GTSI-SBA agreement puts company under the microscope

GTSI Corp. will live for the next three years under close scrutiny from inside and out as federal officials watch the contractor's every move in the government marketplace and an independent monitor stands over the company.

GTSI entered into an agreement with the Small Business Administration Oct. 19 in order to lift its suspension from receiving new government work.

Read SBA's agreement with GTSI

Nevertheless, the SBA inspector general’s office will continue to probe SBA’s charges against GTSI for using small-business prime contractors as a front to funnel work and revenue back to itself. The agreement also gives SBA access to company books, records and other documents.

GTSI and SBA officials must also agree on an independent company monitor who will ensure that the company is compliant with acquisition rules and the agreement. The monitor will have full access to inspect the company on an ongoing basis and report to SBA without interference from GTSI.

GTSI won’t see the monitor’s monthly reports before they go to SBA, and they will be proof of whether the company is or is not complying.

“The monitor shall have unfettered, immediate and, if requested, real-time access to all company documents, information and personnel,” the notice states.

In addition, the agreement requires GTSI to give the monitor management-style office space and it must pay, among other things, all monitor fees, retainers and other reimbursements, including any legal fees, the agreement states.

Inside the company, GTSI must name an employee as ethics officer and adopt a code of ethics.

The agreement demands other high-profile moves. More specifically, it forces out GTSI’s CEO Scott Friedlander and general counsel Charles DeLeon. It also suspends three top company employees: Tom Kennedy, vice president of civilian sales and general manager; Scott Schmader, senior sales manager; and Patrick Berg, program manager, until the agreement ends.

By signing the agreement, government officials said they believe GTSI gave enough assurances to lift the four-week-old suspension. GTSI doesn’t admit to any wrongdoing or breaking the law, but the government still reserves the right to extend the scope of  the case if it comes across any additional revealing facts.

The agreement would remain in effect even if GTSI were to file for bankruptcy.

After signing the agreement Oct. 19, GTSI said in a statement that the agreement allows it to put these issues behind it.

“The lifting of the suspension gives GTSI, its vendors and clients the ability to move forward,” said John Toups, chairman of GTSI’s board of directors.