IBM, Verizon, and others to Compete to Build Government Cloud Infrastructure

IBM Verizon and others to Compete to Build Government CloudNEW YORK – On Thursday the International Data Group (IDG) reported that IBM (NYSE:IBM), Verizon (NYSE:VZ), and eight other companies are competing for $ 10 billion of contracts from the Department of the Interior (DOI) to build their cloud infrastructure.  As part of the plan, the DOI plans to close or consolidate nearly 400 data centers, spending over $ 100 million a year from 2016 to 2020.

According to a statement from DOI Deputy Assistant Secretary for Technology, ‘the contracts will not only allow us to move these apps to the cloud, but move them in a well-planned, methodical way’.  Ten companies have been awarded Indefinite Delivery Indefinite Quantity (IDIQ) contracts including AT&T (NYSE:T), IBM, CGI Group (NYSE:GIB), Unisys (NYSE:UIS), Verizon, Lockheed Martin (NYSE:LMT), Autonomic Resources, Global Technology Resources (NASDAQ:GAI), and Smartronix.

In most cases, the companies awarded IDIQ contracts are not awarded any money as an IDIQ is a license to hunt for available contracts with a department or agency with pre-negotiated terms between the vendor and the agency to expedite the process of issuing work orders.  Under the IDIQ, companies can be awarded up to $ 1 billion of work and other U.S. agencies can also use the IDIQ contract vehicle for their own work.

It is expected that the first contract to be awarded under the IDIQ will be an order to set up and host an SAP implementation.  The agency will also issue task orders for virtual machines, storage, database hosting, secure file transfers, Web hosting, as well as for maintaining development and test environments.

The IDIQ was originally expected to be awarded in May, but was delayed by a protest from CenturyLink (NYSE:CTL) as they were not included in the final selection.  CenturyLink complained that the contract was too vague; however, the Court of Federal Claims stuck down the challenge earlier this month.

In 2012, the DOI began consolidating its email and collaboration to a cloud-based service Google (NASDAQ:GOOG) Apps for Government and the contracts have to potential to be the largest contracts that IBM has been awarded.

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About the author

Audrey is a senior editor for the business and finance sections.