Does IBM have a case with Amazon CIA cloud contract offer?

The Government Accountability Office (GAO) has released a report examining why the CIA chose Amazon ahead of IBM for its recent $600m private cloud contract, and whether IBM has a case to answer with its protests against the decision.

And the conclusion it arrived at was a little from column A and a little from column B. The GAO both sustained and rejected IBM’s complaint in part, and surmised that Amazon’s offer was both “the best value” and a “superior technical solution”.

This comes despite Amazon’s proposal being over $50m a year more expensive – the bean counters found that Amazon would cost $148m annually, as opposed to IBM’s $94m.

In terms of technical specs, the two vendors were put side by side, with Amazon coming out on top. The CIA found that Amazon’s SLA, technical approach and past performance was superior, with only IBM’s management approach beating Amazon.

Given that IBM is traditionally the company of choice for key governmental technology, this has come as something of a culture shock to the Armonk firm.

The GAO agreed with IBM in terms of complaints relating to the evaluation of its technical and pricing model – in particular uncertainty on exact testing rubrics such as the number of 100 TB data runs – but rejected claims over the evaluation of Amazon’s past performance indicator.

Again, this comes despite Amazon’s very public downtime last year.

The report asserts IBM’s argument that “the agency failed to take into account news reports about five service outages experienced by some of Amazon’s public cloud clients between April and December 2012”, but dismissed it.

The argument from GAO states that, in one of Amazon’s past performance references, the outages were mentioned. “We see no basis to find that the agency improperly evaluated Amazon’s proposal under the past performance factor,” the report concludes.

So what was the overall diagnosis from the GAO?

“We recommend that the agency reopen the competition and amend the RFP as necessary to ensure that proposals are prepared and evaluated on a common basis,” the report notes, adding: “We further recommend that the agency conduct discussions with offerors, obtain and evaluate revised proposals, and make a new source selection decision.”

To rub salt further into the wound, the GAO also recommends that IBM be reimbursed for its cost for the protests.

GAO reports are not legally binding; however they do carry significant weight. Expect this to not be the last from this story; yet it’s worth noting, as analysts have pointed out, how the CIA’s original decision to choose Amazon could be a sea-change for the IT industry.

The full 17-page document can be found here. Who do you think is right in this argument?

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