SBA suspends contractor GTSI from federal work

The Small Business Administration on Friday suspended GTSI, a major federal contractor, from doing business with agencies amidst allegations it manipulated small business set-aside rules to win federal contracting dollars.

According to a report in the Washington Post, an SBA official wrote to GTSI's chief executive, Scott W. Friedlander, saying, "There is evidence that GTSI's prime contractors had little to no involvement in the performance of contracts, in direct contravention of all applicable laws and regulations regarding the award of small business contracts. The evidence shows that GTSI was an active participant in a scheme that resulted in contracts set-aside for small businesses being awarded to ineligible contractors."

SBA's action came after the Post reported Friday on GTSI's relationship with Eyak Corp., an Alaska native corporation, to win about $1 billion in information technology contracts. The article also detailed GTSI's relationships with other small firms to compete for contracts.

Suspensions of contractors of GTSI's size are rare in the federal procurement world.

In a posting on GTSI's website Friday, Friedlander said that SBA issued the suspension "without prior discussion or notice to GTSI. Until tonight, no government agency had made an allegation that GTSI had violated any law or regulations regarding this matter. We appreciate your support during this time and look forward to providing you with a report on our activities as the situation warrants. Please be assured that we will fight to restore our good name."

On Government Executive's ranking of the top federal contractors for fiscal 2009, GTSI ranked 106, with nearly $540 million in prime contract awards.

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