Amazon, IBM to Compete for $600 million CIA Contract

Joe Goldman  |

IBM (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.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
ORCL Oracle Corporation 57.54 -0.58 -1.00 11,663,536 Trade
SAP SAP SE ADS 124.63 -2.79 -2.19 1,481,651 Trade
BAS Basic Energy Services Inc. 1.88 0.08 4.44 435,872 Trade
IBM International Business Machines Corporation 149.68 0.05 0.03 7,290,678 Trade
AMZN Amazon.com Inc. 1,964.52 -13.38 -0.68 3,185,612 Trade

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