A big win for Big Blue

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.