What a week it has been, and not just for IBM. Beginning with the listing of IBM on the Excluded Parties List last Thursday, the Federal contracting community has watched the impact of Big Blue's suspension spread like a computer virus through the community. Yesterday, GSA issued a notice that extended the ban to all new business awards, including task orders and purchase orders. As we indicated in our earlier post, this move impacted hundreds of IBM partners and subcontractors on dozens of active Federal contracts as well as hundreds more Value-Added Resellers (VARs) that sold IBM products to the Federal government. This morning, GSA stepped back from the extension to VARs just before we learned that IBM and the EPA reached an agreement, lifting the suspension.

So the story is over, or is it? Should we be worried that this sort of suspension could happen again or frequently? David Drabkin, GSA's deputy chief acquisition officer and senior procurement executive reminded us that the suspension was "not a punishment" of IBM but rather a notice to government agencies that IBM was under investigation for possible "irresponsible" actions. An EPLS report for the past 12 months shows nearly 400 similar actions against firms, most of them small businesses. Certainly the Government has a right and a compelling need to know about firms that break the rules in these instances.

But this begs two questions. First, how many agencies knew about these other 400 actions? Also, is there a better way to put agencies on notice without sending shock waves through the community and disrupting both agency and vendor operations? Subpart 9.4 of the Federal Acquisition Regulation (FAR) has a fairly liberal clause allowing a suspending official to impose suspension if he has "adequate evidence, pending the completion of investigation or legal proceedings" of an "offense indicating a lack of business integrity or business honesty that seriously and directly affects the present responsibility of a Government contractor or subcontractor." We have also questioned the provisions of H. R. 3033, which would provide for a database that would include "information regarding civil, criminal, and administrative proceedings initiated or concluded by the Federal Government and State governments against Federal contractors or assistance recipients" [emphasis added] because we wonder about the potential for misuse, and we have similar worries after the events of the past week.

I certainly do not mean to say that anyone at EPA has overstepped in this case. Although the details about the EPA's evidence warranting suspension are not confirmed, we should give the benefit of the doubt, especially since we know that subpoenas have been issued. However, given the impact that we have witnessed, should there be an interim step prior to suspension while the evidence is investigated? Federal contractors sometimes have other FAR or DCAA compliance problems that they need to fix. When a company fails an audit due to timekeeping problems, they are required to report that on all proposals until the problem is resolved. Any contractor will tell you that such a circumstance is a big competitive problem that they will work hard to fix quickly. In addition, this rule ensures that all agencies considering the vendor will know about the issue without consulting a database. Would a similar rule -- stopping short of the severity of suspension -- have worked in EPA and IBM's case?

UPDATE: April 4; 4:30 pm. Washington Technology has posted the agreement between the EPA and IBM. Apparently IBM received protected source selection information and improperly tried to use it in negotiations, which is a clear and serious violation. IBM has suspended 5 employees and has withdrawn its protest and bid on the EPA procurement, prompting the EPA to end the suspension. EPA indicates that it had to take drastic action in this case to prevent the "imminent" award of a contract to a "offeror whose employees may have participated in illegal activities in receiving and using information about its competitors bid and other information to increase its chance of winning"