Homeland Security bans IBM indefinitely from US Federal Contracts

Dav says: "The Feds have just banned IBM as a vendor, across the board: '"IBM and its subsidiaries are barred from receiving any new government contracts, new orders under existing contracts or purchase card transactions, according to a March 28 e-mail the Homeland Security Department’s Office of Procurement Operations circulated to procurement officials.'"

The ban seems to stem from "improperly obtained information about a contract [IBM] was bidding on from EPA employees." Link

IBM is down just 1% in after hours trading.


  1. #1: Looks like IBM was suspended from doing business with ALL federal agencies.

    But “Homeland Security” definitely gets your attention! LOL

    Mod needs to fix =)

  2. So, who effectively decides these things? Is this just one of those scenarios where “the decider” wants his buddies to get a contract instead of IBM?

  3. From the article: “IBM and its subsidiaries are barred from receiving any new government contracts, new orders under existing contracts or purchase card transactions, according to a March 28 e-mail the Homeland Security Department’s Office of Procurement Operations circulated to procurement officials.”

  4. This is suspicious.

    Given the blatantly illegal conduct by any number of federal contractors in recent years, and the billions of dollars ripped off by many of them, why is IBM being singled out?

    Perhaps their competition is more Republican-friendly.

  5. From the epls link in the article, IBM ( http://www.epls.gov/epls/search.do?debar_recid=98050&status=current&vindex=0&xref=true )got hit with a category “S” exclusion( http://www.epls.gov/epls/jsp/CTCodes.jsp?type=recip#code_S )

    ” Cause
    Suspension by any Federal agency pursuant to Executive Order 12549 and the agency implementing regulations based on an indictment or other adequate evidence (a) to suspect the commission of an offense that is a cause for debarment or (b) that other causes for debarment under the agency regulations may exist.
    Same as Code R, except that suspensions are temporary actions and the period of suspension is indefinite. Therefore, the termination date will be listed as “Indefinite (Indef.). NOTE Debarments and suspensions taken in accordance with agency regulations issued pursuant to Executive Order 12549, which become effective on October 1, 1988, are effective throughout the Executive Branch.

    And for R category:
    Listed persons are excluded as participants or principals in all primary and lower tier covered transactions of all agencies and may not receive contracts under Federal procurement programs (see Treatment A). Further, agencies and participants shall not renew or otherwise extend the duration of covered transactions or consent to lower tier covered transactions with such persons. Exceptions to this treatment require a written determination by the head of the Federal agency or designee stating the reasons for entering the transaction. Debarments are for a specified term as determined by the debarring agency and as indicated in the listing.

  6. It would seem that the ban is issued by the Department of Homeland Security because the office that issues such bans (The Office of Procurement Operations) is part of the Department of Homeland Security, along with TSA, Immigration, FEMA and all the other bits. In other words, the decision isn’t necessarily based on “defending the homeland,” and the ban would be announced by this office even if the original violations were in relation a deal that had originated in the Department of Education, or even the National Park Service. Sounds like something that could be completely rational and necessary, and at the same time something that could really be abused without sufficient controls and transparency.

    Does anyone know if this office existed before the creation of DHS? Would it have been part of the GAO? Or maybe Justice?

  7. @Mark

    I’m sorry, but that headline is still misleading. You’ve got to concede that getting banned by the “Office of Procurement Operations” is much tamer-sounding than getting banned by the Department of Homeland Security. Especially since the agency involved is the EPA, not anything having to do with security.

    But hey, you definitely caught my eye with the headline.

  8. And when the government accepts a bid from a French computer company, congress will have a hissy-fit.

  9. @12

    IBM isn’t really an American company anymore. The majority of its workforce lives outside the US, the majority of its revenue is from outside the US and most stockholders are nameless institutions with global headquarters.

    Sure, the Armonk HQ may be in the US, but follow the money. The main holding companies IBM has are HQ’d in Switzerland or Singapore.

  10. You know not what you are talking about Chava. The majority of the workforce is in the US. The Asian presence is not that large, though growing fast in China and India. About 1/3 of the company is over seas now. Most of the differences in profit is due to currency fluctuations.

  11. Its for an EPA contract. Not sure what DHS has to do with this except to get people to read it? Assuming the worse possible situation, then it seems extreme since it would just involve people on this EPA contract. I can guarantee that IBM will fully cooperate and if there is any hanky panky, they will be fired quickly. Given the bombardment from the top down on ethics and especially with Federal contracts, this is quite surprising, but then nothing guarantees that someone can’t be stupid. Since each group, deal, etc., do their own thing when getting work, the Federal wide ban makes no sense.

  12. I work in education, and some years back, IBM was nearly blacklisted from receiving government funding under the Erate program. I say nearly because due to critical investigation by the program, smart school districts were hesitant to do biz with IBM. I personally attended a presentation given by IBM around 2001 in which highly dubious and gray area “loopholes” were touted by the reps as solutions. Anyway, here is a link if you care to read a bit more.


  13. Chava, if the “Office of Procurement Operations” is an office within Homeland Security, then it is in no way misleading to say “Homeland Security” in the headline. The procurement operations sets procurement policy for all Homeland Security divisions.

    If a division of a department issues a statement banning all divisions of that department from dealing with a company, then it is fair to say that that department has banned said company.

    Nobody’s “got to concede” anything, especially something that’s wrong.

  14. “And when the government accepts a bid from a French computer company, congress will have a hissy-fit.”

    I say BULL!

    On the other hand , I wonder what happens when a government agency needs some more Lotus Notes licenses.

  15. I think you’re more or less right, DCulberson, except for the fact that the ban apparently covers all federal agencies, not just those under direct authority of DHS.

    I think Chava’s real point was that citing “Homeland Security” rather than “The Office of Procurement Operations” or “Some random government agency” tends to invoke additional (and in this case negative) associations and baggage that might color the reader’s perception of the overall story. I think Chava is right to a point, but calling the evocation of those associations “misleading” is inaccurate and/or exaggerated, and I’m not at all sympathetic. That kind of emotional leading is exactly what Bush and the Congress were intending to do by creating a “Department of Homeland Security” in the first place.

  16. They won’t get to make the new computers to keep track of whatever ethnic group GWB decides to holocaust.

  17. Hmmm… I may have come on too strong, my point is that the headline is an attention-grabber, and I feel that it’s misleading in the sense that I was expecting a very different article.

    DCULBERSON & CRUNCHBIRD, I’m sorry you disagree with me, but I really do feel that the headline belongs on Fox News. That said… who cares! It’s not an important thing, is it?


    I was not able to find any current numbers, but this 2006 article cites only half of IBM’s workforce being in the US. If you know anything about the company, the tendency is towards a Global (cheaper) workforce.


  18. Chava,

    BoingBoing exists to entertain. The headlines are almost always sensational and somebody almost always complains about them. It is the way.

  19. @21: and the Department of Defence needs the G7 processor to (“steward”) design the next generation nuclear warheads to do all that holocausting with!

    Hopefully the ban is a tactic to get co-operation from IBM by the government agency, and it gets resolved either because it turns out no-one did anything illegal, or some individual did something illegal – rather than the whole organisation is rated equivalent to the worst member.

    If we applied that logic we’d ban all Americans from ever visiting Europe because a couple of them started an illegal war based on false information, etc.

    + I wonder how well thought out the long-term consequences of that move are – The US government and military are probably too reliant on IBM products to simply refuse to do business with them indefinitely.

    Who made this decision, did they ring round their colleagues in other branches of the government and check —

    “hey, we’re thinking of banning IBM contracts…

    …yep, that’s right, something that’ll block your work too even though your bids and contracts could be entirely above board….

    …Why? Because we’re going to presumptively assume someone’s pulled the wool over your eyes and your employees are taking bribes, just because we think that’s what happening in our department

    … Mainly to deflect the bad press from us.

    … What’s your opinion on that?”

    Or is someone at the EPA/DHS being a hot-shot?

  20. Microsoft conspiracy theories anyone?

    (Or, slightly more likely, EDS [Electronic Data Systems] and other very well connected computer contractors…)

  21. IBM’s official response is here:


    “Prior to learning of the temporary suspension on March 28, 2008, IBM was not aware that the EPA or U.S. Attorney’s office were considering any action against IBM. Upon learning of the suspension, IBM initiated discussions with the EPA and the U.S. Attorney’s office to obtain additional information and is cooperating with the investigations.

    Under Federal procurement procedures, IBM has 30 days in which to contest the scope of the temporary suspension, which can continue for an initial period of up to one year pending the completion of the investigation. IBM intends to take all appropriate actions to challenge the suspension and limit its scope. “

  22. @Mikelotus:

    @CHAVA may have overstated her case a bit, (and I have no idea what the actual numbers are) but as someone who works at Big Blue, the gist of what she is saying is correct. The focus of IBM’s growth — both internally and for new engagements — has shifted to outside the U.S. This means that, for better or worse, many of the jobs and contracts are moving overseas. The world is flat.

    P.S. The “I” in IBM stands for “International”, not “American”

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