Does IBM have problems ?

There are several new data points this week in the ongoing cratering of IBM as an IT vendor. The state of Pennsylvania cancelled an unemployment compensation system contract that was 42 months behind and $60 million over budget. Big Blue has been banned from the Australian state of Queensland after botching a $6.9 million SAP project that will now reportedly cost the people of Queensland $A1.2 billion to fix. That’s some botch. Credit Suisse analyst Kulbinder Garcha says IBM has a cash flow problem and downgraded the stock. At IBM’s Systems & Technology Group, management announced to employees a one week mandatory furlough at the end of August or beginning of September.

The CIA picked Amazon over IBM for a lucrative government contract not because of price, but because of the company’s “superior technical solution” – a view that contrasts with IBM’s vision of itself as the go-to tech organization for governments. IBM protested the CIA award.  The Government Accountability Office (GAO) investigated and found that Amazon’s bid was a whopping  $54 million higher than IBM’s. It asked the CIA to go back through the bidding process again. The CIA has 60 days to respond (
GAO claims that the evaluation in this regard was not inconsistent with the RFP’s  evaluation criteria. The RFP contemplated the award, on a “best value” basis, of a single fixed-price indefinite-delivery/indefinite-quantity (ID/IQ) contract for commercially-managed cloud computing services for the Intelligence Community to be provided through task orders. The contemplated ID/IQ contract was to include a 270-day period to achieve initial operating capability, a 4-year base ordering period, a 3-year option, and a 2-year option, with a maximum value of $600 million over the base period.

There is no place in the final proposal revisions (FPR) where IBM clearly and affirmatively stated that its existing public cloud structure can auto-scale all applications, whether provided by IBM or the consumer.

Return from the knockout ?

ARMONK, N.Y. – 14 Aug 2013: IBM (NYSE: IBM) today announced it will work with the United States Department of the Interior (US DOI) as the Department embarks on a decade long transformation of their information technology (IT) systems to a cloud computing model. As part of an indefinite delivery/indefinite quantity (IDIQ) contract, valued for IBM up to $1 billion, the Department may use IBM cloud computing technologies, services and hosting as the foundation of their next generation infrastructure.

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