GSA memo clarifies terms of IBM suspension

A government document obtained today confirms that the Environmental Protection Agency’s March 27 suspension of IBM from government work stops agencies' actions to purchase from the company.

Agencies can’t place new orders against contracts held by IBM, the General Services Administration wrote in an internal notice today that was obtained by Federal Computer Week. The notice reflects language in the Federal Acquisition Regulation.

Because of the suspension, GSA told its acquisition staff members they can’t solicit offers from the company, award new contracts, place task, delivery, or purchase orders, or consent to subcontracts with IBM.

GSA’s notice is intended for its employees and other agencies buying from GSA’s various contract vehicles. IBM has numerous contracts that agencies can no longer use due to the suspension.

IBM had more than $1.42 billion in sales to the federal government in fiscal 2007, according to the Web site. The site's data shows IBM’s sales are on the upswing; sales have increased more than $203 million since fiscal 2005.

IBM accounted for nearly half of a percent of the total amount of awarded federal dollars in 2007, according to the Web site.

David Drabkin, GSA’s acting chief acquisition officer, said in an  interview that it was too early to know the impact of the IBM suspension. He said the suspension is in effect until EPA lifts it and removes the company from the government's Excluded Parties List. There’s no word when the agency will do so, he said.

Robert Guerra, partner at the consulting firm Guerra Kiviat, said the suspension will have major effects in many ways.

It leaves agencies that rely on IBM products and services with problems as they try to figure out how to move ahead, especially with an indefinite suspension, he said. Also, agencies may be wary of using a company tarnished with a suspension on its performance record, he said.

For now, agencies are prohibited from evaluating pending proposals, quotations or offers from IBM. They also must throw out bids IBM has submitted in response to invitations for bids, GSA said.

Furthermore, agencies can’t add new work, exercise options or extend the duration of current IBM contracts. Agencies can’t modify existing contracts or use purchase cards to buy goods and services from IBM, GSA said.

To do business with IBM, an agency head must approve the exception, GSA said.

GSA told its employees and contract users that existing contracts and task orders may remain in effect unless an agency head directs otherwise.

GSA’s notice says agencies should not terminate existing contracts and task orders without first consulting with their senior procurement executives and general counsels.

In a related development, the U.S. Attorney for the Eastern District of Virginia served grand jury subpoenas March 31 on IBM and on certain employees asking for testimony and documents regarding interactions between EPA employees and IBM employees, the company said in a statement that day. The statement also said, "IBM intends to take all appropriate actions to challenge the suspension and limit its scope."

IBM's March 31 statement has been the company's only comment on the matter.

The suspension apparently involves an $84 million EPA contract to modernize the agency’s financial management system that the CGI Group won in February 2007. IBM filed a protest of the award, which stopped work on the project, according to market research firm Input Inc. The Government Accountability Office still has the protest under review, according to Input.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.


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