IBM suspended from new federal contracts

IBM and its subsidiaries are suspended from receiving new federal contracts, certain subcontracts and some types of federal assistance and benefits, due to an action taken by the Environmental Protection Agency that extends governmentwide, according to federal documents.

According to the Excluded Parties List System, maintained by the General Services Administration, the EPA took action against IBM on March 27, pursuant to Executive Order 12549, created in 1986 to curb fraud, waste and abuse in federal programs.

The list is an online database for agencies that identifies parties excluded from receiving federal contracts, some subcontracts and certain types of federal financial and nonfinancial assistance and benefits. The government can take such action for violations of the Federal Acquisition Regulation, specific agency regulations, the Governmentwide Nonprocurement Suspension and Debarment Common Rule, and other federal standards.

The specifics of IBM's suspension have not been released. IBM did not respond to requests for comment.

"The [EPA] temporarily suspended IBM from receiving new federal contracts or assistance," said Jonathan Shradar, EPA press secretary. "The action was taken by the EPA suspending official as a temporary measure while the agency reviews concerns raised about potential activities involving an EPA procurement. As the matter is currently pending before the suspending official, the agency will have no further comment at this time." Shradar confirmed that the suspension is governmentwide, as dictated by the associated executive order.

The Homeland Security Department sent a notice to its acquisition community directing its Office of Procurement Operation not to award any of the following new procurement actions to IBM or its subsidiaries:

  • Contracts
  • Delivery/task orders
  • Purchase orders
  • Purchase card transactions
  • Modifications to existing contracts
  • Interagency agreements with servicing agencies that will use IBM or its subsidiaries as the vendor
IBM earned $1.5 billion in revenue from federal prime contracts in fiscal 2007, according to McLean, Va., consulting firm FedSources.

"You don't see this very often, particularly for large companies," said Ray Bjorklund, senior vice president and chief knowledge officer for FedSources. He notes MCI among the exceptions. After filing for bankruptcy, MCI received a suspension from U.S. government contracts that lasted from August 2003 to January 2004. "This happens with small companies more frequently," Bjorkland said. "But IBM -- wow."

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