Defense Department IG Omitted Evidence of Alleged Corruption in JEDI Program, Documents Show

The Pentagon’s Office of Inspector General denied the public a complete view of alleged corruption in the notorious Joint Enterprise Defense Infrastructure, or JEDI, program when it left gaping holes in an audit released last year. The investigator cleared many senior defense officials of favoring Amazon for the program’s $10 billion cloud services contract and also asserted its belief that the Defense Department was not pressured by the White House when eventually making the surprise decision to issue the award to Microsoft. However, new documents show the auditor shielded potentially compromising evidence from the public.

The New York Times reported first today that depositions and emails — which the Department of Defense Office of Inspector General, or DOD IG, gathered during its JEDI investigation — show defense officials promoted Big Tech, especially Amazon, more than previously understood. The Intercept also obtained copies of the deposition via the Freedom of Information Act and emails from a source, and a closer look exposes even greater signs of advocacy for the Silicon Valley giants. The documents indicate that the DOD IG — when tasked with investigating the integrity of one of the most disputed and lucrative government contracts in recent years — glossed over evidence of a tainted acquisition.

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That decision may be even more troubling since the auditor’s report demonstrates defense officials had notable financial ties to Amazon but nevertheless cleared them of wrongdoing, as The Intercept reported last month. In particular, the DOD IG discovered Sally Donnelly was serving as a senior adviser to former Defense Secretary James Mattis when she received a $390,000 outside payment that she did not disclose until after leaving the Pentagon. That payment stemmed from the earlier sale of her consulting firm — which had Amazon as a client — to British financier André Pienaar, who had ties to Amazon as well. It arrived in March 2017, the same month Mattis and Donnelly dined with Pienaar and his romantic partner, then Amazon executive Teresa Carlson, laying the groundwork for a future meeting with Amazon CEO Jeff Bezos.

The DOD IG noted Donnelly consulted a Pentagon ethics attorney about her financial disclosures but didn’t address the proximity of the March payment to the pivotal dinner. That oversight led Sen. Mike Lee, R-Utah, and Rep. Ken Buck, R-Colo., to criticize the integrity of the report and request Attorney General Merrick Garland to reevaluate Amazon’s influence on the JEDI program in May.

Donnelly and other defense officials cleared by the DOD IG, including Mattis, no longer work at the Pentagon. But last week, the DOD announced it’s abandoning the $10 billion JEDI deal with Microsoft anyway, claiming the military’s evolving data processing and artificial intelligence activities now require the services of multiple companies. That shift is undoubtedly likely to benefit Amazon, which had derailed the contract from ever even starting by filing a lawsuit asserting that former President Donald Trump unfairly tilted the scale to Microsoft.

The new documents show previously unseen evidence of potentially unethical conduct during and immediately following an August 2017 trip that Donnelly helped arrange for Mattis to meet with the CEOs of Amazon, Apple, and Google. At that point, the secretary of defense was still researching the military’s data storage challenges and possible solutions. The DOD IG pointed to the visits as proof that Donnelly did not favor Amazon, as she gave its rivals access to Mattis too.

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The auditor reported an email that a DOD staffer wrote Donnelly after Mattis met with Bezos on August 10, stating, “Boss did say he’s ‘99.9% there’ in terms of going to cloud.” (Mattis told the DOD IG that meetings with other industry executives and the Central Intelligence Agency also drove his decision to adopt cloud services.)

As the New York Times reported, what the DOD IG did not disclose was another email the same staffer sent that day, informing Donnelly: “The one on one seemed to go very well. The large group seemed to morph into an [Amazon Web Services] sales pitch. Boss was nice and gracious but I didn’t get a good vibe out of it.” (Ethics attorneys do not typically advise that the defense secretary take pitch meetings.)

A few days later, Donnelly and her colleague, Anthony DeMartino, apparently exchanged another email that was not disclosed in the DOD IG’s report, nor the collection of emails obtained by The Intercept, nor in the New York Times’ story. Instead, it was referred to in the depositions of Donnelly and DeMartino, who had been chief of staff to Mattis’s deputy, Patrick Shanahan, and was similarly cleared of wrongdoing.

The interviewer showed DeMartino an August 14, 2017, email he sent Donnelly stating, “Between us. To the Microsoft versus Amazon discussion,” and asked what he meant. (It’s not clear if this “discussion” directly pertained to the future JEDI contract, but the companies eventually emerged as the two frontrunners because of the government’s strict technical requirements for its vendors — restrictions that competitors like Oracle and IBM complained prevented a fair competition.)

DeMartino responded, “[Redacted individual] who was on the trip talked about Amazon and Microsoft.” The interviewer asked what actions Shanahan took based on the assessment and what discussions the two had about Amazon after the trip, and DeMartino responded that he didn’t think any occurred.

Shanahan, a former Boeing executive who would go on to become the acting secretary of defense, was not one of the officials who the DOD IG investigated for signs of corruption, but he was heavily involved in directing the creation of the Pentagon’s cloud adoption strategy and worked closely with the Pentagon’s then acquisition executive, Ellen Lord, former CEO of Textron. Witnesses told the auditor, per the report, that either Shanahan or Lord made the final decision on the use of a winner-takes-all contract for the JEDI program — which companies and lawmakers complained contradicted best practices and unfairly neglected competition.

The DOD IG interviewer didn’t press DeMartino further about his August 14 email to Donnelly but questioned Donnelly, who noted that further down in the email, Shanahan had asked, “how do the Microsofts of the world fit in the equation?”

Donnelly said that someone, whose name was redacted from the transcript, responded: “Microsoft trying to enter the game especially on ML [machine learning], but still a gen, which I think generation, behind Amazon and Google in my estimation, and then he says one area I think Microsoft is ahead is augmented reality and virtual reality.”

The comments were not included in the DOD IG’s dismissal of claims that pro-Amazon bias tainted the JEDI acquisition, nor in its discussion of pressure from the White House to allegedly harm Amazon’s chances of winning the contract.

The allegations of pro-Amazon bias date back to April 2017, when Mattis had just begun evaluating the military’s data storage challenges. The DOD IG reported Donnelly played no role in eventual JEDI procurement decisions, but critics nevertheless argued she gave preferential treatment to Amazon while the Pentagon leadership studied the problem and possible solutions. That month, an unidentified Pentagon staffer asked Donnelly and Adm. Craig Faller, another Mattis advisor, whether to accept a call with Bezos, which ultimately did not materialize. As The New York Times reported, Donnelly responded: “I think he is the genius of our age, so why not.”

The DOD IG report entirely omitted that the reply even existed, despite questioning her about it in an August 2019 deposition. “Well, that was probably flippant language for an official email,” Donnelly acknowledged during the interview.

Instead, the report mentioned another email Donnelly sent April 23 with the subject line, “Why Bezos,” which listed reasons for Mattis to meet with the megabillionaire. The DOD IG removed certain statements, and among those not reported by the New York Times was: “[In] 20 years Amazon has surpassed Wal-Mart in market capitalization.”

Other redactions from the email gave the appearance that Donnelly gave equal weight to another Bezos-founded defense contractor and its rival. The DOD IG reported that she wrote that the Amazon CEO started “a space company(Blue Origin) which, along with SpaceX, is transforming space flight.” What the auditor did not report was that Donnelly went on to say, “of note, Blue Origin has a productive/symbiotic relationship w/the United Launch Alliance (Boeing, etc.), as opposed to SpaceX, which is challenging ULA head on.”

Part of the DOD IG’s justification for clearing Donnelly was that she did not have the final say over who got to actually meet with the secretary of defense. That power rested, the auditor stated, with Mattis’s chief of staff, Kevin Sweeney. However, the DOD IG report neglected to disclose a telling line from an April 21 email to Donnelly and Faller: “[Chief of Staff] defers to you for SecDef consideration.”

Michael Levy, an attorney for Donnelly, wrote in a statement to The Intercept: “She played no role, and exercised no influence, in connection with any government contract, including – as the Department of Defense has confirmed repeatedly – the JEDI contract.”

“After reviewing these and many other emails and conducting numerous interviews, the [DOD IG] issued a detailed report that concluded that Ms. Donnelly acted entirely appropriately and did not provide preferential treatment or greater access to Amazon or anyone else,” Levy added. “It concluded that because it is the truth.”

Asked why the DOD IG left the April 2017 messages out of the report and whether the auditor reviewed them while evaluating whether any wrongdoing occurred, DOD IG spokesperson Dwrena Allen said: “Our JEDI Cloud Procurement report speaks for itself — we stand by our findings and conclusions.”

Nevertheless, in light of the New York Times’ story Tuesday, Sen. Mike Lee and Rep. Ken Buck slammed Amazon’s alleged influence on the program. “It’s becoming more and more clear that Amazon used its market power and paid-for connections to circumvent ethical boundaries and avoid competition in an attempt to win this contract. Now, more than ever, we need to ask Amazon, under oath, whether it tried to improperly influence the largest federal contract in history,” the two stated.

They’re not alone in calling for more scrutiny of the JEDI program. Cloud services provider Oracle, which originally complained to the DOD IG about alleged corruption among the defense officials, has filed lawsuits in court alleging a warped acquisition, and most recently appealed to the Supreme Court earlier this year.