US suspends IBM from seeking new federal contracts

SAN FRANCISCO (Reuters) - IBM (IBM.N) is under investigation by the U.S. Environmental Protection Agency and has been temporarily suspended from seeking new business contracts with all U.S. agencies, the company said on Monday.

International Business Machines Corp, the world's largest provider of computer services, said it had received a notice of temporary suspension from the Environmental Protection Agency (EPA) tied to possible violations of the ethical bidding provisions of the federal government tied to an EPA contract.

The bid was originally submitted to the EPA in March 2006.

The temporary suspension applies to all federal agencies and IBM business units. IBM may continue work on existing contracts as of the date of the suspension, unless a particular agency directs otherwise, the company said in a statement.

In addition, IBM said the U.S. Attorney's Office for the Eastern District of Virginia had served IBM and certain employees with grand jury subpoenas requesting testimony and documents on interactions between the EPA and IBM employees.

(Reporting by Eric Auchard; Editing by Braden Reddall)