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By Nick Wakeman

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SBA mum on GTSI's alleged accomplices

As the suspension of GTSI Corp. for alleged violations of small-business rules continues to unfold, our inbox has been inundated with comments from readers.

One question was often been repeated: Why isn’t the Small Business Administration also suspending the small-business prime contractors who allegedly acted as fronts for GTSI?


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It’s a great question. You have to assume that the small businesses knew what was going on and went along with the alleged scheme. Going back to my days as a courts and cops reporter, that sounds like an accomplice to me, or even a co-conspirator.

Shouldn’t they also be facing suspension and investigation as well as GTSI?

We’ve put the question to SBA and have gotten much of an answer.

When one of our reporters posed that question, an SBA spokesman said: “All I have for you is the suspension letter to GTSI and the statement from [SBA] Administrator [Karen] Mills.”

Mills put out a statement when the news of GTSI’s suspension broke that SBA “has no tolerance for fraud, waste and abuse in any of our programs.”

So far, all indications are that GTSI is the sole target of the investigation.

Cleaning up small-business programs that have let large companies receive dollars intended for small companies has been a goal for Mills since becoming administrator last year.

But most of the rhetoric coming from SBA and Capitol Hill on this issue has emphasized the large companies.

But shouldn’t there be some scrutiny of the small businesses that play a role in these front-company schemes?

Granted, a large business might have so much power and influence that a small business might find it hard to turn down the offer to participate in a front-company scheme, but that doesn’t absolve the small business of all wrongdoing.

“Suspend, investigation and then debar all parties is the only way to keep bad actors out of federal contracting,” wrote one commenter, who claimed to be from a service-disabled veteran-owned small business.

That’s probably a good guiding principle if SBA is serious about cleaning up the system.

Posted by Nick Wakeman on Oct 06, 2010 at 7:23 PM


Reader Comments

Thu, Oct 14, 2010 washington dc

Is this seriously surprising anyone around the DC beltway? anyone who's been awake for the past 18-20 yrs knows GTSI's been playing a shell game with SBA for years, decades even...first it was the annual December layoffs to stay in the "under 1500 employees" NAICS category force fitting everything conceivable type of work under "telecommunications"...yes, a billion dollar small business competing and winning against real small businesses who don't have GTSI's resources, which our SBA regs allowed to happen for years. As for the SB fronts, name one large prime on the Top 100 list who hasn't played that game a few or more times to retain or obtain work? This isn't really NEW news, is it?

Fri, Oct 8, 2010

Jim Long, Come on. It would be nice if more comments were posted... How about it's my livelihood and I am trying to come up with something...

Fri, Oct 8, 2010

I have been in government contracting for 25 years, this is nothing new. I'm on the sales side and I have seen, heard about and witness situations like this on many contracts. I left a mid-size company 4 years ago for similar reasons, some in our company didn't care about rules or laws and wanted results for owners/investors. I now work for a small biz and I now have more control over our contracts and how our teams are formed. I don't want to go to jail, some of these people should. Fraud is easy to find when emails, business cards and W2's don't match up.

Fri, Oct 8, 2010

what a coincidence that EyakTek senior leaders all came from GTSI, except for the CEO alaska fisherman. This is more than 'fishy'... EyakTek appear to be active 'co-conspirators'...

Thu, Oct 7, 2010 Jmaes (Jim) Long

I have known of, worked for, worked with, and/or supported GTSI as an OEM for almost 18 years and I would offer the following observations:
I don’t understand all of the vehement comments towards GTSI. Is GTSI a “perfect” organization that has never intentionally or unintentionally done something wrong?
Of course not.
I would however challenge any reader to name ANY government contractor, large or small, that doesn’t have a few skeletons in their closet.
Based upon interacting with GTSI for almost 18 years, on the whole, I would rank the integrity of the GTSI organization amongst the highest of any organization currently supporting our government. Most recently as an OEM representative, I can’t tell you how many times I was frustrated by GTSI because they WOULDN’T bend the rules even if it was to their benefit financially.
Again, is there or have there been a few bad Apples at GTSI? Of course there has … JUST LIKE EVERY OTHER COMPANY IN EVERY INDUSTRY.
There are probably 600 or 700 great people at GTSI solely dedicated to supporting and helping our government achieve success. Is our government and our federal contractor community really ready to “throw the baby out with the bath water” solely based upon the comments of an over-zealous Washington Post reporter and a politically charged SBA?
Despite any rationalization to the contrary, the contracts that are at the heart of this fracas were awarded to Small Businesses and NOT to GTSI. The responsibility for winning and managing the contract(s) falls upon the Prime Contractor which in this case was NOT GTSI. So again, why is all of the attention focused on GTSI?
Next, despite its size and longevity in the marketplace, hasn’t GTSI been struggling financially over the past few years? Just how much fraud, waste, and abuse could GTSI have possibly inflicted if it was losing money the past few years?
In fact, I would argue that GTSI’s track record for proactively “doing the right thing” and generating cost-avoidance for our government is superior. Prior to working for an OEM, I briefly worked for a competitor of GTSI’s and was constantly frustrated by their ability to provide complex, technically compliant solutions “better, faster and cheaper” than my company. And obviously the government was happy with GTSI’s performance because they kept buying from GTSI.
If the SBA continues down its path, GTSI will likely be forced out of business. I find it very difficult to believe that whatever GTSI is accused of warrants putting 600 or 700 very dedicated and sincere employees on the unemployment line.
Fine them, slap their wrists, put them on probation etc… BUT if you do punish them, you must also give GTSI credit for all of the very positive things they have done for our government over the last 25+ years.
GTSI deserves better than this!
It sure would be nice if more comments were posted about the many, many positive things GTSI has done for our government over the past 25 years.

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