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Challenging the orthodoxy - Amazon v IBM

Den Howlett Profile picture for user gonzodaddy October 8, 2013
Amazon has won the latest round in its battle to be awarded a cloud infrastructure contract. IBM's challenge is thrown out. What does this mean for vendors going forward?

Earlier in the year, the CIA awarded a cloud infrastructure services contract to Amazon. the value was $600 million over the next ten years. This was a surprise, not least to IBM that felt that the agency had made the wrong choice. Accordingly, it complained and the Government Accountability Office ordered the CIA to re-open the bids. Not happy with that turn of events, Amazon filed its own complaint, arguing that the CIA made the right decision on the first pass.  On Monday, a US court agreed with the CIA's original assessment.

Having read through the Amazon appeal document, I am surprised that IBM tried to get the CIA to re-open the bid process. This from the document:

ibm v amazon


Looking at the above table, it seems the CIA was prepared to place its bets with Amazon because it beat IBM across all but one measure, even though the evaluated price from Amazon was substantially higher than that from IBM.

The document sets out in detail how Amazon believes the GAO got it wrong. The degree to which the CIA expected all bidders to understand the highly detailed requirements is particularly striking. How did IBM get it so wrong? The document makes clear that on certain of the points, IBM didn't initially go back for clarification and, if anything, was deliberately ignoring ambiguities in order to renegotiate at a later date. The CIA wasn't having any of that. Further clues can be discerned from IBM's response which, among other things, says:

This court decision seems especially inappropriate in light of the current times, since IBM’s bid was superior in many ways, including being substantially more cost-effective. In addition, IBM has for decades supplied the government with proven mission-critical operations. The company remains committed to provide secure, reliable and robust cloud solutions to federal agencies

[My emphasis added.]

Chutzpah anyone? More to the point, IBM seems to be ignoring the evidence altogether, relying instead on what amounts to little more than an entitlement mentality.

This saga will lumber on as both sides are rebidding anyway and the tone of IBM's PR response implies it is not giving up on this deal - yet.

The lessons here for all vendors should be obvious:

  • The old order can be successfully challenged
  • Those vendors that have been slow to adopt new technologies like cloud are at risk
  • Playing catchup isn't a winning proposition when vendors like Amazon are not standing still
  • Claiming entitlement doesn't wash

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