Procurement

Amazon-IBM dispute enters next phase

justice

The next act in the battle between Amazon Web Services and IBM for the opportunity to develop a cloud computing infrastructure for the CIA, the NSA and the rest of intelligence community opens Oct. 7, and the stakes could hardly be higher.

The U.S. Court of Federal Claims will decide whether the Government Accountability Office was right in June when it sustained IBM's bid protest against AWS's $600 million contract award from the CIA in early 2013. Following GAO's ruling, which directed the CIA to reopen negotiations and rebid the contract, AWS filed a complaint essentially asking the court to overturn the decision.

Oral arguments begin Monday – assuming the government shutdown does not affect the court docket – and Judge Thomas Wheeler will preside over a case that may have repercussions across the technology space. A decision is expected in mid-October.

Of course, money is on the line. A half-billion dollars and change is a lot of money in cloud revenue, and it's a particularly significant sum in the federal sector, where most agencies have yet to utilize cloud for more than the most rudimentary IT services.

Yet far more than money is at stake between these two tech behemoths.

Reputations matter, especially in Washington, where they play an immeasurable but important role in deal-making. IBM has a well-established track record as a contractor to civilian, defense and intelligence agencies, but AWS's aggressive foray into the federal cloud computing market suggests the landscape may be shifting.

Whichever company receives the award gets instant fed-cred. If IBM snatches the first-of-its-kind deal with the CIA away from AWS, Big Blue proves its staying power in an ever-changing tech arena; if AWS lands the contract, it will have proven itself a player, forcing its way into a market ripe with opportunities.

This is not lost on the leaders of both companies' federal efforts.

"It's always good to have people who are perceived as competition, it pushes all of us to do better things," AWS Vice President of Worldwide Public Sector Teresa Carlson told FCW in an interview. "We are moving the cheese. We're trying to look at IT differently."

Carlson said "new-school" approaches to IT such as pay-as-you-use service can lower costs and drive mission success. AWS attacked the cloud computing market early on and hasn't let up since.

IBM's Anne Altman, meanwhile, told FCW that the company has six years of experience in cloud computing and isn't the cloud newbie it's sometimes made out to be. IBM also has decades of experience working for the government, which Altman said helps separate it from challengers in the federal cloud market, especially in the high-stakes game of intelligence data.

"Experience is something to think of, and we have served some of the most mission critical environments for a long time," said Altman, who is general manager of IBM's U.S. federal business. She added that IBM would not have to "learn on the job."

The CIA accepted new bids from both companies in August, but the agency is waiting until the Claims Court ruling to disclose a decision. The new bids from AWs and IBM likely differ significantly from the bids they put forth in 2012 when the CIA first announced it was seeking a cloud solution.

Since FCW first reported the CIA's award to AWS in March and IBM's subsequent bid protest in May, both companies' bid figures and technical specs were put in the public spotlight -- not to mention each other's.

AWS has since added more than 150 new services to its repertoire, including Glacier storage, for rarely accessed data, and Redshift, its petabyte-scale cloud-based data warehouse. And in May it received certification under Federal Risk Authorization Management Program (FedRAMP) certification, the government's rigorous cloud computing security standards.

IBM hasn't been idle, either.

Big Blue made a huge $2 billion move to purchase SoftLayer Technologies, the world's largest privately held cloud computing infrastructure. IBM's federal team expects SoftLayer's acquisition to mitigate the apparent gap between IBM's and AWS's technical solutions as noted by GAO's formal bid protest ruling. In its ruling, GAO said the CIA chose AWS over IBM – despite IBM offering a cheaper solution – because AWS offered a "superior technical solution."

And the two companies have plenty of other competition in the federal cloud space as well. There are now nine FedRAMP-certified providers, with more in the pipeline. And Verizon, which provides a wide range of agencies with enterprise cloud services, on Oct. 3 announced new computing and storage offerings that promise faster deployment and better pricing. Verizon Terremark Public Sector's Chief Operation Officer Norm Laudermilch, speaking with FCW prior to the announcement, said that both services are already in the FedRAMP approval process.

For the CIA cloud deal, however, it's a two-horse race. And all eyes are on Oct. 7.

About the Author

Frank Konkel is a former staff writer for FCW.

The Fed 100

Save the date for 28th annual Federal 100 Awards Gala.

Featured

  • computer network

    How Einstein changes the way government does business

    The Department of Commerce is revising its confidentiality agreement for statistical data survey respondents to reflect the fact that the Department of Homeland Security could see some of that data if it is captured by the Einstein system.

  • Defense Secretary Jim Mattis. Army photo by Monica King. Jan. 26, 2017.

    Mattis mulls consolidation in IT, cyber

    In a Feb. 17 memo, Defense Secretary Jim Mattis told senior leadership to establish teams to look for duplication across the armed services in business operations, including in IT and cybersecurity.

  • Image from Shutterstock.com

    DHS vague on rules for election aid, say states

    State election officials had more questions than answers after a Department of Homeland Security presentation on the designation of election systems as critical U.S. infrastructure.

  • Org Chart Stock Art - Shutterstock

    How the hiring freeze targets millennials

    The government desperately needs younger talent to replace an aging workforce, and experts say that a freeze on hiring doesn't help.

  • Shutterstock image: healthcare digital interface.

    VA moves ahead with homegrown scheduling IT

    The Department of Veterans Affairs will test an internally developed scheduling module at primary care sites nationwide to see if it's ready to service the entire agency.

  • Shutterstock images (honglouwawa & 0beron): Bitcoin image overlay replaced with a dollar sign on a hardware circuit.

    MGT Act poised for a comeback

    After missing in the last Congress, drafters of a bill to encourage cloud adoption are looking for a new plan.

Reader comments

Please post your comments here. Comments are moderated, so they may not appear immediately after submitting. We will not post comments that we consider abusive or off-topic.

Please type the letters/numbers you see above

More from 1105 Public Sector Media Group