Why GTSI, and are others in SBA’s crosshairs?
The news that broke late Friday that GTSI Corp. had been suspended
from winning future government work was a shocker.
SBA alleges that GTSI was improperly receiving dollars meant for small businesses. In other words, SBA says that GTSI was using small business prime contractors as a front to funnel money to the company.
In the initial rush of reading the Washington Post report and GTSI’s rebuttal, the first reaction is, "Boy, those guys at GTSI must have really screwed up."
But let’s pull back a bit and think about how the market operates. As one person told us in an e-mail – “This is something every agency and company in government does every day of the week.”
I’m not sure an “Everybody-else-is-doing” defense is going to work for GTSI if SBA prevails. But I do wonder if SBA is kicking off a crackdown and GTSI was a good first target.
So will we see more suspensions or is GTSI a sole example? How serious is SBA's allegations? What might happen next?
The timing with GTSI also is odd to me. First, the company is trying to fight off a takeover attempt by Eyak Technologies
, a Alaska Native Corporation-owned small business. GTSI also has a 30 percent stake in the company.
Second, Robert O’Harrow of the Washington Post writes a multi-part story on ANCs and one installment focuses on the Eyak’s relationship with GTSI.
Then SBA suspends GTSI the day after O’Harrow’s series ends. He also is the reporter who breaks the story of the suspension and says that his reporting helped SBA make that decision.
That’s a lot of threads coming together in a single week. Is someone after GTSI?
GTSI is a public company and when the market closed Friday it was trading at $7.25. After hours trading this weekend has the stock down to $5.98.
Eyak’s offer for GTSI is $7.50, which was rejected last week. I’m not sure how this suspension affects Eyak’s desire to acquire GTSI. More likely? Less likely? I guess we'll see.
Obviously, we’ll be following this story closely. Not only is GTSI a well-known company, but as our commenter said, “If this stands, there are a couple of hundred other large businesses that face the same dilemma.”
Posted by Nick Wakeman on Oct 03, 2010 at 7:25 PM