10
Mar2020
Judge Grants Amazon Injunction

Judge Grants Amazon Injunction

A Department of Defense contract pitted Amazon against Microsoft. The DOD asked for proposals related to its cloud computing infrastructure to enhance warfare needs. This is the so-called JEDI program (Joint Enterprise Defense Infrastructure). Microsoft won the contract and Amazon complained in the Court of Claims under the Tucker Act and Rule 65 of the Court of Claims Rules. The Court granted the preliminary injunction but required Amazon to post a bond of $42 million. The court analyzed the traditional factors: likelihood of success on the merits, irreparable harm to the movant, a balance of harms to the movant versus the defendant, and the public interest.

Because President Trump publicly stated hostility to Amazon, the case was newsworthy. But the Court’s decision omitted any mention of that.

Of interest generally is the victory of Amazon even though the merits review is lenient: whether the DOD’s decision was arbitrary, capricious, an abuse of discretion, or against the law. Prejudice is also a required showing, the review is highly deferential, and injunctive relief is a drastic and extraordinary remedy.

The court found that Amazon was likely to succeed on the merits. Redactions in the opinion make analyzing it difficult. However, the DOD made arguments for which it could not identify a record citation to show where the determination it argued in court was actually made during the bid process. In the absence of record evidence, the Court could not identify that DOD actually exercised discretion. DOD argued that if Microsoft’s proposal was deficient, then so was Amazon’s. However, Amazon had some record evidence to argue to the contrary.

Amazon Argues Suffering Irreparable Harm

Also of interest was the analysis of irreparable harm. Amazon argued that it would suffer irreparable harm because, absent an injunction, Microsoft would gain access to confidential information. The confidential information would allow Microsoft an advantage in any future bidding. Additionally, Amazon argued that it would lose customers to the JEDI program. Even though the DOD has the authority to neutralize the competitive advantage Amazon alleges, the DOD “constrained” the court to rule on the record.

A significant delay in seeking the preliminary injunction almost derailed Amazon’s request, but the Court found that irreparable harm would be sustained between the time of the request and the time that a decision would be made on the merits.

Unusually, here, the balance of harms factor weighed in favor of the DOD, not Amazon, because of the impact of delay on national security. Harm would accrue between $5 and $7 million per month and Microsoft had invested “hundreds of millions” of dollars preparing to perform.  This factor was not decisive because presently-available technology could be used in the interim and because fair bidding was a governmental goal as well.  Undoubtedly the Court’s decision to require a bond based on the harm caused per month times the estimated months before final resolution helped ameliorate the harms expected to occur to the DOD and Microsoft.

If you would like a copy of the redacted decision, get in touch us at (312) 223-1699.

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