Court Rules in Favor of Amazon in $600 Million CIA Cloud Contract

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Joseph Marks for Nextgov 2013-10-09 03:00:56 UTC

Amazon has won the latest round in a battle with IBM to build a massive computer cloud for intelligence agencies.

Judge Thomas Wheeler of the U.S. Court of Federal Claims ruled in Amazon’s favor after oral arguments held behind closed doors on Monday. The ruling was in favor of Amazon’s motion for judgment on the administrative record, which means Wheeler concluded there was sufficient evidence in Amazon’s favor that it was not worth proceeding with a trial.

Judge Wheeler ordered that Amazon may immediately re-start work on the CIA contract, according to a written record of his order from the bench. A more detailed written order will follow shortly, according to the court docket.

Amazon filed suit against the government after the CIA first awarded and then yanked a $600 million contract to build a computer cloud that could be used across the intelligence community. IBM challenged that contract at the Government Accountability Office, which concluded the CIA gave Amazon an unfair advantage after the cloud deal was signed.

IBM intervened in the federal court case and filed several motions, mostly under seal. The company told Federal Computer Week on Monday it planned to appeal Judge Wheeler’s ruling. The U.S. Court of Appeals would likely be the last stop for the contract dispute.

IBM has called Amazon an upstart in the government cloud arena and said the Web company is unprepared for classified government work. In court filings, Amazon called IBM a “late entrant” to cloud computing.

In its ruling, GAO found the CIA gave Amazon an unfair advantage because it agreed to modify some terms of the cloud contract after it had already been awarded. Notably, the agency agreed to weaken a requirement that all software in its cloud be verifiably free from computer viruses that might let unauthorized people see intelligence data. Amazon asked that it only be required to vouch for software it had built itself, not for third party and open source software.

In the first round of cloud solicitations, Amazon’s bid came in at $148 million and was rated low-risk by the CIA, according to a redacted version of Amazon’s lawsuit. The IBM proposal came in at $94 million and was graded high risk by the CIA, the lawsuit states. Both companies have re-bid on the contract, though that re-bidding process may now be halted.

Image: Robert Scoble

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This article originally published at Nextgov here

Topics: amazon, Business, CIA, cloud storage, IBM, lawsuits, Startups

Nextgov is a Mashable publishing partner that is the all-day technology resource for federal decision makers, delivering news, analysis and a nationwide community of expert voices on how technology and innovation are transforming government. This article is reprinted with the publisher's permission.