US court sides with Amazon on CIA cloud contract

A US federal judge has reinstated a CIA cloud computing contract with Amazon, rejecting a challenge from IBM, according to court documents released Tuesday.

Judge Thomas Wheeler of the Federal Court of Claims said in a notice posted by the court that Amazon Web Services' is "restored" and that a "corrective action stay is lifted."

"The Central Intelligence Agency and AWS may immediately resume performance of the (cloud) contract," the judge said, adding that a full opinion would be issued later.

The ruling marked the latest twist in a case pitting the two tech giants for a contract for a secure computing cloud reportedly valued at up to $600 million.

A report by the Government Accountability Office (GAO), the investigative arm of Congress, sided with IBM and recommended that the CIA reopen the bidding.

The GAO concluded that the CIA had failed to evaluate prices in each firm's proposal in a fair, comparable way and that the agency had waived a requirement in the project proposal only for Amazon.

Amazon's estimated price for the cloud computer project was about $54 million higher than that offered by IBM, but the CIA concluded the price difference was offset by a "superior technical solution" from Amazon, according to the GAO report.

The GAO report created a stir in the tech world as it indicated Amazon would be installing cloud services inside CIA data centers, in a break with its standard practice of offering extra computing power over the Internet.

Amazon Web Services executives have previously argued that "private clouds" connected to data centers do not qualify as authentic cloud services, as they are cut off from the public Internet.