Amazon is protesting the Pentagon's decision to award a huge cloud-computing contract to Microsoft, citing "unmistakable bias" in the decision.
The reports of Trump's apparent interference give Amazon a good case to argue that the bidding process was improper.
FILE - This combination of file photos shows the logos for Amazon, top, and Microsoft.
Amazon Web Services is appealing the U.S. Department of Defense's decision last month to award the massive Joint Enterprise Defense Infrastructure cloud computing contract to rival Microsoft as part of its digital modernization strategy for the military.
Amazon and Microsoft, both based in the Seattle area, are the leading US cloud providers and fierce rivals in a growing industry as more and more organizations migrate their businesses to the cloud. It did not elaborate on those allegations but said "it's important that these matters be examined and rectified".
Amazon did not immediately respond to a Reuters request for comment. A Defense Department representative said: "We will not speculate on potential litigation".
JEDI will store and process vast amounts of classified data, allowing the USA military to use artificial intelligence to speed up its war planning and fighting capabilities. Amazon had been considered the frontrunner due to its other standing cloud deals, including a $600 million cloud contract with the Central Intelligence Agency.
In a company-wide meeting on Thursday, Amazon Web Services' chief executive Andy Jassy said it would be challenging for a USA agency to award a contract objectively when the president is disparaging one of the contestants, according to an Amazon spokesman. Oracle challenged the bidding process in court previous year, but lost.
The Pentagon was preparing to make its final decision when Trump publicly waded into the fray in July, saying he had heard complaints about the process and that the administration would "take a very long look".
"I am confident that it was conducted freely and fairly without any type of outside influence, and I'll just leave it at that", Esper said in response to a question on whether Trump had asked him to bypass Amazon.
"That was reversed after Oracle and others stepped in, protesting that the presence of a former AWS exec on the JEDI committee had weighted the selection process in the company's favor - claims that have never been substantiated", he said. It was generally regarded by experts as "a huge feather in the cap for Microsoft" and a " black eye for Amazon and Bezos".
Amazon said it filed a notice in a United States court last week signalling its intent to protest the handling of the bidding process, which the Department of Defence maintained was fair.
The Defense Department, the Government Accountability Office and the Court of Federal Claims reviewed the bidding and allowed it to proceed.