IBM wins first round in CIA battle with Amazon

The Government Accountability Office has upheld IBM's protest of the $600 million cloud-services contract that the CIA awarded to Amazon, finding fault with price evaluations and discussions with Amazon post award.

IBM Corp. has prevailed in its bid protest over a major cloud computing contract between Amazon Web Services and the CIA – reportedly a 10-year, $600 million deal – to build the spy agency a massive private cloud infrastructure.

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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 said in a statement. GAO also recommended that, at the conclusion of the reevaluation, the agency make a new selection decision.

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.

Calls to AWS were not immediately returned.

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 the request-for-proposal specifications. GAO did not rule in those protests because CIA's changes rendered the protests moot.

Details about what AWS was set to build the CIA remain hazy, but CIA officials have been quoted publicly as saying their agency was to collect massive amounts of information and "hang on to it forever." AWS won the contract in January.