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By Steve Kelman

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The Lectern: The IBM shocker

I have been in Washington this week for some meetings, and the story about IBM's governmentwide suspension from contracting has been the big topic of conversation. Folks are pretty shocked. (I saw an amazed post from one government contracting officer on Facebook.)


We don't know too many details at this point. Possibly, there is some really egregious behavior by IBM that resulted in this extreme step. But possibly, this move reflects the hyper-fear, hyper-punishment procurement environment right now that affects vendors (assumed now to be rapacious crooks until proven otherwise) as well as career public servants.


Somebody mentioned to me a recent meeting involving a number of industry folks where the topic was which information technology firms are going to withdraw from selling to the federal government. Obviously those contractors who are completely dependent on government business -- the IT divisions of the defense contractors, and government-unique small businesses -- will stay on. But are we going to start to see predominantly commercial firms, who have only a small percentage of business in the government marketplace, conclude that in the present environment, the risks simply aren't worth it? (During Katrina, the government was unable to use Wal-Mart for supplying the region because the company refuses to do business with the government for other than micropurchases.)


This would of course be terrible. The last thing the government needs is to revert to the days when government contracting was the preserve of government-only companies. For innovation, competition, and customer-orientation, the government needs predominantly commercial firms. The current procurement environment threatens the big gains in terms of lower prices, innovation, and customer service that we made in the 90's in attracting these firms to government contracting.

Posted by Steve Kelman on Apr 02, 2008 at 12:09 PM


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Reader comments

Tue, Apr 15, 2008 John Monroe

Shep -- Thanks for your thoughtful comments; I also endorse your words of praise for Dave Drabkin, Stan Soloway, and Colleen Preston. I certainly agree that taxpayers have a right to expect that we get best value for spending taxpayer dollars on contracting. Where I differ from the control freaks is in thinking that the main way to do that is through ever-more rules, audits, and controls. Not that we don't need all three in moderation -- however, the current environment is driving out good business decisions and driving away civil servants from the government. Steve Kelman

Sun, Apr 13, 2008 Shep Claremont

Steve:There's a lot to be learned from the IBM matter and it may prove to be another watershed event in t he evolution of our acquisition systtem, although it's hard to tell whether it will be for the better or worse. There is evidence that the process didn't work like it was designed too, even though there appears to be evidence to establish grounds for suspension.Perhaps what's more important about the IBM case is the way in which it shows the polarization within and without our community. On the one end there are those who see the IBM case as an example of how we are backing away from the great strides we took in the 90's toward accessing the commercial market and on t he other therre are those who argie that it is a long overdue reaction to companies that lack ethics and make money from the government. Of course, as is always the case, the truth is somewhere in the middle, but there are few who are focused on the truth or the middle. How did we get here? Where are the leaders who are trying to focus on truth and finding and holding the middle ground? There don't seem to be many. Maybe Drabkin at GSA and Soloway and Preston at PSC, but who else is standing up for both the integrity of the process and reasoned reaction to problems that arise in the day-to-day operations of government? Even you, one of my heroes, seem to lose sight that government procurement is not just a back office business function of government, we all wished it were, but it isn't. We're spending taxpayer dollars and now we are doing it during a War and in an economic crisis. People have a right to have an expectation that when we are spending their money we are doing it with reputable companies and we are getting value for their money.

Fri, Apr 4, 2008 Kevin Krooss

Good riddance to IBM and the rest of the bandits.The government has become FAR, FAR too dependent on these criminals. They charge ten times as much and take ten times as long as government employees. Unfortunately they have been all too successful in displacing those dedicated government employees over the years. Mostly due to kickbacks and a revolving door policy where top level political appointees find a golden parachute waiting for them, just as soon as they clear house. Luckily for most of those people have found jobs working for the very same contractors who replaced them, doing the same jobs. Only costing the taxpayer many times more.That's the real crime, except it's all legal.

Fri, Apr 4, 2008 Michael Lent

Re t1234's comment. Yes, the USA for the Eastern District of VA (Alexandria) evidently, from several news reports, has a grand jury sitting. In cases of alleged public corruption by feds or alleged contractor attempts to obtain or use, or even passively receive, acq-sensitive info, the Bureau is involved. Especially in Paul McNulty's former turf, they are quick to make prelim investigations. We should be happy with this morning's news that the suspension has been lifted because it was vast overkill in scope, even if the allegations, whatever they are, are sustained. But the investigation and attempt to make a case appear to be proceeding. I hesitate to suggest this, Steve, but perhaps the FI includes some government customers, too, not just IGs.

Fri, Apr 4, 2008 Paul Sherman

I guess many years of working in small business (max # of employees 20, NOT the fed definition) has made me cynical about Washington's addiction to big business.My view on this is 'so what?'. If any branch of the government has become that dependent on a particular contractor, then something's amiss with the agency. Truthfully, most of us on the front line don't give a rat's patooty about machinations like this - we'll get the job done in spite of what happens in the beltway.

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