Small Business Administration Suspends GTSI From All Government Contracts

On Friday, the Small Business Administration (SBA) announced that GTSI would be suspended from federal contracting programs. The suspension came as the result of government allegations that GTSI, "inappropriately went through other firms to gain access to contracts set aside for small companies," according to the Washington Post.
(http://www.washingtonpost.com/wp-dyn/content/article/2010/10/01/AR2010100107288.html)

As early as June of 2005, the SBA Office of Inspector General recommended GTSI for debarment for misrepresenting themselves as a small business. The recommendation was made based upon information provided by American Small Business League (ASBL) President Lloyd Chapman. The ASBL successfully sued the SBA to force the release of GTSI's name as the company that was recommended for debarment.

Prior to 2002, Chapman uncovered documents produced by GTSI in which the company openly acknowledged that it was no longer a small business. For example, in its fiscal year (FY) 1999 annual report to the Securities and Exchange Commission (SEC), GTSI stated, "As a result of the acquisition of the BTG Division in February 1998, GTSI no longer qualifies as a small business for contract awards after February, 1998." The statement was also repeated in the company's FY 2000 report.

In a letter written to GTSI's chief executive, Scott W. Friedlander, SBA officials stated, "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." Additionally, SBA Administrator Karen Mills released a statement expressing that the agency has, "no tolerance for fraud, waste and abuse in any of our programs." (http://www.washingtonpost.com/wp-dyn/content/article/2010/10/01/AR2010100107288.html)

Section 16(d) of the Small Business Act prescribes penalties of up to ten years in prison and/or a $500,000 fine per occurrence for firms that misrepresent themselves as small businesses to illegally receive federal small business contracts. (http://www.sba.gov/regulations/sbaact/sbaact.html)

Administrator Mills is a bold faced liar. The SBA has helped large businesses hijack federal small business contracts every day that she has been in office. In fact, the latest government statistics show that of the top 100 recipients of federal small business contracts 60 were actually large businesses.

 

Follow Lloyd Chapman on Twitter: www.twitter.com/LloydChapman

Comments

[Radar423]

01:05 PM on 10/05/2010

The SBA is like a Coroner in Capone era Chicago. Everyone died of "heart failure"......they didn't mention that the 27 bullets that riddled the body are what stopped the heart.
GTSI is just the tip of the iceberg. If the SBA has any cajones, they will put someone in jail and send a message that, to quote our president, "It's time for real change in America."

[Caleb Kwong]

01:01 PM on 10/05/2010

About time the SBA is doing something about large businesses violating the FAR. I hope they start suspending other businesses that follow the same practices..

[memememeeeee]

01:01 PM on 10/05/2010

It's about time!!! I Love all this media attention finally focusing on the real issues that need to be fixed. Too many large corporations are collecting money that belongs to us small businesses.. I hope this will the beginning of a larger picture that gets painted around all these fraudulent contractors

[Cheryl in Northern VA]

08:51 AM on 10/05/2010

All these large federal resellers in the DC area do this, it's the best kept dirty little secret around the beltway and these firms employ thousands of people who profit off this sort of fraudulent activity (moving paper and skimming off the top). This is a house of cards waiting to be blown down. Who's going to be next? The sad thing is these firms take advantage of the people (Alaska natives for example) that the programs were set up to benefit. The whole contracting system is a mess, this is what happens when government gets too big and doesn't let the free market operate. Instead they use these set-asides, companies find work arounds and explot the system and everyone gets rich except the people it was designed to benefit. Go drive through Great Falls, Potomac, etc. - the mcMansions that government waste built.

[Victor Grimes]

07:53 AM on 10/05/2010

I don't understand. If GTSI openly acknowledged that it was no longer a small business way back in 1999, how have they had access to these contracts for more than a decade? What am I missing here? It's not like they could hide the fact that they were participating in these contracts (for the most part). This article needs some more data. Thank you.

[GrimJack]

12:21 PM on 10/05/2010

it's like this...GTSI commits fraud and because they are paid up with the right people, the government agencies like SBA ignore it and claim it is just miscoding errors and do nothing about it, until the Washington Post calls out the SBA on the front page...then the SBA is forced to act. what data do you need? I will also tell you that the worst thing that will happen to GTSI is they may pay a fine and a month from now be back to business as usual...