The CIA picked Amazon over IBM for a lucrative government contract not because of price, but because of the company's "superior technical solution" – a view that contrasts with IBM's vision of itself as the go-to tech organization for governments.
The revelation came to light on Friday when the US Government Accountability Office released a partially-redacted report that outlined the reasons for why the spooks plumped for Amazon over IBM for a $600m private cloud contract, and why IBM protested this decision.
The GAO report partially upheld two of IBM's complaints relating to percieved pricing and technological differences between it and Amazon, and the CIA's subsequent relaxing of a solicitation term for Amazon, and rejected the rest.
Now, the CIA has 60 days to decide to either take the GAO's recommendations and reevaluate the two companies, or stay with Amazon.
Although Amazon came in with an evaluated annual price of $148 million per year versus IBM's $94 million, the CIA chose Amazon for its technical sophistication, the report says.
"While IBM's proposal offered an evaluated [deleted] price advantage over 5 years, the [source selection authority] concluded that this advantage was offset by Amazon’s superior technical solution," the report says.
IBM's price did appear to have some provisions attached to it which freaked out the procurement body, which "found 'serious cost risk' associated with IBM's proposed contract clause which indicated that the contractor would [deleted]."
We don't know what the [deleted] bit could say, but speculate that it's typical for major enterprise contracts to contain provisions relating to cost-overruns that can trigger additional fees.
IBM's school report card shows it needs to go back to cloud class
IBM was given another black mark because the language in its tender indicated its cloud could not provide auto-scaling for custom apps written by the CIA – unlike Amazon.
"The technical/management evaluation team also assigned a significant weakness under the written element of the technical approach subfactor for IBM's failure to make clear in its proposal how IBM would modify its existing commercial cloud to provide the required auto-scaling capability for the intelligence community," the report says. IBM disputed this but the protest was denied by the GAO.
IBM also argued that Amazon's cloud outages throughout 2012 should have been considered by the agency when selecting Amazon. The GAO disputes this, noting that the agency did evaluate the service outages but "concluded that the reports and their knowledge of the circumstances surrounding the outages were not sufficiently detailed to take the outages into account in the past performance evaluation".
In defense of Amazon's reliability, the report quotes a glowing endorsement of the AWS cloud by the Jet Propulsion Laboratory, which said that it was not affected by outages in specific Amazon data centers because "we implement failover and elastic load balancing but it's simple and inexpensive and very much worth it".
What the report highlights is that though IBM came in with a lower price than Amazon, its technology was seen to be simply lacking by the procurement bods over at the CIA.
A specific area where IBM fell down was in its ability to provide auto-scaling within a platform-as-a-service environment consisting of thousands of nodes that need to process MapReduce jobs over raw datasets of 100TB in size at a time. In other words – Amazon's Hadoop tech beat IBM's.
Given IBM's recent annointment of OpenStack as the preferred platform for its SmartCloud technology, the fact that OpenStack is several years behind Amazon Web Services in capability, and the lackluster take-up of SmartCloud so far, and even the recently acquired SoftLayer bare metal cloud, we reckon that Amazon's technical dominance over IBM is likely to hold true for some time to come.
As we've said, the CIA's decision to choose Amazon over IBM is a significant moment in the evolution of the cloud services industry, and whether Amazon wins or not, the initial decision is indicative of a fundamental change in attitudes by government towards IT procurement.
At the time of writing neither IBM, Amazon, or the GAO had responded to requests for information. ®