SBA lifts GTSI ban; Friedlander, general counsel resign

Company can resume fed sales but with restrictions

The Small Business Administration has lifted the temporary federal contracting suspension it imposed on GTSI Corp. on October 1, the company announced today.

The move allows GTSI to immediately resume all business with most of its existing clients and to pursue new contracts with the federal government, the statement said.

In the wake of the suspension and ongoing SBA investigation, Scott Friedlander, chief executive officer, president and a director of GTSI, and Charles DeLeon, senior VP and general counsel, have resigned effective Oct. 26.


What's next for GTSI?

Can GTSI stay in business?

“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, in the announcement.

Under an agreement with the SBA, Toups said GTSI has agreed to immediately cease working with small businesses serving as prime contractors.

GTSI also has agreed to stop participating in the SBA's mentor-protege program and in joint ventures with small businesses, he added.

The SBA agreement will end whenever the earliest of three things occurs: one, 90th day after completion of the investigation, two, Oct. 19, 2013, or three, notification date of a proposed debarment, the statement said.

GTSI's compliance with the agreement and applicable government contracting laws and regulations will be overseen by an SBA-approved monitor who will report to the agency.

“The cloud of uncertainty that was hanging over our employees, creditors, shareholders and partners has been removed, and we can get back to the business of serving our government clients,” he said.

GTSI, of Herndon, Va., ranks No. 59 on Washington Technology’s 2010 Top 100 list of the largest federal government contractors.

About the Author

David Hubler is the former print managing editor for GCN and senior editor for Washington Technology. He is freelance writer living in Annandale, Va.

Reader Comments

Sat, Nov 6, 2010

Top 400 contractor sues its teaming partner in Federal court because the Small Business awarded the Small-Business Set-Aside would not allow for sharing of profits or the management of the project by the large business. Where is the OIG and SBA on this one? Who will be there to defend the Small Business when Large Business tries to take control. Federal Case 2:10-cv-00317-ROS ; Jeffrey C. Stone, Inc., d/b/a Summit Builders (“Summit”) v SDVO

Wed, Oct 20, 2010

So many unanswered questions... who blew the whistle? What small businesses were involved? Do they face debarment as well? What happens to the bogus contracts and sales? How long before the story fades away, or is this matter serious enough trigger a complete review of the small business program? When will politicians begin attacking certain programs to promote their favorites? Can we start a pool?

Wed, Oct 20, 2010

Just curious why everyone assumes that it is the large organizations that are manipulating the small businesses? Isn't it the small businesses that seek out, respond too, and win these contracts? Is it beyond all reason that it is the small businesses with minimal resources and no conceivable way of supporting these multi-million dollar contracts that are the real "masterminds" of these so called schemes? Seriously, if it weren’t for the support of the large businesses how on Earth do you think a small business would have access the credit lines, buying power, and logistical support to complete these contracts? I will reiterate a question that several readers have asked with no clear response… Okay, GTSI got caught… caught doing what? e.g. why didn’t the SBA go after the small businesses who won these contracts who HAD to have been complicit in orchestrating any alleged “scheme”? Does the SBA really think that these small businesses aren’t manipulating the system everyday?

Wed, Oct 20, 2010 Alex Frederick, MD

Yup I agree with most other readers, slap on the wrist and on we go. There is no lesson at all here except "worry not for your moral fiber but for your getting caught" I would be interested to know which Depts are GTSI's biggest customers so I can understand who felt they could not replace GTSI as a vendor or we could follow the money trail to the individuals in those groups. Implication of corrupt purchasing practices? You bet.

Wed, Oct 20, 2010

Good job SBA - but we still have much work to be done. 1. Go after the other large companies that are using small businesses as a front (GTSI is not the biggest offender - they just got caught). 2 Audit and ban the large companies that propose small business percentages to win contract then never use their small business subs. 3. Audit small businesses to ensure they are actually qualify as small - if they are not – ban them too. 4. Get rid of Alaskan Native unlimited 8a programs – or any program set aside program that allows a very large business claim they are small and qualify for set asides.

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