A big win for Big Blue

judge's gavel

GAO has overturned a big Amazon contract win. (Stock image)

IBM has prevailed in its bid protest over a major cloud computing contract between Amazon Web Services and the Central Intelligence Agency.

The Government Accountability Office found that the CIA failed to evaluate prices comparably under one of the solicitation’s pricing scenarios, and that it had waived a requirement in the Request For Proposal only for Amazon, said Ralph O. White, managing associate general counsel for procurement law at GAO. However, GAO denied other IBM protest challenges, including the argument that the CIA neglected to properly evaluate Amazon's past performance.

"GAO recommended that the agency reopen negotiations with the offerors, including amending the solicitation if necessary, to ensure that proposals are prepared and evaluated on a common basis," White wrote in a formal statement. GAO also recommended that, at the conclusion of the reevaluation, the agency make a new selection decision.

When reached for comment, CIA spokesperson Todd Ebitz told FCW, “at this time the agency is reviewing details of the decision.” The CIA has 60 days to decide whether it will follow GAO’s recommendations, though it is rare for an agency not to do so.

Amazon, unsurprisingly, took issue with the finding.  "The CIA selected AWS based on its superior technological platform, which will allow the agency to rapidly innovate while delivering the confidence and security assurance needed for mission-critical systems," an AWS spokesperson said. "The agency conducted a very detailed, thorough procurement that took many months to award. We look forward to a fast resolution of the two issues raised by the GAO so the agency can move forward with this important contract."

IBM filed the protest on Feb. 26. GAO issued its ruling on June 6. The GAO statement said the deal could be worth up to $600 million during the start-up phase and four-year base period. The purpose of the contract is to provide commercially-managed cloud computing services for the intelligence community, according to the GAO statement.

"We now anticipate the re-opening of the contract proposal process and look forward to competing for the opportunity to serve this important federal agency on this vital program," said IBM spokesperson Clint Roswell.

This is not the first time this new cloud computing procurement has come under scrutiny.

The CIA pulled the procurement back in August 2012 and took corrective action on its bid solicitation following AT&T and Microsoft protesting its request-for-proposal specifications. GAO did not rule in those protests because CIA's changes rendered the protests moot. AWS won the contract in January.

And whatever the ultimate outcome, this contract underscores the growing importance of cloud services -- and the efforts firms are making to secure their share of the government's cloud business. Also on June 6, for example, two leading contractors that are rarely thought of as cloud providers -- HP and Lockheed Martin -- joined Autonomic Resources, AWS and CGI Federal on the still-short list of FedRAMP-certified firms. And on June 4, IBM acquired Dallas-based SoftLayer Technologies, Inc. -- the world’s largest privately held cloud computing infrastructure provider. The acquisition, which various reports pegged at almost $2 billion, further strengthens IBM's ability to compete in the growing infrastructure-as-a-service market, expanding IBM’s portfolio of private, public and hybrid cloud offerings.

This story was updated on June 7 to add AWS' statement on the GAO ruling.

About the Author

Frank Konkel is a former staff writer for FCW.

Cyber. Covered.

Government Cyber Insider tracks the technologies, policies, threats and emerging solutions that shape the cybersecurity landscape.


Reader comments

Wed, Aug 28, 2013 Matt Hastings, AlphaBrook Washington, DC

This is the problem with Federal Contracting if you're an Acquisition Executive. It's not enough to know that Amazon Web Services is simply the better option - it has to be proven on paper too. Also, how do you fail to evaluate prices comparably? And even if this did happen, is it a big enough price difference to prove that IBM would've won the competition? I'm also surprised to see IBM protesting this - I would've expected to see Google, Rackspace, or Salesforce in competition on this one.

Fri, Jun 7, 2013

"CIA's OCIO and Acquisition staff are recogized as one of the best in the entire government." by whom? Remind me again, how may months in Federal prison did Dusty Foggo, the number three (3) person in ALL of CIA, get for steering CIA contracts to his good buds? Who exactly was it that awarded the CIA "the Best-in-Government" Acquisition award. Dusty's buds that got the contracts?

Fri, Jun 7, 2013 FromMyWindow PA

Can IBM even touch Amazon for cloud delivery? What can IBM put on the table today that approximates what Amazon has delivered and has been delivering for years? Let's hope CIA has the wherewithal to get the best deal and one that suits its requirements.

Fri, Jun 7, 2013 John Weiler, IT-AAC United States

I was truly surprised to see GAO overturn this award based on procedural grounds. CIA's OCIO and Acquisition staff are recognized as one the of most astute and forwarding thinking in the entire government. They successfully reached outside the Defense Industrial Base to leverage commercial innovations and associated best practice better than another. Hopefully, CIA will prevail and proceed with this experiment in Cloud acquisition. It proves again the importance of tuning the IT Acquisition Process for this Cloud paradigm shift. They had it 99% correct . It should not take long to make this simple corrections.

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