GAO says “not so fast” on proposed secret Amazon-CIA cloud

Remember that proposed secure cloud that Amazon was building for the CIA but that no one would acknowledge? Well it looks like it’s on hold, because the U.S. Government Accountability Office has sided with IBM(s ibm), which filed a formal protest of the awarded contract. News that the GAO was telling the CIA to re-open bids was reported by Federal Computer Week.

IBM, which has a large government-contracting business, charged that the CIA improperly awarded the deal to Amazon Web Services (S aws) by failing to evaluate all the pricing scenarios. Long story short, the GAO told the CIA to re-open the bid and evaluate comparable offerings for a contract valued at up to $600 million over four years for its initial period.

If you like the longer version, here’s the e-mailed statement by Ralph White, GAO’s managing associate general counsel for procurement law:

“On June 6, the U.S. Government Accountability Office (GAO) sustained, or upheld, portions of a protest filed by IBM U.S. Federal, of Bethesda, Maryland, challenging the award of an indefinite-delivery/indefinite-quantity contract by the Central Intelligence Agency (CIA), to Amazon Web Services, Inc., of Seattle, Washington.  The challenged contract, awarded under request for proposals No. 2012-12041000001, provides for commercially-managed cloud computing services for the intelligence community.

The CIA doesn’t have to follow the GAO recommendation but in general, most federal agencies do so.

Update: Responding to an earlier request for comment, an AWS spokesman said via email:

“Providing true cloud computing services to the intelligence community requires a transformative approach with superior technology.  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. 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.”.

Stakes are high for both companies. IBM has a large government sector business it must protect and it wants prove that it’s own mettle in cloud computing. Amazon is trying to prove that it’s technology passes muster for sensitive data of all kinds, and a CIA contract would show that it’s ready for prime time.

Theoretically, the next step will be the re-opening of the bid process but longer term this could be just the first skirmish in a long running battle as AWS and legacy IT vendors square off for the same workloads.

This story was updated at 4:23 PDT with AWS comment.