IBM Wins Its Largest U.S. Cloud-Computing Contract

International Business Machines Corp. (IBM) won a federal cloud-computing contract with a maximum value of $1 billion, its largest such agreement with the U.S. government.

The Interior Department awarded similar, 10-year pacts to nine other suppliers, including Lockheed Martin Corp. (LMT), which also described the agreement as its largest federal cloud contract.

The deals might reach a combined $10 billion, allowing the agency to speed its efforts to move information to the cloud, a Web-based pool of shared resources such as data storage and software. Other U.S. departments may eventually tap the program.

The agreement shows that “IBM’s ability to help governments transform with new technologies, like cloud, continue to grow,” Michael Rowinski, a spokesman for the Armonk, New York-based company, said in an e-mail yesterday.

The award is a coup following IBM’s loss to Amazon.com Inc. in the competition for a four-year, $600 million cloud contract with the Central Intelligence Agency. IBM may get another chance at that business following a successful protest to a federal office that arbitrates contract disputes.

The Interior Department’s awards are “central to transforming our overall IT capabilities, which we expect to result in benefits of $100 million each year from 2016 to 2020,” said Andrew Jackson, the agency’s deputy assistant secretary for technology, information and business services.

Photographer: Simon Dawson/Bloomberg

The agreement shows that “IBM’s ability to help governments transform with new technologies, like cloud, continue to grow,” Michael Rowinski, a spokesman for the Armonk, New York-based company, said in an e-mail yesterday. Close

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Photographer: Simon Dawson/Bloomberg

The agreement shows that “IBM’s ability to help governments transform with new technologies, like cloud, continue to grow,” Michael Rowinski, a spokesman for the Armonk, New York-based company, said in an e-mail yesterday.

“The approach we’ve chosen also allows us to speed up our acquisition process, which in turn allows us to leverage this technology more quickly,” Jackson said yesterday in a blog posting on the department’s website.

Center Consolidation

Interior officials believe access to the cloud-hosting services will allow the department to begin the process of closing or consolidating potentially hundreds of data centers, he said.

While the agency’s awards were issued in May, the work and many of the companies’ announcements were delayed by CenturyLink Inc. (CTL)’s protest.

CenturyLink, based in Monroe, Louisiana, in March sued the government in the U.S. Court of Federal Claims, partly because it said the Interior Department’s price and technical evaluation criteria were unreasonable. It lost last month, and it didn’t make the department’s list of 10 winners.

The agency’s cloud effort may end up being the biggest across the federal government, Afzal Bari, a senior technology analyst for Bloomberg Government, said in an interview.

Photographer: Scott Eells/Bloomberg

International Business Machines Corp., the world’s biggest computer-services company, is trimming expenses to preserve profit margins as hardware revenue continues to decline. Close

International Business Machines Corp., the world’s biggest computer-services company,... Read More

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Photographer: Scott Eells/Bloomberg

International Business Machines Corp., the world’s biggest computer-services company, is trimming expenses to preserve profit margins as hardware revenue continues to decline.

Business Advantage

The 10 companies selected to provide services under the contract will have a competitive advantage in the expanding cloud-computing industry, Bari said.

While the award is Bethesda, Maryland-based Lockheed’s “largest U.S. government cloud contract to date,” the $1 billion represents the ceiling, Diane Ashley, a business development manager for the company, said in an e-mailed statement. Lockheed hasn’t yet received funding for orders under the contract, she said.

Other winners include CGI Group Inc. (GIB) of Montreal; Verizon Communications Inc. (VZ), based in New York; Unisys Corp. (UIS), based in Blue Bell, Pennsylvania; and AT&T Inc. (T), based in Dallas.

Four closely held vendors made the list. They are Aquilent Inc., based in Laurel, Maryland; Smartronix Inc., based in Hollywood, Maryland; Autonomic Resources LLC, based in Cary, North Carolina; and Global Technology Resources Inc., based in Denver.

To contact the reporters on this story: Kathleen Miller in Washington at kmiller01@bloomberg.net; Chris Strohm in Washington at cstrohm1@bloomberg.net

To contact the editor responsible for this story: Stephanie Stoughton at sstoughton@bloomberg.net

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