IBM Drops $600M CIA Contract Lawsuit Against Amazon.com

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International Business Machines Corp. (NYSE:IBM) has dropped a cloud computing CIA contract lawsuit against Amazon.com, Inc. (NASDAQ:AMZN).  IBM and Amazon both delivered oral arguments, but Judge Thomas Wheeler of the U.S. Court of Federal Claims sided with Amazon and decided to shut down IBM’s renewed effort to win the CIA contract, according to a court notice.  Amazon Web Services received a $600 million contract to create a private cloud inside CIA data centers, but IBM believed that Amazon.com’s bid did not meet the criteria for the CIA contract.

The Government Accountability Office (GAO) agreed with IBM’s argument and decided that the CIA did not properly evaluate the prices.  The CIA was asked to reopen the bidding process.  Amazon.com sued the U.S. in July as a result.

IBM was hit hard by this decision because they depend heavily on government contracts.  Amazon.com’s cloud services started to build by partnering with startups.

IBM has now decided to withdraw their bid for a stay of U.S. Court of Claims Judge Thomas Wheeler’s ruling in favor of Amazon. The Justice Department said in court papers that a further delay in resolving the contract would cause “harm to the United States” and could create “significant challenges” for the CIA.

“In light of the government’s recent submissions emphasizing its need to move forward on the contract, IBM has withdrawn its motion,” stated IBM spokesman Clint Roswell. “IBM maintains its position that the GAO’s findings were appropriate.”

The case was filed under Amazon Web Services Inc. v. U.S., 13-cv-00506, U.S. Court of Federal Claims (Washington).

[Source: BusinessWeek]

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