Amazon Plans Virginia Data Center to Serve Federal Clients

Subsidiary Vadata negotiates $2.7 million in tax breaks for data center build at government compound

Yevgeniy Sverdlik

November 16, 2015

2 Min Read
Amazon Plans Virginia Data Center to Serve Federal Clients
Werner Vogels, CTO, Amazon, speaking at AWS re:Invent 2015 in Las Vegas (Photo: AWS)

Amazon subsidiary Vadata has successfully negotiated a $2.7 million tax-break deal with local officials for a data center the company plans to build at the Warrenton Training Center in Virginia, a classified US federal government communications complex that serves the likes of CIA, NSA, and the Department of Defense. Local news outlet Fauquier Now reported on the tax deal.

Vadata does data center projects on the online retail and cloud infrastructure services giant’s behalf. It’s common for web-scale data center operators like Amazon to use subsidiaries to build data centers for them in attempts to obscure their connection to the projects, which sometimes represent hundreds of millions of dollars in investment.

An Amazon spokesperson confirmed to us earlier that Vadata was a wholly owned Amazon subsidiary.

The US federal government is a major customer of cloud services, and its use of these services will only grow as agencies continue to outsource more and more of their IT infrastructure needs in efforts to cut cost.

Security requirements for many government agencies, however, dictate that they do not host data and applications in data centers that also host private-sector customers. In response to these requirements, cloud service providers have built data centers just for government customers.

Amazon Web Services has a data center on the West Coast of the US that hosts its GovCloud availability region. The facility is designed specifically for government customers, meeting various regulatory and compliance requirements.

Microsoft launched the government version of its Azure cloud services last year. Azure Government is physically and virtually separated from non-government customers. Its infrastructure in multiple data centers is operated by personnel that has gone through specialized screening.

IBM serves government cloud customers out of data centers in Dallas and Ashburn, Virginia.

Vadata, which has operated at the Warrenton Training Center in Virginia for two years, has already invested $26.4 million in the site, Fauquier Now reported, citing the company’s tax application. The upcoming project will be much bigger, with the company expecting to spend up to $200 million on the data center over time.

A local economic development official told Fauquier Now that as far as he knew, the federal government would be the data center’s only customer. Fauquier County expects the project to generate about $1.5 million in tax revenue annually.

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