IBM Says Federal Suspension Lifted
Washington, D.C. -- The Environmental Protection Agency lifted a week-old ban that prevented International Business Machines Corp. from competing for federal contracts, as IBM conceded its employees "appear to have" violated contracting guidelines.
In an agreement between the EPA and IBM released by the EPA Friday, IBM said that it has put on leave five IBM employees identified by the EPA for their involvement in the case. The EPA temporarily banned IBM last week from receiving new contracts -- a move that automatically became effective government-wide -- while it investigated "potential activities involving a procurement."
The suspension was related to a ten-year, $84 million deal awarded in February 2007 to CGI Federal, a U.S. subsidiary of Canada-based CGI Group Inc., to modernize the EPA's financial management system. IBM, which was also vying for the contract, protested the award two months later to the Government Accountability Office, according to information provided by market research firm Federal Sources Inc.
The EPA said its official in charge of suspensions found "adequate evidence to support allegations" that IBM employees obtained confidential information from an EPA employee and used it in negotiations for a contract. The EPA said that "IBM officials knew [the information] was improperly acquired." The agreement doesn't provide any names of officials involved.
The EPA said that IBM senior managers have "pledged IBM's full commitment to conducting a full examination of IBM's federal compliance program" and to take any needed corrective actions. IBM "acknowledges that the integrity of the subject procurement process has been adversely affected," according to the agreement.
IBM has agreed to continue cooperating with EPA investigators and the U.S. attorney in Alexandria, Va., who is investigating the case. The company also agreed that it will drop its protest of the contract award to CGI.
The agreement between the EPA and IBM acknowledges that "criminal proceedings may ensue." Procurement law experts had said that the involvement of the U.S. attorney in Alexandria, Va., in issuing subpoenas for testimony by IBM employees, implied a potential criminal investigation, but there haven't been any indictments.
IBM agreed it will make information available to the U.S. attorney without requiring further subpoenas. It will also let EPA officials interview IBM employees in IBM facilities.
Armonk, N.Y.-based IBM had federal contracts last year that amounted to at least $1.3 billion, roughly 1% of its 2007 revenue.
Under a reciprocal agreement among federal agencies, when one agency issues a ban, the others follow it. The company had 30 days to contest the scope of the suspension, which could have continued for up to one year pending the completion of EPA's investigation.
--The Associated Press contributed to this article.
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