Exclusive: Republicans Demand Answers on DOD Clearing Former Official of Alleged Misconduct on Amazon JEDI Bid

Editor’s Note: This article has been corrected to state that Pienaar and Carlson were not yet engaged in 2017, and would not become engaged until 2019. This article has also been corrected to state that the hearing at which Nancy Mace asked DOD IG Robert Storch about the DOD OIG final report was not a hearing about the report or the JEDI contract, but rather a hearing about President Biden’s withdrawal of troops and personnel from Afghanistan. This article has been updated to further reference prior reporting by ProPublica. This article did not imply that Pienaar and Carlson acted improperly, and has been revised to explicitly state as much.

Based on newly revealed evidence, Republicans are now questioning the Department of Defense Office of Inspector General’s (DOD OIG) April 2020 finding that a former senior defense official — Sally Donnelly — did not engage in ethical misconduct by allegedly trying to steer a massive government contract to Amazon.

Now in control of the House, Republicans are reviewing the DOD OIG’s conclusion, which leaves the former official in a position to continue pursuing lucrative contracts for Amazon with the DOD, as well as to sit on a key DOD business advisory board.

House Speaker Kevin McCarthy (R-CA) recently previewed their efforts in an exclusive interview with Breitbart News. “There are a number of members that have been looking into this contract, how the contract was made — is there any illegal activity done within there — and I think more of that will come to light,” he said in March.

Rep. Nancy Mace (R-SC), who sits on the Oversight and Accountability Committee, is one of the members digging into the details of the investigation.

“The conflict of interest there is major,” she told Breitbart News in an exclusive interview in May. “This is a ‘what the f-ck’ moment.”

Background

As previously reported, the DOD OIG investigation concerned allegations that Donnelly and her allies as far back as 2017 improperly used their positions within the DOD to try to steer a multibillion-dollar information technology contract to Amazon.

Donnelly served as a top adviser to then-Defense Secretary James Mattis between 2017 and 2018. According to ProPublica reporting, during that time, she arranged several meetings between Mattis and her former consulting firm clients, which included Amazon Web Services (AWS) — according to emails obtained through FOIA litigation and previously reported by Breitbart News.

At the time, AWS was vying for a lucrative contract – later known as “Joint Enterprise Defense Infrastructure” (JEDI) — which would provide DOD with a single cloud infrastructure and cloud services.

Donnelly’s activities, among others, raised suspicions of ethical misconduct, and after the contract appeared poised to be awarded to AWS, House Republicans requested for the DOD OIG to look into the matter.

At the center of the DOD OIG’s investigation was whether or not Donnelly had followed federal ethics regulations.

One of those regulations requires government officials to recuse themselves for one year from “covered relationships,” or relationships with people or companies who were sources of income. For Donnelly, that would have included her former consulting clients AWS and C5, a British-based venture capital firm owned by CEO and founder Andre Pienaar.

According to ProPublica, in March 2017 Donnelly arranged a private dinner with Mattis at an exclusive London venue that included Pienaar and an AWS executive named Theresa Carlson.

During that dinner, Carlson pitched a meeting with then-Amazon CEO Jeff Bezos to Mattis. According to emails, after the dinner, Donnelly approved a phone call between Mattis and Bezos. Donnelly would also later give AWS employees guidance on how to speak to Mattis about AWS cloud services during a visit by Mattis to Amazon’s headquarters in summer 2017. Also according to reporting by ProPublica, she later organized a subsequent dinner between Mattis and Bezos.

These meetings occurred while AWS was seeking to land the lucrative DOD cloud contract.

At the time of the London dinner, Donnelly was late in filing her mandatory ethics disclosure form, known as OGE Form 278e. The form is critical to helping ethics officials identify covered relationships, and thus potential conflicts of interest. Although the form is due 30 days after entering government employment, she would not file this until May 17, 2017.

The DOD OIG ultimately concluded in a final investigative report on April 21, 2020, that Donnelly did not engage in any of the alleged wrongdoing. It said:

We did not substantiate any of the allegations regarding Ms. Donnelly. We did not find evidence that she failed to disclose payments from SBD Advisors on her OGE 278e, provided preferential treatment to Amazon, or improperly participated in the JEDI Cloud procurement because of her prior associations with Amazon, SBD Advisors, and C5 Capital.

It added: “We determined that Ms. Donnelly did not violate any ethical agreements and obligations regarding OGE financial disclosures, did not give preferential treatment to Amazon officials or restrict access to Secretary Mattis for other industry leaders…”

Grassley Presents New Information Not Considered by DOD OIG

However, last October, Sen. Chuck Grassley (R-IA) said he discovered additional relevant information that the DOD OIG did not have during its investigation.

According to Grassley, as set forth in a letter dated October 24, 2022, the DOD OIG allegedly admitted to him that it did not know who the purchaser of Donnelly’s firm was, arguing it was “not relevant” to its investigation. According to Grassley, Donnelly’s counsel had provided the DOD OIG with the Purchase and Sale Agreement for her firm — but had redacted the name of the purchaser.

Grassley said he later obtained an unredacted Purchase and Sale Agreement, which revealed that Pienaar, CEO of C5 Capital and Donnelly’s former client, and a C5 Capital investor named Vincent Mai, created an entity called “VMAP Investor LLC” that purchased Donnelly’s firm for $1,560,000. Pienaar signed as the “authorized person” for VMAP on the agreement.

Grassley alleges he discovered that VMAP made one payment of $390,000 to Donnelly before she entered the DOD in January 2017, but it made three more payments of $390,000 to her while she served at the DOD — in March 2017, July 2017, and March 2018. Donnelly resigned from the DOD just days after she received her last payment, according to the DOD OIG report.

This meant that VMAP, a C5-linked entity set up by Pienaar and Mai, paid Donnelly during her time at the Pentagon, including when she set up the London dinner with Mattis and Pienaar. Ongoing payments during government service for business deals completed while a person was still in the private sector are permitted.

In addition, as Grassley noted in his letter, AWS and Pienaar’s C5 Capital also had their own business relationship. Around 2017 and 2018, AWS supported two C5 Capital startup accelerator programs.

This meant – according to Grassley — that AWS was supporting Pienaar’s C5 Capital while Pienaar’s VMAP was paying Donnelly, as she set up calls and meetings between Mattis and AWS representatives. While that does not imply wrongdoing by private citizens, it apparently makes Grassley question the thoroughness of the original OIG report.

There was another tie between C5 Capital and AWS: Pienaar, CEO of C5 Capital, who would later get engaged in 2019 to Carlson, the AWS executive in charge of the company’s bid for the DOD cloud contract.

Given these ties, Grassley argued that Pienaar’s involvement in the purchase of Donnelly’s firm was indeed relevant to the DOD OIG’s investigation of alleged ethical misconduct by government officials and has pressed for the DOD OIG to reopen its investigation.

He wrote in his letter:

Knowledge of the entity that purchased her firm is relevant and central to the question of whether a conflict of interest existed and could have substantively affected the protocols required to wall off Sally Donnelly from potential and actual conflicts of interest while employed at DoD.

He added that the new information contradicts the DOD OIG’s finding that there was “no evidence that [Ms. Donnelly] had an ongoing or undisclosed financial relationship with C5 or Amazon and its affiliates” during her employment at the DOD.

“[N]ot only did the DoD OIG fail to acquire an unredacted version of the Purchase and Sale Agreement, it never even interviewed Andre Pienaar, Chief Executive and Founder of C5 Capital, during its review of DoD’s JEDI cloud procurement program,” Grassley claimed.

He added, “Taken together, while in government service, Ms. Donnelly received payments from VMAP Investor LLC—an entity directly linked to two senior C5 officials, a company connected to Amazon. These facts were not included in DoD or DoD OIG’s conflicts analysis.”

The DOD OIG report did mention in a footnote: “Ms. Donnelly and Mr. Pienaar co-owned SBD Advisors. Ms. Donnelly sold her share of ownership of SBD Advisors to Mr. Pienaar in January 2017, prior to entering on duty with the DoD.”

However, that footnote did not reflect that Pienaar co-created an entity named VMAP that purchased her firm, and that VMAP was linked to C5 Capital and paying Donnelly while C5 Capital was working with AWS on at least two projects.

Donnelly in her testimony to the DOD OIG also seemed to downplay Pienaar’s role in purchasing her firm, calling him the “organizer” of the sale of her firm. And an SBD Advisors spokesperson and former Obama administration official, Price Floyd, also told the Daily Caller in August 2018 that SBD Advisors was sold to a “group of investors” in January 2017.

Floyd also claimed to another outlet that none of the investors had any commercial relationships with AWS. That statement appears to be false, since at least one investor — Pienaar — had a commercial relationship with AWS.

Given the subsequently discovered information not considered — or perhaps dismissed — during the initial DOD OIG investigation, Grassley and other Republicans say the investigation should be reopened.

“It looks bad,” Mace said of Donnelly’s failure to disclose that an entity created in part by Pienaar paid her over a million dollars during her tenure at the Pentagon as she helped coordinate meals with Mattis. “There was a huge conflict of interest.”

“You need to disclose all of your finances before taking your appointment in federal government, especially if you have a position where you’re introducing new contracts,” she said in the interview with Breitbart News.

“This employee didn’t disclose any of this until they were leaving,” she added. “It’s pretty f-cked up.”

She also expressed concern that Donnelly continues to serve at the DOD on the Defense Business Board. “She [Donnelly] shouldn’t be let inside the building,” she said.

The Question Being Asked Is Whether the DOD OIG Whitewashed Evidence of Misconduct

According to the additional emails and documents obtained via FOIA litigation and reviewed by Breitbart News, the final DOD OIG report omitted information that demonstrated Donnelly’s involvement in the cloud initiative and called into question some of her statements to DOD OIG investigators.

For example, the DOD OIG report left out part of an April 27, 2017, email where Mattis’s Chief of Staff Kevin Sweeney asked Donnelly and Mattis’s Senior Military Advisor Navy Adm. Craig Faller if they wanted to “accept an office call with Jeff Bezos of Amazon and Blue Origin” after the London dinner.

Faller wrote to Donnelly, “[Chief of Staff] defers to you for SecDef consideration.” The DOD OIG left out that Donnelly okayed the call, writing, “I think he is the genius of our age, so why not?”

On the other hand, the DOD OIG report did include in its report an email that was favorable to Donnelly sent 10 days earlier.

On April 17, 2017, when an Amazon representative emailed Donnelly’s aide Tony DeMartino — who had worked with Donnelly at her firm on AWS matters — to arrange a post-dinner meeting for Mattis and Bezos, the DOD OIG report said that DeMartino consulted Donnelly and that Donnelly responded, “We should stand back and let the [Secretary of Defense’s] schedule process work — we should take no action to help. Not our place, not proper.”

The DOD OIG report concluded, “According to witnesses we interviewed, Ms. Donnelly was not Secretary Mattis’ scheduler, nor was she the decision-maker regarding his acceptance of meeting or dinner invitations … We found no evidence that Ms. Donnelly served as a ‘gatekeeper’ for Secretary Mattis or screened his meeting or dinner invitations to favor Amazon at the exclusion of its competitors, as alleged in the complaint we received.”

But since the record contained an email in which Donnelly expressed support for Mattis accepting a call with Bezos, it is not clear why the OIG only cited the other arguably exculpatory email in its report.

The DOD OIG report also cited an email from a DOD ethics official that said there were “no ethics objections” for Mattis’s London dinner with Pienaar and Carlson. (DOD OIG report, p. 197)

However, the DOD OIG report did not include context that the DOD ethics official’s assessment seemed limited to whether it was OK for Mattis to accept the “gift” of the meal itself and did not opine regarding any ethical implications beyond Mattis accepting the meal.

Such meetings are not inherently improper. But Grassley and Mace appear to be raising a concern regarding ethics regulation 5 C.F.R. § 2635.502(b)(1) — which, as previously reported, prohibits officials from working on any matter involving individuals or entities the officials had a “covered relationship” with for at least a year, unless given express permission. Again, Grassley and Mace appear to be expressing concern over how thoroughly OIG examined the conduct of government employees.

In a separate instance, the DOD OIG omitted an entire section of an email from an ethics official regarding whether or not Mattis could meet with Bezos. The omitted portion said:

DoD officials can generally meet one-on-one with members of industry as long as they do not give preferential treatment to some members of industry. Several factors should be taken into account, including the topic(s) to be discussed, whether the official is willing to hold such meetings with all similar situated entities, any pending matters involving the contractor (procurements, claims, audits, etc.), and any other factors that might give rise to an appearance of impropriety.

The DOD OIG omitted this portion of the email without any indication that anything had been deleted at all.

In a third instance, the DOD OIG had asked Donnelly, “Do you know if there was a DoD cloud discussion during his meeting with Mr. Bezos on August 10, 2017?”

Donnelly had responded, “I do not know. I was not there. I don’t recall.”

However, according to the documents and emails obtained from the DOD OIG via FOIA and obtained by Breitbart News, Donnelly approved the meeting agenda which included mention of the cloud initiative. Additionally, there was evidence that Donnelly had coached AWS’s Jennifer Chronis on what to say to Mattis during the meeting to include using the words, “Also security of cloud.”

There was also an email in which a staffer reported back to Donnelly immediately after the August 2017 meeting saying that Mattis’ meeting at Amazon morphed into a sales pitch and that after the visit, Mattis was almost 99.9% there on the cloud, to which Donnelly had responded, “Excellent.”

Lawmakers are also looking into allegations the DOD withheld relevant documents in response to a 2019 FOIA request for any Donnelly emails that used “Bezos,” “Amazon,” “AWS,” or “Seattle.”

“No records,” the DOD had responded, before a subsequent FOIA lawsuit resulted in a trove of responsive documents.

Mace recently grilled the current DOD IG Robert Storch at an Oversight hearing on President Biden’s withdrawal of US troops and personnel from Afghanistan, asking for a list of investigators and employees who worked on the DOD OIG’s final report.

Storch first told Mace, “I am responsible for the work of my office, so no, we, I don’t believe it’s consistent with IG practice to provide the names of underlying individuals who worked [on the report].”

He also told Mace he had reviewed the report and that he was “satisfied with it.”

“I’m not satisfied with the report,” Mace retorted. “How can anyone conclude there was no conflict of interest or ethical?”

After she pressed him, he finally said, “I’d be happy to cooperate with Congress and provide whatever information I appropriately can.”

Later, Mace told Breitbart News about the DOD OIG’s omissions, “I don’t know if it’s ignorance or intentional…Were they trying to hide something, or are they just idiots?”

She said the DOD OIG should reopen its investigation, and that she would also look at whether or not Congress needs to take legislative action.

“No one is ever held to account for the corruption. We’ve got to start somewhere. The waste, fraud, and abuse is rampant,” she said. “I want to get answers. We need fighters in D.C. who are willing to uncover what’s going on, and I’m willing to take anyone on to do it.”

Breitbart News reached out to the DOD OIG for comment but did not receive a response.

Amazon spokesman Duncan Neasham said in a statement after the story’s publication:

These are the same false, tired, and meritless allegations that have been repeatedly rejected by every independent review — from federal courts, to the GAO, to the DoD IG. This is nothing more than an attempt by certain less capable AWS competitors to distract from the fact that by every objective measure AWS provides its customers with superior technology, more secure and reliable services, and deeper experience supporting classified workloads.

This story was updated with a comment from Amazon.

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