Amazon vs. IBM: Does it matter who wins?

The importance of $600 million CIA cloud contract ultimately outweighs whether IBM or Amazon prevails as the prime; instead, this could be a watershed moment in how the government buys technology.

We knew that, on June 6, the Government Accountability Office was set to make its decision on IBM Corp.’s protest of a $600 million CIA cloud computing contract won by Amazon.

But when the decision came out in favor of IBM, a small fire ripped through the newsroom. I think the prevailing wisdom was that Amazon, one of the pioneers of cloud computing, would keep the contract, so the opposite result was a shock.

GAO didn’t rule on the merit of either company’s solution, only on the process the CIA used to award the contract. They found fault with price evaluations, and the waiving of a requirement post award. The recommendation now is that the CIA reopen negotiations, and make a new award decision.

Amazon could still be picked as the winner, but as far as the impact on the market, it doesn’t matter whether IBM or Amazon ultimately wins.

If, before this contract came to light, someone had asked me about Amazon’s likely role on such a project, I probably would have said that Amazon would likely be a partner to a more traditional prime. That they didn’t follow a subcontractor strategy says a lot about the company, their position in the market, and their belief in themselves.

But the fact that Amazon is such a contender as a prime says that the company has arrived. It’s not an overnight success either. Two years ago, the company set this course when it hired Teresa Carlson to run their global government business. Other strategic hires have followed along with the investments that the company has made for its government-only cloud infrastructure.

What makes the CIA project different is that is for a private cloud, not the usual public cloud that Amazon is famous for.

For IBM, the loss had to sting. Look at the investments they’ve made over the past several years in cloud computing, most recently the acquisition of SoftLayer Technologies. The new company will be added to the IBM SmartCloud offering, which includes software, infrastructure and platform as a service along with private cloud offerings and consulting and implementation.

From what we know about what the CIA is doing, it appears the agency is ready to move beyond the pilots and smaller cloud projects it has done to date.

This likely will be the largest cloud contract in government, worth $600 million over four years.

From the agency’s perspective, they have a far-flung workforce that needs to share, collaborate and analyze vast amounts of data and information. A cloud solution makes perfect sense.

It also says something about the maturity and trust that cloud technology now carries.

This contract, whether it goes to a traditional player like IBM or to an upstart like Amazon, might be a watershed moment in government technology. This could be the moment that the cloud sheds its label of newness and simply becomes the way that business gets done.