U.S. Court Rules in Favor of Amazon in High-Profile CIA Cloud Computing Contract


Amazon Web Services (AWS), the cloud-based computing services arm of Amazon.com, recently scored a significant victory in the U.S. Court of Federal Claims after a judge sided with AWS over a high-profile CIA cloud computing contract worth up to $600 million. The decision was welcome news for the cloud web host and virtual services giant after a lengthy legal dispute with competitor IBM kept the coveted contract hanging in the balance. Amazon Web Services was initially awarded the CIA commercial cloud services contract amid fierce competition, but IBM quickly responded by protesting the decision with the Government Accountability Office (GAO), citing issues with proposal evaluation methods. As a result of IBM’s protest, the GAO put forth a recommendation for the CIA to reopen the bidding competition in order to ensure fairness in the proposal selection process.

Amazon strongly condemned IBM’s protest, calling it “untimely in its entirety”, and subsequently filed a legal complaint against the GAO-authored recommendations. Amazon claimed that the CIA “got it right the first time” and further elaborated that AWS was the appropriate choice due to their ability to adopt a “transformative approach” utilizing “superior technology”. IBM begs to differ with Amazon regarding their suitability for the job of providing commercial cloud services, saying in an emailed statement that the court’s decision was “especially inappropriate” in light of the current economic climate, citing that IBM’s bid was “substantially more cost-effective”. IBM has labeled Amazon as an upstart in cloud-based services for governmental agencies, stating that they are “unprepared” to handle classified government information. Court filings reveal that Amazon considers IBM to be a “late entrant” into the arena of cloud computing, implying that IBM will have difficulty keeping up with the rapid changes taking place in the development of cloud-based technologies.

In the initial ruling following the IBM complaint, the GAO stated that the CIA had given Amazon an unfair competitive advantage due to the fact that some of the terms of the contract were modified after it had already been awarded. One of the primary points of contention was the fact that the CIA had agreed to soften some of the requirements of the contract, allowing certain security vulnerabilities to go overlooked which could potentially put sensitive intelligence data at risk. A technical modification in the contract allowed Amazon to only be liable for software that it had built in-house, but made no security requirement provisions for third-party or open source applications. In the first round of contract bidding, Amazon’s $148 million bid was rated as low-risk by the CIA, while IBM’s $94 million bid was rated as high-risk, according to the public lawsuit filings.

Amazon has been a pioneer in the development of cloud computing services, launching Amazon Web Services in 2006 to give companies a means to utilize large data center capabilities to do things like host websites and deliver applications without having to invest heavily in on-site equipment and personnel. The retail giant already operates AWS GovCloud in the United States for a number of government agencies, and is setting its sights on gaining market share for international government cloud services as well. Amazon’s Chief Technology Officer, Werner Vogels, recently stated in an interview that the company plans to establish “mini-clouds” for governments worldwide.



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Nick Barnett

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