Amazon has become the new behemoth in government contracting in Washington. It seems like the army of lobbyists and influence peddling by Jeff Bezos is working to secure massive billion-dollar contracts with the federal government.
Taxpayers should be worried that they are paying inflated prices to Amazon, through the federal government, for services that are being secured through cronyism.
A massive contract for all the cloud computing of the Department of Defense is being worked out right now and it appears that a former consultant for Amazon may have helped her former client, Amazon Web Services, get a leg up in the contracting process while she served as a senior official to Secretary of Defense Jim Mattis.
The Daily Caller reported on August 8, 2018 that “a former senior adviser to Secretary of Defense James Mattis was receiving payments from her sale of a consulting firm she founded that worked with Amazon’s cloud computing arm, while the Pentagon simultaneously crafted a $10 billion contract that many say is tilted in favor of the tech giant.”
According to the report, Sally Donnelly filed financial disclosures that “do not clearly state that she was receiving payments from the purchaser of her firm during her stay at the Pentagon, nor did she file a written recusal from involvement with the Department of Defense’s cloud computing contract.” This development presents a classic case of the appearance of impropriety.
Donnelly disclosed a $390,000 payment for her firm when she entered government service but did not disclose until her departure of another $1.17 million payment that was made until she left the department. The company, under new ownership, continued to work on the Amazon Web Services contract during the entire time Donnelly was employed by the Department of Defense.
The department issued the first request for the “JEDI” contract that was written just for Amazon. On July of this year, Bloomberg reported that the “Pentagon’s Winner-Take-All Move on Cloud Contract Expected to Favor Amazon.” Not a coincidence.
One of the big problems with government contracting is that many companies utilize the revolving door to secure government largess. In this case, you have a staffer who founded a firm, SBD Advisors, loaded with former defense officials, that was a contractor for Amazon Web Services to secure government contracts. A person with an ownership interest in the firm gets a million dollar payout after they enter government service and the contract is written in a way to financially benefit the former owner’s company.
This is a textbook case of a strong appearance of an impropriety in contracting.
Vanity Fair on August 13, 2018, quoted an individual as saying “everybody immediately knew that [the JEDI contract] was for Amazon.” One reason was the specificity in the request for proposals that pointed right at Amazon as the likely winner.
The report indicated:
“When JEDI was issued, on the day Congress recessed for the summer, the deal appeared to be rigged in favor of a single provider: Amazon. According to insiders familiar with the 1,375-page request for proposal, the language contains a host of technical stipulations that only Amazon can meet, making it hard for other leading cloud-services providers to win—or even apply for—the contract. One provision, for instance, stipulates that bidders must already generate more than $2 billion a year in commercial cloud revenues—a ‘bigger is better’ requirement that rules out all but a few of Amazon’s rivals.”
Vanity Fair pondered whether Jeff Bezos, Amazon’s founder, was more powerful than President Donald J. Trump.
The lesson is: Massive lobbying efforts and placing people in government to help out with the drafting of contract specifications still works.
According to Vanity Fair, Amazon has spent $67 million in lobbying since 2000 and have spent more this year than other large influence peddling companies like Citigroup, JP Morgan Chase and Wells Fargo combined. The taxpayers get hurt when contracts are bloated and certain companies are favored to receive massive contracts that are not the subject of a fair competitive bidding process.
The D.C. Swamp has not been drained and some are thriving with an army of lobbyists and use of the revolving door between the public and private sector to get even richer. Bezos is, by far, the richest man in the world, yet he should not be allowed to use his wealth and the massive amounts of cash used to play the influence game to sideline real competition for government contracting.
This deal stinks.
Jerry Rogers is vice president at the Institute for Liberty and the founder of Capitol Allies, an independent, nonpartisan effort that promotes free enterprise. He’s the co-host of The LangerCast on the RELM Network. Twitter: @CapitolAllies
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.