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Contract with ties to Microsoft and Google needs changes, GAO says

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A proxy fight between Google and Microsoft in their battle to provide lucrative cloud computing services to the federal government appears to be headed for another round.

The General Services Administration is spearheading a contract program to help federal agencies use Web-based e-mail services. It now must rework the deal to better address terms that would have allowed technology firms to base computing centers in countries including Afghanistan, Yemen and Somalia, but not in more tech-friendly countries, according to a decision published Monday by the Government Accountability Office.

Two small contracting firms, Annapolis-based Technosource Information Systems and Reston-based TrueTandem, filed bid protests with the GAO, arguing that the GSA’s deal would have allowed winning contractors to base their computing centers in the war-torn countries that the GSA considers Trade Agreements Act-designated countries but not in countries with developing tech sectors — such as Brazil, India and South Africa — which are not considered compliant with the act.

The GAO agreed, concluding that the GSA had not provided a meaningful explanation for the limitations and failed to prove “a legitimate government need” for the stipulations.

Technosource and TrueTandem are Microsoft resellers, according to their Web sites and people familiar with the ruling.

Two firms associated with Google, Onix Networking and Unisys, filed as interveners in the case, allowing them to testify on the matter.

The GSA said Monday that it is reviewing the contract decision before taking action. The agency has 60 days to inform the GAO of what it plans to do with the recommendations. Under federal statute, the GAO reviews bid challenges and issues recommendations that are usually adopted by agencies.

The companies involved in the decision did not respond to requests for comment.

Advocates for “cloud,” or Web-based, computing, say it saves space and money by pooling computer resources.

The value of the GSA contract in dispute is not yet known because it is being set up as a “blanket purchase agreement,”a program open to companies already part of a GSA schedule. Inclusion in the program does not guarantee work for a company but gives it a chance to be selected.

Monday’s decision is the latest development in Microsoft and Google’s heated competition to provide federal agencies with platforms for cloud computing. Both have received notable government contracts; Microsoft won the job of shifting the Agriculture Department’s 120,000 e-mail accounts to the cloud, while Google partnered with Unisys on a high-profile contract to move the GSA’s e-mail accounts to the cloud.

With intense competition often comes protests. Late last year, the GAO reported that 2,299 challenges to bids were filed in fiscal 2010, up from 1,989 the prior year.

But it is hard to win a protest. The GAO upheld a protest only 19 percent of the time in 2010, up slightly from 18 percent in 2009 but down from a recent high of 29 percent in 2006.

In its decision Monday, the GAO also faulted the GSA for being ambiguous with other terms of the deal regarding Internet routing.

But the GAO upheld the GSA’s requirement for a “government community cloud” limited to federal, state and local government entities. Keeping government data separate from other data avoids the risk of security breaches, the GAO said.

Censer is a staff writer with The Washington Post’s Capital Business.

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