IBM surrenders $600M CIA cloud deal to Amazon

A high-profile legal battle over a $600 million spy agency contract has finally come to an end.

IBM has withdrawn the injunctive action it filed after Amazon received a favorable ruling regarding its $600 million cloud computing contract with the CIA.

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“In light of the government’s recent submissions emphasizing its need to move forward on the contract, IBM has withdrawn its motion,” reads a statement provided to VentureBeat by an IBM representative. “IBM maintains its position that the [Government Accountability Office’s] findings were appropriate.”

Earlier this month, Judge Thomas Wheeler of the U.S. Court of Federal Claims sided with Amazon and shut down IBM’s renewed effort to win the contract — a ruling IBM promised to appeal.

Big Blue was upset after Amazon Web Services won a contract to build a private cloud inside the CIA’s data centers, beating out its own offering. IBM claimed Amazon’s bid didn’t meet the necessary criteria to win the contract.

Receptive to IBM’s protests, the Government Accountability Office (GAO) recommended the CIA reopen the bidding process because it failed to sufficiently evaluate prices. The spy agency listened to the GAO, and both companies resubmitted their bids, but the rebidding process prompted Amazon to sue, leading to the recent court case.

The CIA’s initial decision to go with Amazon was a major blow to Big Blue, which has long counted federal agencies as some of its most reliable (and lucrative) customers. IBM didn’t expect to lose to Amazon, which has historically been dismissive of private cloud solutions.

While this battle has come to a close, the war to power the government cloud will continue. IBM has seen its share of successes on that front, recently securing a $30 million contract with the General Services Administration to provide cloud infrastructure for a new order management system. IBM also provides cloud services to the Department of Defense.