Washington Technology is now reporting that the GSA has directed in an internal notice that due to EPA's listing IBM on the Excluded Parties List, agencies using GSA vehicles should not solicit offers from IBM, award new contracts, task orders, purchase orders, or consent to subcontracts with IBM. We have seen no reports yet as to whether this ban is in effect government wide, but if it is, it could have serious effects on the supply chain and the fortunes of many more companies than IBM.

INPUT analysis uncovered over 50 major contracts still active across the government where IBM is a prime. An analysis of some of the bigger ones uncovers a list of nearly 200 subcontractors -- many of which are small businesses -- that are now blocked along with IBM. IBM has 47 subs on DHS's EAGLE alone and another 34 on Navy's eSEAPORT. In addition, we estimate that over 400 Value Added Resellers may need to suspend sales of IBM products to their government customers.

While this certainly spells headaches in many business development and procurement shops, it may also impact government operations and even national security. For example, IBM is the prime contractor on DHS's Automated Commercial Environment, which has modernized systems that allow enhanced security and efficiency at the nation's cargo ports. What happens if ACE has a glitch that needs fixing? Keep those container ships on hold?

Observers may imagine that IBM's competitors are happy to see Big Blue drop out of various races such as DHS's CIS Transformation, where proposals are due April 18. However, people that I have spoken to are more worried about collateral damage due to their own links with IBM and the chilling thought of who might be next. We are hopeful for everyone's sake that this matter will be resolved quickly. We cannot help asking, however, that once the suspension issue is settled, what must IBM do to get its reputation back?

[Blogger's note: I would like to thank Andrew Caster of INPUT for his timely research support.]