CEO Jeff Bezos's blackmail vulnerability from reckless "sexting" with a Hollywood agent's wife risks Amazon's loss of a $100-billion Department of Defense cloud service contract.

Hours after Bezos and wife of 25 years Mackenzie tweeted their plan to divorce January 6, the National Enquirer published that Bezos was having an extramarital affair and sent "X-rated D--- Pic" selfies to Lauren Sanchez, a former TV anchor and pilot for his Blue Origin space firm that is funded by $1 billion in annual Amazon stock sales. 

As the richest man and with Amazon the most valuable company on the planet, Bezos tried to distract from his recklessness by claiming that the National Enquirer had attempted to blackmail him and the Washington Post he owns by threatening release of nine images including a Bill Clintonesque shot of Ms. Sanchez "smoking a cigar in what appears to be a simulated oral sex scene" and a Carlos Dangeresque shirtless Mr. Bezos wearing tight shorts, where "his semi-erect manhood is penetrating the zipper of said garment."

The timing of the scandalous affair could not be worse for Amazon, which just finished 2018 with annual sales of $232.9 billion, up an impressive 31 percent, and up a jaw-dropping operating earnings of $12.4 billion, up 302 percent.  The spectacular profit improvement was due to Amazon Web Services' cloud computing sector, which, on a 47-percent increase in sales to $25.6 billion, generated $7.3 billion in operating income.

Key to AWS's spectacular profit growth has been extension of its commercial services to outsourcing government cloud computing.  With top CIA technology officer Sean Roche calling the digital innovation since Amazon won a $600-million annual cloud contract in 2013 "nothing short of transforming," Amazon was expected to win the $10-billion-a-year Joint Enterprise Defense Infrastructure contract to build a cloud computing platform to manage all Defense weapons systems and classified data storage.

Amazon had such an insider advantage in the JEDI bidding that Oracle and IBM both filed pre-award bid protest with the Government Accountability Office in August complaining that the single vendor contract — a potentially $100-billion contract over the next decade — would be contrary to DoD statutory requirements for maintaining "flexibility, innovation, a broad industrial base, and keeping pace with evolving technology."

Excitement regarding the AWS imminent JEDI win enticed a state and local government subsidy competition to attract a second Amazon Headquarters (HQ2).  The taxpayer-funded deal was split, with New York going all in for $3 billion and Virginia participating in a lesser role for $750 million.  The lucrative incentives seemed justified, with Amazon supposedly dangling 40,000 jobs paying $150,000 per year, including 25,000 with JEDI.  

But for Amazon to win such an important national security services contract, the officers and directors of the corporation must fully demonstrate that they are not engaging in such reckless or illegal activity that they are susceptible to being blackmailed or bribed.

According to the Morale Operations Field Manual signed by "Wild Bill" Donovan, the founder of the Office of Strategic Services, which would become the CIA, the basic doctrine for training agents focused on the use of "psychological operations" to recruit strong and reckless individuals as spies and turncoats through the use of blackmail and bribes.  The manual suggested that recruiters focus on politicians, military leaders, newspaper editors, reporters, radio broadcasters, and heads of businesses.  To succeed:

Blackmail requires intimate intelligence on the man, his family, his friends, or his associates.  "Documentary or photographic evidence is valuable." To increase the susceptibility of a target to blackmail, an agent should "exploit transgressions" and "special vulnerabilities" to drugs, alcohol, women, luxury, and power.

IBM and Oracle can try to block the $100-billion JEDI national security contract award based on Amazon's CEO disqualification due to his reckless actions that led to a blackmail attempt.  Based on Jeff Bezos's personal admissions, Amazon may also be in default of the four risk management compliance provisions of its CIA contract requirements to 1) Implement a Contractor Code of Business Ethics and Conduct, 2) Establish a Regular and Robust Training Program for All Employees, 3) Institute an Internal Control System, 4) Understand the Difference between Reportable and Non-Reportable Evidence.