Amazon, IBM to Compete for $600 million CIA Contract

Joe Goldman |

IBMIBM (IBM) won its protest against the CIA’s $600 million cloud computing contract award to Amazon.com (AMZN), sparking a new battle to win the CIA’s business and trust.

According to The Wall Street Journal, the U.S. Government Accountability Office ruled that the CIA failed to thoroughly evaluate the competition and must review the two offers. The CIA will reconsider pricing, technology, and security before making a decision.

In the fallout of the NSA leak scandal, the timing is right for the CIA to move its operations into a secure cloud. Although federal contracts have fallen in value over the last several years, the cloud contract will be a major, worthy investment in American intelligence and security.

The news is a blow for older software companies like Oracle (ORCL) and SAP (SAP), who have seemingly fallen behind in the cloud revolution. Meanwhile, the news serves as a testament to the strength in IBM’s management, which has successfully shifted its business into the cloud and established itself as a top competitor in the space.

Whoever the CIA chooses not only has an additional $600 million in revenue on the books, but also a supreme marketing tool. The CIA’s decision will declare a leader in cloud security; if its company’s services are good enough for the CIA, they are good enough for anybody.

Both IBM and Amazon traded down with the market on Wednesday. IBM shares dropped 1.02 percent to $201.90, while Amazon shares were down 0.83 percent to $272.51.

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Companies

Symbol Name Price Change % Volume
ORCL Oracle Corporation 38.97 0.47 1.22 13,681,522
IBM International Business Machines Corp 159.84 -0.18 -0.11 3,447,052
AMZN Amazon.com Inc. 759.36 19.02 2.57 4,314,790
SAP SAP SE ADR (Sponsored) 83.13 1.21 1.48 439,916
BAS Basic Energy Services Inc. 0.49 0.01 2.90 1,457,562

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