Amazon wins big in battle with IBM over contractual enforcement


New Jersey consumers that do any online shopping probably recognize Amazon and its role as a pioneer in the online shopping industry. Lesser known is Amazon's Amazon Web Services (AWS) division, which specializes in remote computer services, including cloud computing. For the most part, AWS mostly caters to start-ups and other small companies, but the company recently got a huge boost when it won a $600 million contract with the Central Intelligence Agency (CIA). It beat out IBM and many other large companies. IBM appealed this result and the matter was taken to court.

The U.S. Government Accountability Office (GAO) stepped in and requested a review of the bidding process. When the GAO pushed for changes to the bidding process, Amazon took the issue to court and challenged the recommendation. The U.S. Court of Federal Claims reached a decision on the bidding issue on Oct. 7 and sided with Amazon.

IBM is disappointed with the decision and believes that there were flaws in the bidding process that should be reviewed and fixed. The company is now appealing the court's decision.

Contract disputes are common in the competitive world of business. Top companies such as IBM expect to win all the huge technology contracts and may try challenge those who do win the contracts, especially if the company is much smaller and not previously seen as a threat.

After winning a contract of this magnitude, it is important to focus on contractual enforcement. IBM wants to continue fighting this battle, while AWS is prepared to start work on the contract requirements.. This may be just one of many hurdles that AWS will have to face in its quest to fulfill the contract and compete with other large technology companies.

Source: USA Today, " Amazon wins major victory in CIA cloud dispute with IBM," Alistair Barr, Oct. 8, 2013