Amazon has proven the victor of an intense battle with IBM over a CIA cloud contract.
Earlier this week, the U.S. Court of Federal Claims ruled that Amazon Web Services could keep its $600 million contract to supply the intelligence agency with a private cloud. Although Amazon won the contract in January, IBM (which draws a significant portion of its revenue from government contracts) protested the win to the U.S. Government Accountability Office (GAO).
In its GAO complaint, IBM argued that, because it bid lower than Amazon, the contract-approval process should be reconsidered. The CIA agreed with the GAO, and the whole matter ended up in federal court despite Amazon complaining that IBM’s original proposal was “uncompetitive” and “marginally deficient.”
But the battle isn’t over for IBM. “We are disappointed with the ruling from the U.S. Court of Federal Claims, reversing the GAO’s recommendation to reopen the competition and correct flaws in the bidding process,” Big Blue wrote in a statement to VentureBeat. “IBM plans to appeal this decision. This court decision seems especially inappropriate in light of the current times, since IBM’s bid was superior in many ways, including being substantially more cost-effective.”
Amazon’s own statement indicated that the company was “pleased” with the court’s decision.
IBM is almost certainly concerned over Amazon’s intention to seize an ever-larger share of agency contracts. Although Amazon Web Services powers the cloud infrastructure of many private corporations, including Netflix and SAP, it has never launched a federal private-cloud deployment on a massive scale. If it manages to pull off the CIA job, more federal agencies could come knocking—something that would not only threaten IBM’s business, but also that of major federal contractors such as Microsoft and Google.
While the CIA is staying quiet about its specific requirements for the private-cloud infrastructure, it’s likely that Amazon will need to provide a variety of mission-critical services while obeying all various regulations and protocols.
Image: Maksim Kabakou/Shutterstock.com