Amazon Facing “Epic Battle” for CIA Cloud Services

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International Business Machines Corp. (NYSE:IBM) has successfully protested a deal between Amazon.com Inc. (NASDAQ:AMZN) and the Central Intelligence Agency for cloud-computing services.

The U.S. Government Accountability Office sided with IBM regarding Amazon’s $600 million contract with the CIA. The GAO claims that the spy agency waived a contract requirement for Amazon and failed to properly evaluate prices. The ruling recommended that the CIA reopen negotiations with other companies, including IBM.

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IBM has been a long-time federal contracter, while Amazon is much newer to that market. IBM received about $1.5 billion in awards in the fiscal year ending September 30, 2012. Amazon has only recently made a dedicated government sales division. Currently about 300 government agencies use the company’s services, according to a statement from Amazon in May. If Amazon gets the CIA deal, the spy agency would help the company sell its cloud-computing services to other businesses and federal agencies.

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