October 9, 2013, 8:51 AM

Amazon wins a CIA web services contract following a court ruling

A federal judge sides with the e-retailer over IBM.

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A federal judge has cleared the way for Amazon.com Inc.’s cloud-computing business, Amazon Web Services, to provide services to  the CIA. The deal is valued at up to $600 million over a period of two to four years.

The CIA awarded Amazon the contract in February, but competing bidder IBM Corp. filed a complaint, claiming that the evaluation and negotiation process leading to the deal were unfair. Ruling on that complaint yesterday, U.S. Court of Federal Claims judge Thomas C. Wheeler denied IBM’s claim, and ordered Amazon and the CIA to resume launching the intelligence agency’s computing infrastructure on Amazon’s servers. Amazon Web Services hosts web sites and provides data storage and computing power to client companies.

Neither Amazon nor IBM immediately responded to requests for comment.

In Amazon’s 79-page court filing from Aug. 16—available publicly, albeit riddled with redactions, via Scribd.com—the retailer takes jabs at IBM. It writes that IBM, as relatively new provider of cloud computing technologies, doesn’t even match up as a formidable competitor, citing its lack of mention in recent industry analyses by research firms Gartner Inc. and Forbes Inc. Amazon Web Services beat IBM in its technical demonstration, service-level agreement, confidence of past performance and overall risk to the CIA, according to a summary of the agency’s side-by-side evaluation of the two vendors included in court documents.

Ten retailers in the 2013 Top 500 Guide and 18 retailers in the Second 500 report hosting their e-commerce sites via Amazon Web Services.

For the first six months of 2013 ended June 30, Amazon reported total net sales of $31.77 million, of which $1.69 million came from non-retail activities including Amazon Web Services in North America, advertising services and co-branded credit card agreements.

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