Report: The CIA Picked Amazon To Build Its Cloud Even Though IBM Would've Been Cheaper

Andy Jassy, AmazonAmazon’s cloud chief, Andy Jassy

The CIA picked Amazon over IBM for a big cloud computing project because it “represented the best value,” even though IBM’s would’ve been less expensive to build.

That’s one of the findings in a partially redacted report the US Government Accountability Office (GAO) released Friday.

As first reported by FCW’s Frank Konkel, the CIA and Amazon inked a 10-year, $600 million cloud contract in January, and IBM filed a protest to block the deal in February. 

The GAO report is its response to the points IBM raised in its protest.

Amazon and IBM had “materially different interpretations” of the CIA’s requirements, the GAO said, so the CIA came up with its own price comparison. 

While Amazon’s estimated price was around $54 million higher than IBM’s, the CIA felt this “was offset by Amazon’s superior technical solution,” the GAO said in its report. 

The GAO report confirms that Amazon’s deal with the CIA is for a different type of cloud than the one sells to startups and other customers over the Internet, called Amazon Web Services.

The CIA wanted Amazon or IBM to provide “a copy of its existing public cloud (modified where necessary) to be installed on government premises and operated by the provider,” according to the GAO report. 

This is called a “private cloud,” and it’s what many enterprises prefer because they think it’s more secure than AWS, which is called a “public cloud.” 

The GAO is recommending that the CIA re-evaluate Amazon and IBM’s bids and is giving the agency 60 days to decide whether to do this or stay with Amazon.

We’ve reached out to IBM and Amazon for comment and will update if they respond. 

Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.

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