Cloud Company Amazon Wins CIA Contract and IBM Protests

June 8, 2013
Cloud Company Amazon Wins CIA Contract and IBM Protests
Over the last week, a number of sources reported something that had been suspected for quite some time now - that Amazon Web Services (AWS) was awarded a contract to provide cloud services to the United States Central Intelligence Agency, better known as the CIA.

But, almost as soon as this revelation was confirmed, cloud rivals International Business Machines Corporation, or IBM (who recently purchased cloud company Softlayer), submitted a formal protest related to how the $600 million contract had been awarded.

According to Amazon, the CIA chose to use its cloud services because of its advanced technological capability and a platform that would provide the "mission-critical" security the agency needed. According to Amazon, the decision was based on a rigorous procurement procedure that took the CIA several months to complete.

However, IBM, a company which is traditionally recognized as an IT supplier for US government organizations (albeit not generally cloud services), had a number of concerns, suggesting when it agreed to use Amazon the agency had not evaluated prices properly, and had also waived a contract requirement.

The U.S. Government Accountability Office (GAO) - the "investigative arm of Congress charged with examining matters relating to the receipt and payment of public funds" - tended to agree with IBM, recommending that the CIA reopen the contract. Adding weight to those who now suspect the contract is more likely headed towards IBM, some sources suggested that Ralph White, Managing General Counsel for Procurement Law at the GAO had suggested that, "at the conclusion of the reevaluation, the agency make a new selection decision".

In the 2012 fiscal year ending September 30, 2012, IBM was awarded around $1.5 billion in government contracts, and some suggest the GAO's decision is seen as an obstacle to that sort of money being directed towards newer companies - like Amazon - that do not have a long tradition of working with US government agencies. However, simply being considered for the CIA contract now puts Amazon in the ranks of companies like HP and Cisco, and even IBM itself.

Although IBM is a relatively late starter as far as the cloud is concerned, purchasing Softlayer, what was the largest privately held Infrastructure-as-a-Service provider in the world, will certainly not hurt its chances of obtaining the CIA contract. Amazon, however, began building its architecture in the late 90s and started offering web services in 2006 - a year that some say was the birth of the cloud. It is almost inevitable the company will begin to pick up government contracts at some stage in the near future.

We will give you more news on this struggle between industry giants as and when we hear about it.

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