Court Upholds Amazon CIA Cloud Deal
October 8, 2013

Court Upholds CIA Cloud Contract With Amazon Despite IBM Complaints

Michael Harper for - Your Universe Online

Last January, Amazon Web Services (AWS) won a bid to build the CIA’s new cloud infrastructure, beating out a cheaper bid from IBM. The two have since exchanged complaints against one another to government heads, and this week a US court has finally settled the matter, giving the final $600 million contract to AWS.

The main issue in this fight is cost; Amazon’s web service was priced $54 million higher than IBM’s bid. Big Blue argued the CIA didn’t accurately read their proposal and protested the decision in January. This led to a formal investigation by the US Government Accountability Office (GAO), which in June recommended the CIA give IBM another chance to bid. This led AWS to file a complaint against the GAO’s recommendation, which was upheld yesterday.

In a ruling published on Monday, US Court of Federal Claims Judge Thomas Wheeler ruled AWS as the final winner of the bid to build their new cloud, Reuters reported Tuesday. According to the Wall Street Journal, IBM plans to continue fighting for this contract and will appeal Judge Wheeler’s decision.

“We are disappointed with the ruling from the US Court of Federal Claims, reversing the GAO’s recommendation to reopen the competition and correct flaws in the bidding process,” explained an IBM spokesperson in an emailed statement to Bloomberg. “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.”

The issue of cost is central in this debate and it appears the CIA is willing to get what it pays for. According to official documents, AWS pitched the CIA a proposal that would cost about $148 million per year over the span of four years. IBM’s proposal came in at about $94 million a year. Despite the higher bid by AWS, the CIA picked them to operate their new cloud, noting their proposal offered better technology.

“While IBM's proposal offered an evaluated price advantage over 5 years, the source selection authority (SSA) concluded that this advantage was offset by Amazon's superior technical solution," the CIA said, according to June’s GAO ruling. IBM argued their technology was even better than AWS’ and took issue with the way the CIA tested certain parts of their proposed cloud scenario.

"We believe strongly that the CIA got it right the first time," said an AWS spokesperson following their July complaint against the GAO with the US Court of Federal Claims. "Providing true cloud computing services to the intelligence community requires a transformative approach with superior technology.”

The new CIA cloud is expected to be responsible for serving up data to a host of intelligence agencies, most notably the National Security Agency (NSA). It’s a big win for AWS which, while one of the biggest cloud providers in the public sector, doesn’t have as much strength in the private sector as IBM. This win would give AWS more power in the market and possibly upend long-time leader IBM.