We consider the impact of multi-user interference on a bit-interleaved coded-modulation system with M-ary PPM (BIC M-ary PPM) in an impulse-radio ultra-wideband physical layer. In a realistic scenario such as an ad hoc network, the interference is inherently variable. This justifies the need for a physical layer that can optimally adapt its transmission parameters to the interference level. We use puncturing on the channel code so that we can not only change the modulation order $M$ but also the channel code rate. We study by simulation how the optimal combination of modulation order $M$ and channel code rate behaves with various degrees of interference. The results show that BIC M-ary PPM can be successfully adapted to various levels of interference conditions. It also shows the benefit of both rate and modulation adaptation, especially in the presence of multi-user interference.