Not only does this come as a bit of a surprise, but it throws the Indiana political scene into a bit of a mess.

Sen. Evan Bayh is expected to announce Monday afternoon that he will not seek a third term in the Senate, a source close to the Indiana Democrat told CNN.

The senator has scheduled a 2 p.m. ET news conference in Indianapolis.

“After all these years, my passion for service to my fellow citizens is undiminished, but my desire to do so by serving in Congress has waned,” Bayh will say, according to the senator’s prepared remarks that began circulating after the news broke that he is retiring.

MSNBC has this:

“To put it in the words most Hoosiers can understand: I love working for the people of Indiana, I love helping our citizens make the most of their lives, but I do not love Congress,” Bayh said in comments prepared for an announcement later Monday in Indianapolis. His statement was obtained by The Associated Press from a Democratic official who declined to be named publicly.

Bayh’s departure continues a recent exodus from Congress among both Democrats and Republicans, including veteran Democrats Christopher Dodd of Connecticut and Patrick Kennedy of Mass. The announcements have sprung up in rapid-fire fashion amid polls showing a rising anti-incumbent fervor and voter anger over Washington partisanship, high unemployment, federal deficits and lucrative banking industry bonuses.

And while the national GOP machine wanted Rep. Mike Pence to step up, he will not do so.

National Republicans courted Pence to challenge Sen. Evan Bayh last month, before it was known that the Indiana Democrat was going to retire. Former Sen. Dan Coats entered the race earlier this month, but Pence’s name was mentioned again after it was learned that Bayh would not seek a third term.

“After receiving considerable encouragement to run for the United States Senate last month, Mr. Pence made a decision to seek re-election to the House of Representatives and help lead a conservative comeback in 2010 and that decision stands,” Pence spokesman Matt Lloyd said. “Mr. Pence’s decision was made irrespective of polls or Senator Bayh’s intention to seek re-election.”

“Mr. Pence believes that Republicans will retake the House in 2010 and he counts it a privilege to be a part of the House Republican leadership during this historic election,” he continued. “Mr. Pence has filed for re-election to the 6th Congressional District of Indiana and will continue serve his constituents and help lead the effort to retake the House of Representatives.”

Pence is expected to be among the GOP contenders for the 2012 presidential race.

So guess they will have to settle for Dan Coates… will be interesting to see how this all plays out, as the Tea Party seems to be fracturing away GOP supporters in Indiana as well.

For some state and local Republicans, there is frustration caused by the perception that the Washington GOP establishment – particularly the National Republican Senatorial Committee, which helped to woo Coats and has played an active and public role in promoting and defending his candidacy – is intruding in Indiana politics. And the populist conservative grass roots in the tea party movement feels it most acutely.

One day after Coats announced his interest in the race, a Huntington, Ind., tea party group circulated an e-mail with the subject line, “NO to RNC/Coats for force feeding us this crap sandwich,” while Emery McClendon, a Tea Party organizer, has distributed an e-mail to activists declaring that the push for a Coats candidacy “is the Republican Party’s way of slapping we the people in the face …”

A coalition of 10 state-based tea party groups, meanwhile, are set to launch the “Indiana Patriot Coalition,” which will be taking part in an e-mail and phone call campaign directed toward the Indiana Republican Party and the Republican National Committee, asking Washington to stay out of state races.

“We have our own state, we have our own candidates, and we have some darned good candidates,” said Mark Leyva, a tea party organizer who is involved with the effort.

Fascinating stuff this year, if you’re a political junkie…