GAO sheds light on IBM-Amazon CIA battle

GAO says the CIA fell short in how it evaluated pricing and relaxed a key technical requirement for Amazon. The spy agency now has 60 days to decide whether it'll recompete the $600 million contract.

IBM said it could build the CIA's cloud computing infrastructure for less, but the CIA thought Amazon's more expensive solution was technically superior, according to the Government Accountability Office.

But GAO ruled in favor of IBM's protest after finding that the CIA was "unreasonable" in how it evaluated the pricing offered by the two companies.

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IBM filed its protest in February after the CIA awarded a $600 million contract to Amazon Web Services worth $600 million over four years. While much of the language released June 14 GAO decision was scrubbed by CIA, Amazon and IBM attorneys, it reveals that Amazon bid $148 million a year and IBM $94 million, a difference of about $54 million per year, for the project. 

Yet the CIA picked AWS in January to build out a cloud that will help the CIA, the National Security Agency and the rest of the intelligence community better analyze its growing piles of information.

GAO sustained IBM's protest on the pricing evaluation grounds and on a second point that the CIA relaxed a solicitation term for Amazon during post-selection negotiations.

In technical language outlined in the GAO ruling, IBM took issue with how the CIA adjusted the company's pricing based on test scenarios of "providing a hosting environment for applications which process vast amounts of information in parallel on large clusters (thousands of nodes) of commodity hardware" using MapReduce. Test runs were to assume clusters large enough to process 100 terabytes of raw input data, and clusters were to be provisioned for computation and segmentation through MapReduce, with various other details specified.

GAO stated that both companies "adopted materially different interpretations" of the scenario requirements, and said the CIA's attempt to evaluate the performance "using the same or otherwise comparable level of performance" was unreasonable.

In addition, GAO sided with IBM over the company's objection to the CIA agreeing to an AWS' post-selection provision to alter a "material requirement" for the contract stating "only software developed and provided by Amazon" would be subject to certain requirements.

"In sum, we find that the agency, without issuing a written amendment, materially relaxed the solicitation's requirements for Amazon without affording the other offerors an opportunity to propose to the modified requirements. Accordingly, the protest is sustained on this basis as well," according to the GAO statement.

"IBM believes this decision reaffirms our position that there were inaccuracies in the government's assessment of our proposal," said IBM spokesman Clint Roswell. "IBM remains committed to providing enterprise-level secure and robust cloud solutions and looks forward to a renewed opportunity to show our capabilities to fulfill the requirements of this important agency."

AWS did not respond to requests for comment from FCW. In a previous report, though, AWS took issue with GAO's 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 then. "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."

The CIA has 60 days to decide whether it will follow GAO's recommendations. The CIA is still reviewing details of the decision, according to a CIA spokesperson.

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