US court rules in favour of Amazon’s AWS in CIA cloud contract dispute

A $600 million contract to supply the Central Intelligence Agency (CIA) of the United Sates with cloud computing services has given Amazon its first major victory in a public spat with IBM.

On 7 October, US Court of Federal Claims judge Thomas Wheeler ruled in favour of Amazon Web Services, the rapidly expanding cloud computing business of the world's largest internet retailer.

AWS, as the business is known, started off as a supplier of remote computer processing power and storage to small start-ups, but was keen on adding large corporations and government organisations even as it competed against some of the world's largest enterprise tech companies such as IBM, Oracle and HP.

The company's enterprise push got a leg-up earlier this year with a CIA contract it bagged against rivals IBM and a clutch of other large tech companies.

However, IBM went in appeal seeking review of the bidding process by the US Government Accountability Office. The GAO called for changes to the CIA bidding process, which Amazon challenged in court. The court upheld Amazon's appeal earlier this week.

An AWS spokeswoman said the company was pleased with the court's decision and looked forward to resuming work on the important contract.

IBM spokesman Clint Roswell said the company would appeal the decision.

The GAO had stated that AWS's offer was superior, even as it upheld IBM's appeal.

On Monday, judge Thomas Wheeler of the US Court of Federal Claims heard oral arguments of the parties.

Following the conclusion of the arguments, Wheeler ruled in favour of Amazon and against IBM. A court notice said a written opinion would follow.

AWS pioneered public cloud computing, in 2006, which allows companies to rent computing power, storage and other services from data centres shared with other customers, which works out cheaper and affords greater flexibility to customers than maintaining their own.