe, Franklin and Alex, you can talk about, if the complaint simply alleged these statements, alone, which they consider to be improper bias, what do you think the chances are, with respect to their likelihood of success?
Franklin Turner: This is Franklin. Thanks for the question, Dan. I would rate that at 0.000 percent. I think that it is -- taking a step back, just purely based on what the complaint says, this is highly a-typical. It's a highly a-typical situation, when you have all these statements coming out of the President.
But that isn't what matters, in terms of ultimately deciding whether or not the government did its job the right way here. What matters is whether or not the evaluation that was conducted was reasonable and consistent with the stated evaluation criteria. Which is precisely why you have a very, very granular complaint here. And again, much of this information is redacted, but it's clear that Amazon counsel went through the entirety of the, then available source selection record, and basically threw the kitchen sink. I mean, their argument's that the government, essentially, ignored the stated evaluation criteria. That they treated Amazon very unfairly by ignoring aspects of its own proposal by favoring Microsoft when it shouldn't have.
By doing just a variety of different things.
You literally have a factor-by-factor assault here being lodged by Amazon's lawyers, against the backdrop of, quite frankly, some unprecedented statements from the President. Which if you connect those dots, certainly from a public relations standpoint, militate in favor of, yeah okay, maybe something was done incorrectly. From a DoD standpoint though, again, the only thing that matters is what does the evaluation record actually show.
So when you get in there under the protective order, and when Amazon's counsel looks at everything that the government did here, which is all going to come to light when the government files the administrative record of this procurement. Which, by the way, is essentially how the government responds to a protest. At the GAO, you see a response come through the Agency Report, which is essentially the government's reaction to the protest. You'll see a legal memorandum. And you'll see the contracting officer's statement of facts along with all sorts of exhibits that relate to the documents that were requested in the protest. You see, functionally, the same things in the Court of Federal Claims. You'll see the Administrative Record come through, which is going to contain, or should contain, all of the relevant materials.
Now, oftentimes, parties will complain and say, no you need to provide more information. But when the administrative record in this case comes through, it's going to be incumbent upon Amazon's counsel to go through and to further connect the dots. And to show, as a matter of law, why what it said in the complaint is true and why the government's actions are, essentially, indefensible in the administrative record. Of course, the government, for its part, and Microsoft, for its part, will come through and argue the exact opposite. You'll see arguments that Amazon is wrong, as a matter of law. That irrespective of the bias, the purported bias, but I think it's -- all you have to do is read the President's statements here, that that was not something that infected the source selection here, because the team, itself, performed its tasks consistent with what the actual evaluation criteria said it should do.
So those are the core arguments, and I'll pause here for a second, Dan, if you have any follow up questions on that.
Dan Kelly: Yeah, one question I have, I mean, one of the themes of the complaint, if you could call it that, is that Amazon, consistent with some of the press account at the time, really was the only qualified entity to perform this service. And the government neglected to include past performance as one of the evaluation factors, which is a factor we typically see in many procurements. And I'm wondering whether that particular issue, in your view, both Alex and Franklin, carries any weight, or will carry any weight, as the court considers this protest?
Alex Major: Well, I'll start, and I'll let Franklin chime in. I think there are a couple issues here. First of all, to the extent that it was missing, and to the extent Amazon believed it was something that was required in the proposal—and we can talk about that in a sec—but to the extent that they believe something was wrong with the proposal, we didn't really get into it, but there is something called a pre-award protest.
A pre-award protest allows competitors, or excuse me, vendors or potential vendors, to say, "Hey listen. Your proposal's not right because you're asking for this and you should be asking for that." Or there's something wrong with it. Or you're obviously only targeting one particular entity through this "competitive proposal."
So in that respect, there is an element to it where, if there's a problem -- and if there is a problem with the proposal, if there's a problem that's been identified, if there's something ambiguous, you have until the time that offers are provided. To the extent that there's a problem, to the extent that somebody saw that the past performance was absent, I mean everybody would recognize that past performance, there's generally something included in all competitive -- I should say most competitive procurements, someone would raise their hand and say, “Hey, this is a problem.”
I think that, in this particular instance, the reason that it sort of cuts both ways, is really leading up to this procurement, only one company really had the muscles to flex to say, we do this kind of work, and it was Amazon. So that's why I think a lot of people believed, initially, that Amazon was the heir apparent to this contract. And I believe that there was a lot of negotiations and a lot of discussions about how best to address that rather large elephant in the room that, hey really only one company has done this in the past to this size for the government, and it's Amazon. Obviously, Microsoft and IBM, they have large enterprises, but no one on the government side.
And when I see it in the complaint, I think, and you guys can tell me if I'm wrong. I don't think, necessarily, I don't think the lawyers are using it so much as to say the RFP was in error or was an issue. I think they're showing it more as a reference to the prejudice that the DoD was showing against Amazon, by basically removing that advantage, removing that piece of -- that flex, as the kids would say, that Amazon could throw down and say, hey listen, we're going to remove this, so now in order to -- I think they talked about leveling the playing field. And Amazon believes that was improper.
Franklin Turner: I think that's generally right there, Alex. This is Franklin, and I'll say the FAR, specifically, the FAR, which we talked about earlier. The Federal Acquisition Regulation. You look at subparts 12206 and 15304, there's a fairly explicit requirement that you have to evaluate past performance as an important element in every evaluation and contract award that comes through for commercial item acquisitions.
This procurement is different. I think that the government's viewpoint on this would be that this is virgin territory. That yes, it's clear, as you said earlier there, Dan, that Amazon was kind of the presumptive favorite here because it’s got a lot of experience working with the cloud and assisting the government in connection with all sorts of cloud-based initiatives and projects, but not this. Not something like this, which is a really first-of-its-kind implementation across the Department of Defense.
I think Alex is exactly right. I think the reason that the government -- or the reason that it factors in the complaint is simply as additional fodder, additional evidence that should militate in favor of the fact, in Amazon's view, that the government -- or I should say the argument in Amazon's view that the government removed an inherent advantage that Amazon would have. And that they did it for, at least in Amazon's view, a reason, I think, to come to a preordained conclusion that it was not going to pick Amazon in the first place, and it didn't want to have any criteria in that solicitation that could militate in favor of Amazon.
Dan Kelly: Right. And I would just, before we open up to questions, would just hammer home the point that Alex already made, that Amazon really cannot argue that the solicitation was flawed because it didn't include past performance as an evaluation factor, because the law only allows them to launch such a protest before the offers are due. Once they submit the proposals, they are foreclosed from challenging, what are called, solicitation improprieties. Improprieties in the solicitation. But I think what the lawyers are doing here, is they're saying that because of their past performance, because of who they are, their technical capabilities are so far greater than the technical capabilities within each of the evaluation criteria that do exist, are so far greater than what Microsoft could offer, that they were improperly rejected as the awardee in this case.
So Wesley, I see we're 10 minutes out. We're happy to answer any questions that any of our listeners have, at this point.
Wesley Hodges: Very good. Thank you, Dan, and thank you everyone. Dan, Alex, and Franklin, I'll let you know if anyone chimes in with a question. The queue is currently open. Alex, back to you.
Alex Major: Yeah, I was just going to say that one of the things that I think we probably should have started and led with is, qualifying that what we know about this procurement is exactly probably what many people have seen. And we obviously look at it through the constructs of our experience, etc. But in terms of reviewing the complaint, in terms of reviewing the press announcements by the DoD and by Microsoft and by Amazon, so by looking at this and by examining it, we're by no means trying to say, one way or the other, who's right, who's wrong, or what have you. We're spectators of the game, as well, and kind of enjoying the limelight that the government procurement process is taking in this very, very large procurement.
Dan Kelly: Let me ask, while we're waiting for a question, if we get a question, what are the possible remedies? What's the end result of this?
Alex Major: Yeah, I'll start. One of the things that's interesting about the particular selection of the Court of Federal Claims is, the Court of Federal Claims -- as we look at it, the Court of Federal Claims generally has a propensity to, I don't want to say side with the agency, but side with the deference given to the agency. They tend to, because of their case law and the case law under which they operate, I believe they kind of definitely lean in and respect an agency's wishes. I think this one's a little bit unique because of the, like Franklin said, rather unique addition to that recipe of significant Presidential statements to the contrary, and sometimes derogatory nature of the competitor.
But in the end, when it comes to protests, and this one's so big that someone's going to be challenging, what happens is, you might win a protest -- we haven't really talked about this. You can win a protest, and that doesn't necessarily mean you win the contract award. Yes, they might have done something wrong. Yes, they might not have seen this, or they might not have taken something into consideration, but in the end, they'll say, "Thank you very much. We'll go back and look at it again." They can go back and look at it again, after you've spent additional time and money and dollars and energy, and they can go, "Y9ou know what, we're going to do it this way." And they could still award it to the same way and the same manner in which they did before.
Alternatively, they could go back and try to figure out a way to change it to get to the same desired effect. It’s not legal, it's not proper, but nonetheless, it's something that they can do. So just because you win a protest doesn't necessarily mean you also win the contract. So sometimes it could be, "thank you very much for doing your civic duty. We appreciate you advising us of this discrepancy and this error. You still lose."
Dan Kelly: That's a really important point. Whether at the Court of Federal Claims, or at GAO, rarely is the remedy, the end result if the protest is sustained, an order by GAO -- well, I guess it'd be a recommendation which the agency will follow, or an order the Court of Federal Claims, that you will award it to the awardee. Most often it's go back and do it again, or go back and revisit a particular aspect of the procurement.
And we also have a phenomenon that I think is occurring more and more, where a protest will be launched, but before the protest is actually decided, the agency will take it upon itself to engage in, what's called, corrective action. In other words say, we're going to go back to the drawing board and reevaluate the price proposals, or the technical proposals, or -- which is a win, in my book. But it can, in the end, wind up with the same result.
Franklin Turner: I think though, kind of the key distinction -- so first of all, you're right. Anytime the government takes corrective action, they can go back and do a variety of different things, although I'll tell you, I've seen corrective action being taken that result in the essential flipping of multibillion-dollar contracts. So it's not as though they're all fruitless endeavors. But the one thing, in terms of remedies, and you seized on it earlier there, Dan, is when you said that GAO can make a recommendation. That's absolutely right. The government can ignore that recommendation. It's seldom ever done, because GAO then has to notify Congress as to what's happened here. And 99.9 percent of the time, the government will do what GAO tells it to do, which usually is, go back and fix these issues, recompete it, and conduct an evaluation that's consistent with what the RFP says you need to do.
The Court of Federal Claims have, I think, stronger teeth with respect to remedies. The law under which they operate essentially says that they can award, basically, any relief that the court considers to be proper. And if you ignore a federal judge's order, you can find yourself in contempt of court. There could be all sorts of negative things that would happen, in that respect, to the agency. So I think it’s -- you certainly have, and it's rare to see those types of orders come out of the Court of Federal Claims, but they are, in my view at least, stronger and sharper than the relief that you can sometimes get from GAO.
Alex Major: Yeah, and another thing, with regards to the corrective action side. One of the things that we've noticed, too, is we've seen the Court of Federal Claims be a lot more -- this is where their deference kind of switches, a lot more, I should say, interested in corrective actions and probably more siding with the awardee, the person from whom the contract was taken. So that's another unique angle at the Court of Federal Claims.
Dan Kelly: We're almost done here, Wesley. And we obviously invite the listeners, and the listeners to the podcast once it's up and running, to pose questions to us. You can find us at McCarter & English's website, mccarter.com. We'll also be following this case very closely. As I mentioned, it's been announced that Amazon does intend to file within the next few days, a request for injunctive relief. The government will drop the administrative record and its arguments in opposition to the complaint today, unless there's been an extension of that. So this is a big case that we'll be following. And we are at your disposal.
Wesley Hodges: Thank you, Dan, and Alex, and Franklin. On behalf of The Federalist Society, I would like to thank you all for the benefit of your very valuable time and expertise today. We welcome all listener feedback by email at email@example.com. Thank you all for joining us for the call. We are now adjourned.
Operator: Thank you for listening. We hope you enjoyed this practice group podcast. For materials related to this podcast and other Federalist Society multimedia, please visit The Federalist Society's website at fedsoc.org/multimedia.