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This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (February 20, 2019).

By John D. McKinnon and Kate O'Keeffe 

WASHINGTON -- A federal judge delayed a lawsuit over a massive Pentagon cloud-computing contract Amazon.com Inc. was favored to win so the government could investigate what it said was "new information" on possible conflicts of interest in the procurement process.

Senior Judge Eric Bruggink of the U.S. Court of Federal Claims ordered the stay on Tuesday "while the Department of Defense reconsiders whether possible personal conflicts of interest impacted the integrity of the JEDI Cloud procurement," according to his order.

The order followed a sealed motion seeking the stay by the Defense Department, which is overseeing the Joint Enterprise Defense Infrastructure cloud, or JEDI, program that could be worth up to $10 billion.

The contract was expected to be awarded this spring. Rival Oracle Corp. sued to halt the process until the government thoroughly investigates Oracle's claims of alleged conflicts, which center on a former government employee who worked at Amazon before and after playing a role in the Pentagon's procurement process.

The Defense Department largely dismissed conflict of interest claims earlier, making Tuesday's motion to seek the stay a potential turning point.

"DoD can confirm that new information not previously provided to DoD has emerged related to potential conflicts of interest," Pentagon spokeswoman Elissa Smith said in a statement. "As a result of this new information, DoD is continuing to investigate these potential conflicts."

Steven Schooner, a professor of government procurement law at George Washington University, said the Defense Department's request for a delay appears to be a win for Oracle, at least in the short term. "If Oracle's goal is to derail, or for that matter, delay the JEDI procurement, then this has to be viewed as good news" for the company, Mr. Schooner said.

Amazon and Oracle declined to comment on the judge's ruling.

The JEDI project would help the Pentagon use cloud computing to harness advanced technologies for much of the nation's military.

The Oracle suit focuses on Deap Ubhi, who worked at Amazon both before and after his 2016-17 stint in the U.S. government. In its suit, Oracle says Mr. Ubhi effectively steered the procurement process to favor Amazon, which then hired him back.

In a blog post during his stint at the Pentagon, Mr. Ubhi wrote that he was "currently leading the effort to accelerate adoption of the cloud for the Department of Defense." According to his Twitter bio, he is now "GM, @awscloud, " an apparent reference to the cloud division of Amazon Web Services.

While declining to comment on the court case overall, an Amazon spokesman said Mr. Ubhi works for the AWS commercial division, not the public-sector division.

Amazon in the past disputed allegations of wrongdoing, saying Mr. Ubhi recused himself from JEDI discussions inside the Pentagon. Oracle says he didn't recuse himself until the procurement work was in advanced stages.

Mr. Ubhi was involved "personally and substantially" in the JEDI procurement design and "drove the decision" to adopt an approach that would give the entire job to one provider, Oracle lawyers say in court filings.

Mr. Ubhi couldn't be reached to comment.

Oracle also contends that at some point during his time at the Pentagon, Mr. Ubhi and Amazon began engaging in negotiations about Amazon's potential purchase of a startup company in which Mr. Ubhi was involved.

The government previously defended the procurement process. But in a January declaration filed in the Oracle case, the Pentagon's contracting officer said her July 2018 investigation into the situation didn't consider all of the relevant factors.

She said she hadn't considered whether AWS had an organizational conflict of interest because she didn't then know for sure which companies would bid on the contract.

In light of AWS since submitting a proposal, she said she was "currently considering whether AWS's employment of Mr. Ubhi (and potentially others)" created a conflict of interest that couldn't be mitigated.

In court filings, Oracle claims Mr. Ubhi made public statements in support of Amazon while working for the government. On Jan. 30, 2017, for example, he sent a tweet applauding Amazon founder Jeff Bezos for challenging President Trump's immigration policies.

"Once an Amazonian, always an Amazonian. Proud today. Thank you, @JeffBezos," the tweet said.

Oracle also claims that Mr. Ubhi used his position at the Defense Department to gather valuable intelligence on all the potential contract bidders by holding meetings with them to learn about their capabilities. When he returned to Amazon, he was unfairly armed both with specific knowledge of what the Pentagon was looking for and what AWS's competitors could offer, Oracle contends.

On Oct. 31, 2017, Mr. Ubhi told colleagues he would recuse himself from the cloud procurement process "due to potential conflicts that may arise in connection to my personal involvement and investments," according to an email produced in the lawsuit. "Particularly, Tablehero, a company I founded, may soon engage in further partnership discussions with Amazon, " the email says.

Two weeks later, on Nov. 13, 2017, Mr. Ubhi said he would be leaving his Pentagon job, the court filings indicate. He then rejoined Amazon to take up a senior role in its cloud division.

--Nancy A. Youssef contributed to this article.

Write to John D. McKinnon at john.mckinnon@wsj.com and Kate O'Keeffe at kathryn.okeeffe@wsj.com

(END) Dow Jones Newswires

February 20, 2019 02:47 ET (07:47 GMT)

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