Amazon defeats IBM challenge over CIA 'spy cloud' bid

In more good news for Amazon's cloud business the firm has successfully seen off a legal challenge launched by IBM to reopen the bidding for a $600 million (£370 million) contract to build a new CIA 'spy cloud' handed to Amazon.

IBM had previously held the upper hand after the US Government Accountability Office (GAO), which is in charge of processing challenges to contracts, ruled that the CIA had not assess the pricing properly and granted Amazon alone a waiver on one contract requirement.

Amazon however sued in July following the ruling, and US Court of Federal Claims judge Thomas Wheeler sided with Amazon.

At $148 million (£92 million) a year, Amazon's bid was priced over 50 per cent higher than IBM's $94 million (£58.5 million), however evaluators decided that Amazon offered a "superior technical solution".

Following this weeks ruling, IBM said in a statement that it was "disappointed with the ruling from the U.S. Court of Federal Claims, reversing the GAO's recommendation to reopen the competition and correct flaws in the bidding process".

"IBM plans to appeal this decision. 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," the statement added.

"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."

Amazon currently dominates the cloud market, particularly in the US. In Q2 2013, the firm's cloud revenue was more than IBM, Google and Microsoft's cloud earnings combined.