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GAO advises CIA to renegotiate $600M cloud contract

Jun. 6, 2013 - 06:00AM   |  
By | BY JIM McELHATTON and NICOLE BLAKE JOHNSON   |   Comments

The Government Accountability Office ruled Thursday the CIA should reopen negotiations on a $600 million cloud computing contract that the agency had awarded to Amazon Web Services.

GAO sided with IBM, which competed unsuccessfully for the contract, in ruling that the CIA had failed to evaluate prices comparably under one of the solicitation’s pricing scenarios.

Specifics of the contract haven’t been released, but Alex Rossino, a principal analyst at market research firm Deltek, said the CIA deal reflects the intelligence community’s increasing appetite for data storage capacity. The CIA and intelligence community have said they want to retain all of the huge amounts of data they collect, Rossino said.

“This means that storage will be an exponentially growing requirement for the CIA and a huge area of profit for industry partners,” he said.

So-called “big data” requirements are driving the need for cloud computing, said Rossino, who expects the CIA contract likely includes requirements for information technology infrastructure, processing power, storage and analytic tools.

For now, however, the fate of the contract remains unclear. Lawyers for Amazon and IBM did not immediately return calls seeking comment on the decision.

The GAO ruling, which was issued under a protective order, was made public in a statement on the decision from Ralph White, managing associate general counsel for procurement law at GAO.

White said the maximum value of the contract to provide “commercially-managed cloud computing services” for the intelligence community during an initial start-up phase and a four-year base period was $600 million.

He said GAO agreed with a portion of IBM’s protest that the CIA had waived only for Amazon a portion of a request for proposal provision concerning “security requirements — software certification.”

But GAO denied other challenges from IBM, including one that the CIA did not properly evaluate Amazon’s past performance given service outages with Amazon’s cloud in 2012.

White said GAO recommended CIA reopen negotiations, including possibly amending the solicitation, to ensure proposals are prepared and evaluated on a common basis.

“GAO’s decision expresses no view as to the merits of these firms’ respective proposals to provide commercial cloud computing services,” White said.

“Judgments about which offeror will most successfully meet the government’s needs are reserved for the procuring agencies, subject only to statutory and regulatory requirements, such as full and open competition, and fairness to potential offerors.”

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