IBM Temporarily Banned from U.S. Government Deals
April 7, 2008 Timothy Prickett Morgan
Given the shaky state of the economy in the United States and IBM‘s dependence on services contracts and sales to the Federal government, any kind of interruption on the flow of deals is something that Big Blue wants to avoid. But for a couple of days last week, IBM was barred from bidding on contracts with Uncle Sam.
According to a report in the Wall Street Journal, which was echoed later by a press release put out by IBM and elaborated on not at all by a separate statement that the company sent to its PartnerWorld partners, the U.S. Attorney’s Office for the Eastern District of Virginia last Monday served IBM’s corporate officers and certain (and unspecified) employees with grand jury subpoenas requesting testimony and documents regarding interactions between employees of the Environmental Protection Agency and IBM’s employees. Apparently, according to the report in the Journal, IBM was bidding on an IT contract for the EPA and someone somewhere became available that IBM had access to sensitive information relating to an $80 million IT systems modernization contract that IBM bid on in March 2006. The nature of that information, and whether or not it led to IBM winning the deal, is not clear.
On Monday, IBM announced that in the prior week, Uncle Sam barred IBM from bidding on new government contracts and by Friday, nine days later, after a preliminary investigation, the government said IBM could start bidding again. The EPA is still investigating if IBM broke its procurement rules and the U.S. Attorney’s Office is also still actively investigating whatever happened.
Last year, the U.S. Department of Justice sued Hewlett-Packard, Sun Microsystems, and Accenture for making kickbacks to other tech firms they partnered with as they sold IT solutions to the federal government in the 1990s and 2000s.