IBM Reinstated As Federal Contractor

IBM said Friday that it's reached an agreement with the U.S. Environmental Protection Agency to terminate a suspension order that would have made the computing and outsourcing company ineligible to bid for billions of dollars in federal government contracts.

The EPA imposed the suspension on March 27. Federal rules automatically extended the ban to all other U.S. government agencies.

The EPA is investigating whether EPA and IBM employees acted improperly during bidding for an $84 million contract to modernize the agency's finance systems.

The contract was awarded to Canada's CGI Group last year. Specifically, the EPA is investigating whether its employees gave confidential information to IBM to assist it with its appeal of the award.

The Wall Street Journal reported Friday that IBM has suspended five employees in connection with the matter. The case is also being scrutinized by the U.S. Attorney's Office for eastern Virginia with an eye to possible criminal charges.

In a statement, IBM said it would "continue to cooperate with the EPA's ongoing investigation of possible violations of the Procurement Integrity provisions of the Office of Federal Procurement Policy Act."

IBM said it would also cooperate with the eastern Virginia attorney's office.

IBM first disclosed its suspension from federal contracts Monday. It said it had not been aware of the EPA's and eastern Virginia attorney's investigations prior to that time.

IBM's revenue from the government totaled about $1.3 billion last year. While that's less than 2% of the company's total sales, a prolonged banishment from high-profile federal projects could have had a spillover impact on the company's private-sector work.