No.
`In the Supreme Court of the United States
`ORACLE AMERICA, INC.,
`PETITIONER,
`v.
`UNITED STATES AND AMAZON WEB SERVICES, INC.
`
`ON PETITION FOR A WRIT OF CERTIORARI
`TO THE UNITED STATES COURT OF APPEALS
`FOR THE FEDERAL CIRCUIT
`
`PETITION FOR A WRIT OF CERTIORARI
`
`R. REEVES ANDERSON
`ARNOLD & PORTER
`KAYE SCHOLER LLP
`1144 Fifteenth Street
`Suite 3100
`Denver, CO 80202
`(303) 863-1000
`
`ALLON KEDEM
`Counsel of Record
`CRAIG A. HOLMAN
`SALLY L. PEI
`SEAN A. MIRSKI
`NATHANIEL E. CASTELLANO
`ARNOLD & PORTER
`KAYE SCHOLER LLP
`601 Massachusetts Ave., NW
`Washington, DC 20001
`(202) 942-5000
`allon.kedem@arnoldporter.com
`
`
`In the Supreme Court of the United States
`ORACLE AMERICA, INC.,
`PETITIONER,
`v.
`UNITED STATES AND AMAZON WEB SERVICES, INC.
`
`ON PETITION FOR A WRIT OF CERTIORARI
`TO THE UNITED STATES COURT OF APPEALS
`FOR THE FEDERAL CIRCUIT
`
`PETITION FOR A WRIT OF CERTIORARI
`
`R. REEVES ANDERSON
`ARNOLD & PORTER
`KAYE SCHOLER LLP
`1144 Fifteenth Street
`Suite 3100
`Denver, CO 80202
`(303) 863-1000
`
`ALLON KEDEM
`Counsel of Record
`CRAIG A. HOLMAN
`SALLY L. PEI
`SEAN A. MIRSKI
`NATHANIEL E. CASTELLANO
`ARNOLD & PORTER
`KAYE SCHOLER LLP
`601 Massachusetts Ave., NW
`Washington, DC 20001
`(202) 942-5000
`allon.kedem@arnoldporter.com
`
`
`
`i
`
`QUESTIONS PRESENTED
`The Department of Defense structured its procurement
`for cloud-computing services, worth up to $10 billion, for award
`to a single bidder. Petitioner Oracle America, Inc. filed a bid
`protest, arguing that the single-bidder award violated federal
`law, which requires agencies to choose multiple bidders for
`contracts of this size and type. The Federal Circuit agreed with
`Oracle that the procurement violated federal law, yet declined
`to remand the issue to the agency as required by SEC v.
`Chenery Corp., 318 U.S. 80 (1943). Instead, the court applied its
`own “harmless error” exception to conclude that even if the
`agency were to conduct the procurement as a multiple-award
`solicitation, Oracle would not stand a better chance of winning
`the contract.
`During the bid protest, the Defense Department uncovered
`serious conflicts of interest between several of its employees and
`a leading bidder. The Federal Circuit acknowledged that one or
`more conflicts may have violated 18 U.S.C. § 208, the criminal
`conflict-of-interest prohibition. It nevertheless upheld the
`procurement, deferring to the Department’s view that the
`conflicts had not “tainted” the solicitation.
`The questions presented are:
`1. Whether a bid protest that establishes a violation of
`federal law may be denied for “harmless error” based on a
`rationale not present in the administrative record.
`2. Whether, in resolving a bid protest that establishes a
`violation of the criminal conflict-of-interest statute, 18 U.S.C.
`§ 208, the Federal Circuit can enforce the contract based on
`deference to an agency’s assessment that the criminal violation
`did not taint the procurement.
`
`
`
`ii
`
`PARTIES TO THE PROCEEDINGS
`Petitioner Oracle America, Inc. was plaintiff in the U.S.
`Court of Federal Claims and appellant in the Federal Circuit.
`Respondent the United States was defendant in the U.S.
`Court of Federal Claims and appellee in the Federal Circuit.
`Respondent Amazon Web Services, Inc. was defendant-
`intervenor in the U.S. Court of Federal Claims and appellee in
`the Federal Circuit.
`RULE 29.6 STATEMENT
`Oracle America, Inc.
`is wholly owned by Oracle
`Corporation, through one or more non-publicly held wholly
`owned subsidiaries. Oracle Corporation is a publicly held
`corporation. No other publicly held corporation owns 10% or
`more of Oracle America, Inc.’s stock.
`RELATED PROCEEDINGS
`The following proceedings are directly related to this case
`within the meaning of Rule 14.1(b)(iii):
` Oracle America, Inc. v. United States, No. 2019-2326
`(Fed. Cir.), judgment entered on September 2, 2020; and
` Oracle America, Inc. v. United States, No. 18-1880C
`(Fed. Cl.), judgment entered on July 19, 2019.
`
`
`
`TABLE OF CONTENTS
`
`Page
`Introduction .................................................................................... 1
`Opinions below ............................................................................... 3
`Jurisdiction ..................................................................................... 3
`Statutory provisions involved ....................................................... 3
`Statement ....................................................................................... 4
`A. The JEDI Cloud solicitation ........................................... 4
`B. Oracle’s protest................................................................. 7
`C. The Federal Circuit’s decision ...................................... 11
`Reasons for granting the petition .............................................. 13
`I. The Federal Circuit’s harmless-error approach to
`procurement warrants review ............................................ 14
`A. The Federal Circuit’s approach to agency error
`is irreconcilable with this Court’s precedents ............. 15
`B. This recurring issue goes to the heart of
`executive accountability ................................................. 20
`II. The Federal Circuit’s approach to criminal conflicts of
`interest warrants review ........................................................ 25
`A. The Federal Circuit’s enforcement of government
`contracts infected by criminal misconduct is
`irreconcilable with this Court’s precedent .................. 25
`B. Congress did not delegate discretion to agencies
`to police their own criminal ethics violations .............. 29
`Conclusion..................................................................................... 34
`Appendix A: Opinion (Fed. Cir., Sept. 2, 2020) ........................ 1a
`Appendix B: Opinion (Court of Fed. Claims, July 19, 2019)
`(re-filed July 26, 2019) ....................................................... 40a
`Appendix C: Statutory Provisions Involved ......................... 121a
`
`(iii)
`
`
`
`iv
`
`TABLE OF AUTHORITIES
`
`Page(s)
`
`Cases
`Abramski v. United States,
`573 U.S. 169 (2014) .......................................................... 29
`Advanced Data Concepts, Inc. v. United States,
`216 F.3d 1054 (Fed. Cir. 2000) ....................................... 21
`Am. Relocation Connections, L.L.C. v. United States,
`789 F. App’x 221 (Fed. Cir. 2019) .................................. 22
`Amazon Web Services, Inc. v. United States,
`147 Fed. Cl. 146 (2020) ................................................. 3, 9
`Bannum, Inc. v. United States,
`404 F.3d 1346 (Fed. Cir. 2005) ....................................... 22
`Burlington Truck Lines, Inc. v. United States,
`371 U.S. 156 (1962) .......................................................... 16
`Chevron U.S.A. Inc. v. Nat. Res. Defense Council,
`Inc., 467 U.S. 837 (1984) ................................................. 29
`Dep’t of Homeland Sec. v. Regents of the Univ.
`of Cal., 140 S. Ct. 1891 (2020) ...................................16, 17
`Emery Worldwide Airlines, Inc. v. United States,
`264 F.3d 1071 (Fed. Cir. 2001) ....................................... 21
`Godley v. United States,
`5 F.3d 1473 (Fed. Cir. 1993) ........................................... 27
`Gonzales v. Oregon,
`546 U.S. 243 (2006) .......................................................... 29
`Gutierrez-Brizuela v. Lynch,
`834 F.3d 1142 (10th Cir. 2016) ....................................... 29
`H.G. Props. A, L.P. v. United States,
`68 F. App’x 192 (Fed. Cir. 2003) .................................... 21
`I.C.C. v. Brotherhood of Locomotive Eng’rs,
`482 U.S. 270 (1987) .......................................................... 16
`
`
`
`v
`
`Page(s)
`
`Cases—Continued
`JWK Int’l Corp. v. United States,
`279 F.3d 985 (Fed. Cir. 2002) ......................................... 21
`Kingdomware Techs., Inc. v. United States,
`136 S. Ct. 1969 (2016) .................................................14, 24
`Kisor v. Wilkie,
`139 S. Ct. 2400 (2019) ...................................................... 29
`Kurzon v. U.S. Postal Serv.,
`539 F.2d 788 (1st Cir. 1976) ........................................... 18
`Mass. Trs. of E. Gas & Fuel Assocs. v. United States,
`377 U.S. 235 (1964) .......................................................... 17
`Michigan v. EPA,
`576 U.S. 743 (2015) .......................................................... 15
`NLRB v. Am. Geri-Care, Inc.,
`697 F.2d 56 (2d Cir. 1982) ......................................... 18-19
`NLRB v. CNN Am., Inc.,
`865 F.3d 740 (D.C. Cir. 2017) ......................................... 19
`NLRB v. Wyman-Gordon Co.,
`394 U.S. 759 (1969) .......................................................... 18
`Oracle Am., Inc. v. United States,
`144 Fed. Cl. 88 (2019) ....................................................... 3
`Oracle Am., Inc. v. United States,
`975 F.3d 1279 (Fed. Cir. 2020) ......................................... 3
`Peter v. Nantkwest, Inc.,
`140 S. Ct. 365 (2019) ........................................................ 14
`Prill v. NLRB,
`755 F.2d 941 (D.C. Cir. 1985) ......................................... 19
`Safe Air for Everyone v. EPA,
`488 F.3d 1088 (9th Cir. 2007) ......................................... 19
`
`
`
`vi
`
`Page(s)
`
`Cases—Continued
`Scanwell Labs., Inc. v. Shaffer,
`424 F.2d 859 (D.C. Cir. 1970) ......................................... 24
`Scenic Am., Inc. v. Dep’t of Transp.,
`138 S. Ct. 2 (2017) ........................................................... 30
`SEC v. Chenery Corp.,
`318 U.S. 80 (1943) .................................................... passim
`SEC v. Chenery Corp.,
`332 U.S. 194 (1947) .......................................................... 16
`Sierra Club, Inc. v. U.S. Forest Serv.,
`897 F.3d 582 (4th Cir. 2018) ........................................... 19
`United States v. Miss. Valley Generating Co.,
`364 U.S. 520 (1961) .................................................. passim
`WellPoint Military Care Corp. v. United States,
`953 F.3d 1373 (Fed. Cir. 2020) ....................................... 22
`Statutes
`10 U.S.C. § 2304a........................................................ passim
`18 U.S.C. § 208 ........................................................... passim
`28 U.S.C.
`§ 1294 .................................................................................. 3
`§ 1295 ................................................................................ 20
`§ 1491 ................................................................................ 15
`Regulations
`48 C.F.R. § 3.104-7(a) ........................................................ 30
`80 Fed. Reg. 38,293 (July 2, 2015) ...................................... 5
`Legislative Materials
`H.R. Rep. No. 84, 116th Cong., 1st Sess. (2019) ............... 5
`S. Rep. No. 258, 103d Cong., 2d Sess. (1994) .................... 4
`
`
`
`vii
`
`Other Authorities
`Page(s)
`FedRAMP, Frequently Asked Questions ......................... 7
`Frank Konkel, Federal Government to Conclude
`Fiscal 2020 With Record Spending,
`Nextgov (Sept. 30, 2020) ................................................ 24
`Frederick W. Claybrook Jr., Please Check Your
`Crystal Ball at the Courtroom Door,
`38 Pub. Cont. L.J. 375 (2009) ......................................... 22
`Frederick W. Claybrook Jr., Standing, Prejudice,
`and Prejudging in Bid Protest Cases,
`33 Pub. Cont. L.J. 535 (2004) ......................................... 22
`GDP (Current US$)—Sweden,
`World Bank ..................................................................... 23
`Gov’t Accountability Office, A Snapshot of
`Government-wide Contracting for FY 2019,
`WatchBlog (May 26, 2020) ........................................23, 24
`Gov’t Accountability Office, GAO-18-412R, Use by
`the Department of Defense of Indefinite-Delivery
`Contracts (2018) ............................................................ 4, 5
`Henry J. Friendly, Chenery Revisited,
`1969 Duke L.J. 199 (1969) .........................................18, 19
`Report on Defense Contracting Fraud, Office of the
`Under Secretary of Defense for Acquisition and
`Sustainment (Dec. 2018) ................................................ 33
`Ron Miller, Why the Pentagon’s $10 billion JEDI
`deal has cloud companies going nuts,
`Tech Crunch (Sept. 15, 2018) ........................................... 5
`
`
`
`viii
`
`Other Authorities—Continued
`Page(s)
`U.S. Navy Admiral Sentenced to Prison for Lying
`to Federal Investigators about His Relationship
`with Foreign Defense Contractor in Massive
`Navy Bribery and Fraud Investigation,
`Dep’t of Justice (May 17, 2017) ..................................... 33
`William E. Kovacic, Procurement Reform and the
`Choice of Forum in Bid Protest Disputes,
`9 Admin. L.J. Am. Univ. 461 (1996) .............................. 24
`
`
`
`In the Supreme Court of the United States
`ORACLE AMERICA, INC., PETITIONER,
`v.
`UNITED STATES AND AMAZON WEB SERVICES, INC.
`
`ON PETITION FOR A WRIT OF CERTIORARI
`TO THE UNITED STATES COURT OF APPEALS
`FOR THE FEDERAL CIRCUIT
`
`PETITION FOR A WRIT OF CERTIORARI
`
`What happens to a $10 billion federal procurement
`contract that is structured in violation of federal law and mired
`in the criminal misconduct of its chief architects? One might
`reasonably presume that the award would be set aside, so that
`the procurement can be reconsidered by the agency, in the first
`instance, in accordance with legal requirements. Certainly that
`is the route required by this Court’s precedents.
`But the Federal Circuit has charted a very different course.
`Despite agreeing with Oracle that the Defense Department’s
`10-year, $10 billion JEDI cloud-computing procurement violates
`Congress’s statutory restriction on single-source awards, the
`court rejected Oracle’s bid protest and left the unlawful
`procurement in place. Rather than remanding so that the
`agency could structure the procurement lawfully, the Federal
`Circuit deemed the statutory violation “harmless,” based on
`speculation about requirements the agency would have
`imposed if the matter were remanded. The result: Despite a
`judicial determination that federal law forbids the agency from
`awarding the procurement to a single source, that violation
`remains uncorrected; JEDI is still a single-source contract.
`The Federal Circuit’s harmless-error doctrine runs counter
`to this Court’s instruction that “[t]he grounds upon which an
`
`(1)
`
`
`
`2
`
`administrative order must be judged are those upon which the
`record discloses that its action was based.” SEC v. Chenery
`Corp., 318 U.S. 80, 87 (1943). This simple but fundamental
`principle of administrative law—that agency “action must be
`measured by what the [agency] did, not by what it might have
`done,” id. at 93-94—means that agencies, not courts, must
`determine how best to respond to administrative errors. The
`Federal Circuit’s repeated violation of the Chenery principle in
`its procurement decisions warrants this Court’s review.
`But there is more. The same Defense Department officials
`who led the agency to structure the JEDI procurement as a
`single-source award also violated 18 U.S.C. § 208, the federal
`criminal conflict-of-interest prohibition. The Federal Circuit
`again accepted that agency officials likely had broken the law,
`yet declined to heed this Court’s instruction that such criminal
`misconduct “renders the contract unenforceable.” United
`States v. Mississippi Valley Generating Co., 364 U.S. 520, 563
`(1961). Instead, the court upheld, as not “clearly erroneous,” a
`determination by the Defense Department that its own
`criminal ethics violations did not taint the procurement.
`According to the Federal Circuit, Congress implicitly gave
`contracting officers, rather than courts, primary responsibility
`to decide whether a Section 208 violation requires setting aside
`a procurement.
`Both issues are recurring and important. The Federal
`Circuit frequently upholds illegally structured or corrupted
`contracts on the basis of “harmless error”—a practice that
`abdicates judicial responsibility to check agency misconduct,
`usurps administrative prerogatives, and undermines public
`confidence in government spending. The decision below signals
`that agencies can flout congressional safeguards established to
`maintain the integrity of the procurement process, confident
`
`
`
`3
`
`that rule-breaking will later be excused through after-the-fact
`justifications offered to deferential courts.
`This petition is an ideal vehicle to address both questions
`presented. The legal issues are dispositive; the material facts in
`the administrative record are undisputed; and the questions
`are timely. And unlike many government-contract disputes
`that come before this Court, the underlying JEDI contract has
`not yet gone into effect. Amazon Web Services, Inc. v. United
`States, 147 Fed. Cl. 146, 150 (2020). Because the Federal
`Circuit has exclusive jurisdiction over bid protests, only this
`Court can restore an evenhanded commitment to fair
`competition and reestablish the balance of power among the
`three branches of government.
`OPINIONS BELOW
`The opinion of the Court of Federal Claims (App. 40a-120a)
`is reported at 144 Fed. Cl. 88. The opinion of the Federal
`Circuit (App. 1a-39a) is reported at 975 F.3d 1279.
`JURISDICTION
`The Federal Circuit entered judgment on September 2,
`2020. App. 1a. This Court has jurisdiction pursuant to 28 U.S.C.
`§ 1254(1).
`
`STATUTORY PROVISIONS INVOLVED
`Pertinent statutory provisions are reproduced at
`App. 121a-125a.
`
`
`
`4
`
`STATEMENT
`A. The JEDI Cloud Solicitation
`In 2018, the Department of Defense issued a request for
`proposals to provide worldwide cloud-computing services for
`the entire agency over a ten-year period. Valued at up to
`$10 billion, the contract—known as the Joint Enterprise
`Defense Infrastructure (JEDI) Cloud contract—is among the
`largest information-technology contracts in the history of the
`federal government.
`1. The Department structured the JEDI Cloud procurement
`as an “indefinite delivery, indefinite quantity” (IDIQ) contract,
`sometimes called a “task order” contract. Unlike contracts that
`identify in advance a firm quantity of desired goods or services,
`IDIQ contracts create an open-ended agreement for the
`awardee to supply an agency’s needs over time within broadly
`stated parameters. “The [agency] then places orders through
`the indefinite-delivery contract when it knows the timing and
`quantity of its needs.” Gov’t Accountability Office, GAO-18-
`412R, Use by the Department of Defense of Indefinite-Delivery
`Contracts 1 (2018). Indefinite delivery contracts (roughly 80%
`of which are IDIQ) are the federal government’s most
`frequently used contract type, accounting for over $130 billion
`in annual spending. Id. at 6.
`Congress has recognized that IDIQ contracts create
`substantial risks by
`locking an agency
`into
`long-term
`commitments to pay for “broad categories of ill-defined
`services,” which “unnecessarily diminishes competition and
`results in the waste of taxpayer dollars.” S. Rep. No. 258, 103d
`Cong., 2d Sess. 15 (1994). To promote innovation, flexibility,
`competition, and cost-savings—and to prevent favoritism and
`corruption—Congress has
`instructed agencies to prefer
`“multiple awards,” ibid., which give winning bidders “a fair
`
`
`
`5
`
`chance to compete” to fulfill the agency’s needs as they arise
`over the life of the contract, id. at 2.
`Federal law restricts awarding large IDIQ contracts to a
`single vendor. Congress has specified that “no task … order
`contract in an amount estimated to exceed [$112 million] may
`be awarded to a single source unless the head of the agency
`determines in writing that” one of four statutory exceptions
`applies. 10 U.S.C. § 2304a(d)(3)(A); see 80 Fed. Reg. 38,293,
`inflation). Despite
`38,997 (July 2, 2015) (adjusting for
`Congress’s strong “preference for making multiple awards of
`IDIQ contracts,” agencies still routinely make single awards,
`including for large, long-term procurements. GAO-18-412R at
`1, 5. The Department of Defense is among the worst offenders:
`It uses single-award IDIQ contracts more than 60% of the time.
`Id. at 6.
`2. a. From the outset, the Defense Department made clear
`that it intended to award the decade-long JEDI Cloud contract
`to a single provider. App. 44a-47a. Numerous
`industry
`stakeholders expressed concerns with
`that approach,
`observing that
`it contravened best practices
`in cloud
`computing; would stifle competition and innovation; and could
`reduce the agency’s flexibility and increase security risks. E.g.,
`App. 48a; H.R. Rep. No. 84, 116th Cong., 1st Sess. 12 (2019)
`(House Appropriations Committee expressing concern that
`Department “is deviating from established OMB policy and
`industry best practices, and may be failing to implement a
`strategy that lowers costs and fully supports data innovation”).
`Nevertheless, the Department announced that it would
`award the JEDI Cloud contract to a single provider, App. 60a,
`prompting media observers to comment that “the Pentagon
`seems hell bent on going forward with the single vendor idea.”
`
`
`
`6
`
`Ron Miller, Why the Pentagon’s $10 billion JEDI deal has
`cloud companies going nuts, Tech Crunch (Sept. 15, 2018).1
`In a written determination justifying the agency’s decision,
`the Under Secretary of Defense concluded that one of the
`statutory exceptions to § 2304a(d)(3)’s single-award prohibition
`applied. App. 57a. Specifically, she determined that the JEDI
`Cloud contract “provides only for firm, fixed price (FFP) task
`orders or delivery orders for services for which prices are
`established in the contract for the specific tasks to be
`performed.” Ibid.; see 10 U.S.C. § 2304a(d)(3)(A)(ii). The Under
`Secretary so concluded even though the contract contemplated
`the “incorporation of … new services into the contract” after
`award, at prices to be determined at a later date. App. 57a-60a.
`The Under Secretary did not invoke any other statutory
`exception under § 2304a(d)(3).
`b. The JEDI Cloud solicitation was unusual in other ways.
`The request for proposals included several “gate” provisions
`that prospective bidders were required to satisfy. A bidder’s
`failure to satisfy any gate provision meant that, regardless of its
`other qualities, the bid “w[ould] not be further evaluated.”
`App. 61a.
`One of the gate provisions (Gate 1.1) required the
`contractor to demonstrate, prior to proposal submission, that
`JEDI Cloud usage would represent less than 50% of the
`contractor’s total commercial cloud usage. App. 61a-62a. Oracle
`satisfied this gate at the time proposals were due.
`Another gate provision (Gate 1.2) required the contractor
`to have at least three geographically separated commercial
`cloud datacenters, each of which must hold a “FedRAMP
`Moderate” certification. C.A. App. 100792. FedRAMP is a
`government-wide program that provides broad security
`
`1 https://tcrn.ch/38u2pfA.
`
`
`
`7
`
`standards for cloud-computing.2 The JEDI Cloud contract
`itself did not rely on or incorporate FedRAMP protocols,
`however; to perform the contract, the winning bidder would
`instead need to satisfy an entirely separate, contract-specific
`set of security standards. C.A. App. 105495-96.
`When it issued the JEDI Cloud solicitation in July 2018,
`the Department knew that only two prospective bidders had
`the requisite FedRAMP certification: Amazon Web Services
`and Microsoft. See App. 105a. The Department nevertheless
`required all bidders to obtain FedRAMP certification by the
`date of proposal submission, due only two months later.
`App. 63a. The Department thus intended, by imposing a pre-
`submission certification requirement, to limit the universe of
`potential bidders to Amazon and Microsoft. Even so, Oracle
`expected to meet (and exceed) the Gate 1.2 requirement by the
`time an award was made—and in fact did so.
`B. Oracle’s Protest
`Oracle filed a pre-award bid protest with the Government
`Accountability Office to challenge the single-source decision
`and other flaws in the JEDI Cloud solicitation. After the
`challenge was denied, Oracle filed its protest in the Court of
`Federal Claims in December 2018. App. 64a.
`1. While the case was pending in the Claims Court—and as
`a direct result of Oracle’s protest—the Department discovered
`that several of its employees working on the JEDI Cloud
`procurement had serious conflicts of
`interest
`involving
`Amazon.
`One conflict involved Deap Ubhi, an employee who had
`engaged in “loud advocacy for a single award approach.”
`
`2 Frequently Asked Questions, https://www.fedramp.gov/faqs. FedRAMP
`stands for the Federal Risk and Authorization Management Program.
`
`
`
`8
`
`App. 115a. Ubhi pushed this position at key meetings with
`Department decision-makers, and he “participated in drafting
`and editing some of the first documents shaping the
`procurement.” App. 28a. Unbeknownst to the Department,
`however, Ubhi had been negotiating for employment with
`Amazon while still working on the procurement. App. 69a-73a.
`Ubhi eventually recused himself, but lied to the Department
`about the reason: Rather than disclose his months-long
`employment negotiations, he falsely represented that Amazon
`had only recently expressed interest in purchasing a start-up
`that he owned. App. 69a-70a.
`Another employee, Tony DeMartino, worked on the JEDI
`Cloud procurement despite having consulted for Amazon
`before joining the Department. DeMartino reviewed and
`commented on documents even after receiving a verbal
`warning from the Department’s Standards of Conduct Office
`that he should consider recusing himself from anything to do
`with Amazon. App. 66a-68a.
`A third employee, Victor Gavin, accepted a job with
`Amazon but subsequently attended meetings about the JEDI
`Cloud procurement. And after he began working at Amazon,
`Gavin spoke with a colleague there about the procurement.
`App. 79a-81a.
`Once these improprieties came to light, proceedings in the
`Court of Federal Claims were stayed while a Department
`contracting officer reviewed the conflicts. App. 70a-71a. The
`contracting officer concluded that these employees had acted
`unethically, even unlawfully: The officer found that Gavin and
`Ubhi had potentially violated 18 U.S.C. § 208, the criminal
`conflict-of-interest prohibition for federal officials. App. 79a,
`81a. Nevertheless, in the contracting officer’s opinion, the
`employees’ conflicts ultimately did not “taint” the procurement
`process. App. 107a.
`
`
`
`9
`
`2. While Oracle’s protest was pending in the Claims Court,
`the Department of Defense continued to evaluate JEDI Cloud
`bids. Four companies submitted proposals: Oracle, Amazon,
`IBM, and Microsoft. App. 64a-65a. The Department eliminated
`Oracle’s proposal under Gate 1.1, based on a measurement of
`Oracle’s cloud capacity during an arbitrarily selected period
`eight-to-nine months before proposal submission. The
`Department did not consider whether Oracle met the other
`gate criteria. App. 65a. The Department also removed IBM
`from consideration, finding IBM’s proposal unacceptable under
`Gate 1.2. Ibid.
`The Department ultimately awarded the JEDI Cloud
`contract to Microsoft in October 2019. Amazon filed a bid
`protest, prompting the Department to revise and reconsider
`parts of the procurement. The Department re-awarded the
`contract to Microsoft in September 2020. Amazon then
`renewed its bid protest, and the contract award is presently
`enjoined pending resolution of Amazon’s lawsuit. See Amazon
`Web Services, Inc. v. United States, 147 Fed. Cl. 146, 150 (2020).
`3. The Court of Federal Claims denied Oracle’s bid
`protest. App. 40a-120a.
`At the outset, the Claims Court agreed with Oracle that the
`Department’s decision to award the JEDI Cloud contract to a
`single vendor violated federal law. As the court explained,
`§ 2304a(d)(3) generally “prohibits awarding such large task
`order contracts to a single vendor,” and none of the exceptions
`to that statutory prohibition on single-vendor awards applied.
`App. 92a. The Department had attempted to invoke the
`exception for “firm fixed-price task or delivery orders,” 10
`U.S.C. § 2304a(d)(3)(A)(ii), but the court rejected that
`argument as “tortured.” App. 95a. The contract called for the
`vendor to provide “new, additional services to be identified and
`
`
`
`10
`
`priced in the future,” and those services “are not, by definition,
`fixed or established at the time of contracting.” Ibid.
`Despite finding the JEDI Cloud procurement contrary to
`congressional command, the Claims Court held that this
`statutory violation did not require setting aside the solicitation.
`The court reasoned that even if the agency had sought multiple
`providers, “Oracle would not stand a better chance of being
`awarded [the JEDI Cloud] contract.” App. 97a. To reach that
`conclusion, the court did not point to any statement from the
`Department regarding how it might structure a multiple-award
`solicitation—because no such statement existed in the record.
`Instead, the Claims Court relied on the speculation of
`William Rayel, counsel for the government. Rayel argued that
`even if the agency changed the procurement to a multiple-
`award solicitation, the agency would still insist on the Gate 1.2
`requirement for each award (which, the Department argued,
`Oracle could not meet). The following remarkable exchange
`occurred at oral argument, with the court invoking “Rayel on
`the facts”—shorthand for counsel’s representations:
`THE COURT: I understand that we’re on Rayel on the
`facts as opposed to the administrative record.
`MR. RAYEL: Well, yeah, you asked me, Your Honor.
`So yes, I mean, this isn’t all—
`THE COURT: No, I understand.
`MR. RAYEL: Because, I mean, this was a single award.
`So the agency didn’t—I’ll admit it doesn’t say in [the
`deputy director’s] memorandum [“]and my decision would
`be the same if there were multiple awards.[”]
`C.A. App. 2296 (115:16-25). The Claims Court stated that it had
`“no reason to doubt” the agency’s assertion “that the Gate
`Criteria 1.2 security requirements are the minimum that will
`be necessary to perform even the least sensitive aspects of the
`
`
`
`11
`
`JEDI Cloud project.” App. 97a. The court accordingly
`concluded that “if multiple awards were made, the security
`concerns would ratchet up, not down,” and “Oracle would not
`stand a better chance of being awarded this contract.” Ibid.
`The Claims Court also rejected Oracle’s arguments that
`conflicts of interest between Defense Department employees
`and Amazon required setting aside the procurement. The court
`again agreed with Oracle that the law had been broken,
`including potential criminal violations of 18 U.S.C. § 208 by
`Ubhi and Gavin. App. 110a-112a. The facts were more than
`merely “sufficient to raise eyebrows,” the court explained; they
`revealed “lax oversight” and the “constant gravitational pull on
`agency employees by technology behemoths.” App. 107a. The
`court noted that “one would hope the agency would be more
`alert to the possibilities of an erosion of public confidence,
`particularly given the risk to the agency in having to redo
`procurements of this size.” Ibid.
`Ultimately, however, the Claims Court viewed its mandate
`narrowly: The court limited its review to whether the
`contracting officer had a “rational basis” for asserting that
`these conflicts of interest had not “tainted” the procurement.
`App. 108a, 109a. And the court found “nothing irrational” in the
`contracting officer’s decision to overlook the agency’s ethical
`lapses. App. 112a, 118a.
`C. The Federal Circuit’s Decision
`The Federal Circuit affirmed. App. 1a-39a.
`Like the Claims Court, the Federal Circuit agreed with
`Oracle that the Department of Defense’s decision to structure
`the JEDI Cloud contract as a single-award procurement
`violated 10 U.S.C. § 2304a(d)(3)(A), and was thus “legally
`improper.” App. 16a. The Federal Circuit also acknowledged
`the “foundational principle of administrative law,” articulated by
`
`
`
`12
`
`this Court in SEC v. Chenery Corp., 318 U.S. 80 (1943), that
`judicial review of agency action “ is limited to ‘the grounds that
`the agency invoked when it took the action.’ ” App. 15a. The
`Federal Circuit nevertheless declined to send the case back for
`the agency to reconsider, in the first instance, how to structure
`the solicitation in a manner consistent with federal law.
`Instead, the Federal Circuit asked a different question:
`whether the agency’s violation of § 2304a(d)(3)(A) was
`“harmless error.” App. 16a. To answer that question, the
`Federal Circuit stated it would defer to the Claims Court’s
`speculation that the statutory violation did not “prejudice”
`Oracle. App. 17a. Such a determination, the Federal Circuit
`said, was a factual finding reviewable “under the clearly
`erroneous standard.” Ibid. In other words, the Federal Circuit
`stated that it would uphold the procurement unless the Claims
`Court had “clearly” erred in its view—which itself was based
`on post hoc speculation from agency counsel—that upon
`remand, the agency would ratchet up its security requirements,
`such
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