Following on the heels of Lockheed Martin's (NYSE:LMT) announcement that it had won a $1 billion government contract to help "transition" the U.S. Department of the Interior "to the cloud" last week, a second major government contractor made a similar announcement, of similar size, today.
On Wednesday, IBM (NYSE:IBM) announced that it, too, has been awarded a $1 billion contract by the U.S. Department of the Interior. As with the Lockheed contract, IBM will be embarking upon a decade-long transformation of the IT systems at interior. IBM, like Lockheed, will work under what's known as an indefinite delivery, indefinite quantity contract (IDIQ), under which IBM will bid on work for specific task orders up to a $1 billion ceiling value on the underlying contract.
IBM's work will focus on data storage, secure file transfers, virtual machines, databases, Web hosting, development testing, and SAP application hosting, and it will utilize IBM's "Smart Cloud for Government," hosted at the IBM Federal Data Center, plus "Smart Cloud for Enterprise" commercial offerings, and also IBM's "AIX Cloud," which the company says is "very cost competitive."
According a report in the Federal Times, IBM's contract and Lockheed Martin's contract are not one and the same. Rather, they are separate contracts, each of which makes up approximately 10% of a $10 billion "pot" of federal money that is being allocated among multiple contractors for the purpose of bringing Interior into the "cloud."
Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of IBM and Lockheed Martin. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.