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

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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.


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