Related:

6 June 2013, GAO: Decision re. IBM-U.S. Federal, CIA, Amazon (PDF)
http://www.washingtonpost.com/business/capitalbusiness/amazon-web-services-ibm-battle-over-high-profile-cia-cloud-contract/2013/09/01/2c69c1a0-0e60-11e3-bdf6-e4fc677d94a1_story.html

Amazon Web Services, IBM battle over high-profile CIA cloud contract

By Marjorie Censer

9/1/2013

An ongoing fight between Amazon Web Services and IBM over a cloud computing contract with the CIA is bringing to a climax questions about what kind of company is best positioned to provide the government with the new technology.

It's not unusual for government contractors to wrestle over work by, for instance, filing a protest with the Government Accountability Office, but the dispute between these tech giants has taken a far more aggressive turn, with Amazon suggesting in court papers that IBM is just a staid government contractor that is in over its head in the fast-evolving cloud world.

The stakes are all the larger as federal spending slows, and opportunities grow more limited to claim a high-profile contract.

Web-based computing has become a major government focus in the several years since Vivek Kundra, the former U.S. chief information officer (and the first to hold that role), said that federal agencies should embrace a "cloud-first" approach. Cloud computing allows users to access a pool of Internet-based servers and applications, rather than invest in their own computing infrastructure and is meant to be both cheaper and more efficient.

Since then, government contractors large and small have embraced the cloud, finding ways to help federal agencies move their e-mail and other services to the technology.

The shift has also opened the door to newer entrants, such as Amazon Web Services, which has long focused on cloud computing but was less accustomed to working with federal agencies. About the same time Kundra gave his stamp of approval to the cloud, Amazon hired Teresa Carlson, who headed Microsoft's federal business, to run its own public sector business. (Amazon.com founder and chief executive Jeffrey P. Bezos recently agreed to buy The Washington Post.)

While Amazon Web Services has quickly made friends [1] in government agencies, the CIA deal represented a critical turning point.

Amazon initially won the contract despite a much higher bid, judged by the government to be $148.1 million compared with IBM's bid of $93.9 million. But the CIA rated IBM's proposal the riskier to pull off and gave Amazon higher ratings in technical and past performance categories, according to a GAO report that examined the competition.

The award quickly turned heads in the industry.

Amazon has "arrived as a serious player, due to this award," said Shawn P. McCarthy, research director at IDC Government Insights. "That will change things going forward."

David Yang, an analyst with IBISWorld, said that Amazon Web Services has been known for its price and ease of use, but the CIA deal provided a way to significantly improve its reputation for security.

"That gives them the credibility to work with other major corporations," he said.

The kudos, though, proved to be premature. IBM protested the award, and the GAO ultimately found merit in the complaint and recommended the CIA reopen the competition.

Amazon Web Services then filed suit against the government in the U.S. Court of Federal Claims.

In a filing released last month, portions of which had been redacted to protect confidential information, Amazon argues that "commercial cloud technologies have outpaced fixed Government IT counterparts."

Amazon writes off IBM as "a traditional fixed IT infrastructure provider and late entrant to the cloud computing market." The company has asked the court to prevent resubmission and reevaluation of proposals.

Anne Altman, general manager of IBM's U.S. federal business, said in an interview last week that the company has been involved with cloud technologies for half a dozen years.

"I think it is unfair to say IBM hasn't been doing this," she said, noting that IBM has significant experience building clouds tailored for organizations and agencies.

The CIA, which declined to comment on Amazon's legal actions, is moving forward with the new competition, and bids were due last month.

"The selection process is ongoing, and the Agency remains focused on awarding a cloud contract for the Intelligence Community," Christopher White, a CIA spokesman, said in a statement.

Amazon Web Services said in a statement that it believes "strongly that the CIA got it right the first time."

McCarthy said both companies have their strengths.

"You're talking about a company like Amazon, who was quick to the cloud, quick to be able to develop solutions that have gotten people's attention, including the federal government," he said. But "don't write IBM off as being stodgy. They have reinvented themselves many times over the years."

[1] http://www.washingtonpost.com/business/capitalbusiness/amazon-spreads-its-web-in-washington/2012/06/15/gJQAvTbjjV_story.html