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Project on Government Oversight

GTSI Is Back In Business: SBA Lifts Suspension of Major Contractor

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October 19, 2010

Less than three weeks after tech firm GTSI Corporation was suspended from federal contracting for allegedly defrauding the small business contracting program, the U.S. Small Business Administration (SBA) has lifted the suspension. GTSI is eligible once again to win new federal government contracts.

GTSI announced the news this morning in a press release.

The SBA and GTSI struck a deal. GTSI agreed to immediately cease working with small businesses serving as prime contractors and to stop participating in the SBA’s mentor-protégé program and forming joint ventures with small businesses. GTSI will also hire an SBA-approved corporate monitor to report on the company’s compliance with the agreement. GTSI President and CEO Scott Friedlander and Senior Vice President and General Counsel Charles DeLeon also agreed to tender their resignations, effective October 26.

A copy of the agreement is posted here.

The SBA will continue its investigation of GTSI’s conduct as a subcontractor for certain small businesses, which could still result in administrative, civil or criminal penalties. As POGO blogged when the suspension was announced, GTSI is accused of forming sham subcontracting arrangements which enabled it to pocket taxpayer dollars intended for legitimate small companies. Section 16(d) of the Small Business Act prescribes fines of up to $500,000 and imprisonment of up to 10 years for anyone who misrepresents their company as a small business in order to obtain a federal contract or subcontract.

According to the American Small Business League (ASBL), GTSI reported to the government as far back as 1999 that it was no longer a small business for the purposes of contracting, yet from fiscal years 2004 to 2010, GTSI has received more than $1.18 billion in federal small business contracts. GTSI previously ran afoul of the SBA several years ago, narrowly avoiding debarment in 2005 after the SBA Inspector General determined the company had misrepresented itself as a small business in order to win a contract with the U.S. Navy.

Founded in 1981, the Project On Government Oversight (POGO) is a nonpartisan independent watchdog that champions good government reforms. POGO’s investigations into corruption, misconduct, and conflicts of interest achieve a more effective, accountable, open, and ethical federal government.