7 Things The Judge Didn't Like About IBM's CIA Cloud Legal Battle With Amazon


Why The CIA Picked AWS Even Though IBM's Estimate Was Cheaper

AWS's estimated price for the CIA cloud was around $148 million, whereas IBM's was about $94 million. Despite the discrepancy, the CIA picked AWS, and there are a couple of reasons for this, Wheeler said in the ruling.

IBM's guaranteed minimum was $39 million, while AWS's guaranteed minimum was $25 million. Wheeler said because IBM's $39 million figure was "nearly double the anticipated Year 1 amount for IBM's services," the CIA would've likely had to "make a large year-end payment to IBM." What's more, the CIA saw that IBM's contract proposal would have allowed it "to request restructuring of the entire agreement after Year 2 if the service price in that year did not exceed the guaranteed minimum," Wheeler said in the ruling.

These terms allowed IBM "to propose a low price for the agency's proposal evaluation purposes, but then to argue for negotiation of a higher price in the later years of performance," Wheeler said in the ruling.