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State Department revokes $16.5M Kindle contract offer

After asking Amazon to negotiate a no-bid contract to provide U.S. embassies with at least 2,500 loaded Kindle Touches, the government cancels the plan.

The U.S. State Department canceled its potential partnership with Amazon to ship Kindle Touches overseas.
Sarah Tew/CNET

What once seemed like a dream scenario for Amazon has officially become nonexistent.

Two months ago, the U.S. State Department asked the company to negotiate a no-bid contract that would essentially earn Amazon up to $16.5 million to pass out Kindle Touches to the country's embassies overseas.

Today, the government announced that plan has officially been canceled.

Here's what the State Department posted on its Web site today:

U.S. Department of State solicitation (Request for Proposals) SAQMMA12R0272 for Amazon e-Readers, Content Management, and Logistics is cancelled and the Justification and Approval (J&A) to award contract SAQMMA12D0131 on a sole-source basis is withdrawn. The Department of State intends to conduct additional market research and re-examine its requirements for this program.

Originally, pushing aside the iPad and Nook, the State Department focused on the Kindle Touch as being the perfect e-reader for its programs overseas. The deal was that Amazon would provide at least 2,500 Kindle Touches preloaded with 50 titles each, and that this number could grow over the following five years.

"The DoS has identified the Amazon Kindle as the only e-Reader on the market that meets the Government's needs," read a government document about the original proposed contract, "and Amazon as the only company possessing the essential capabilities required by the Government."

It's not clear why the government had the change of heart or if it was actually Amazon that decided it didn't want to negotiate.

CNET contacted both the State Department and Amazon for comment, and we'll update the story when we get more information.