Top Execs Ousted, GTSI Suspension Lifted Bowing to intense financial pressure, GTSI Corp. agreed to a broad range of sanctions in return for the lifting of its suspension from federal contracting. GTSI was suspended Oct. 1 when SBA charged it had used small businesses as fronts to get set-aside work. The IT company ranked 59th on Washington Technology magazine’s 2010 list of top federal contractors, with $762 million in revenue, according to its latest annual report. It derives the vast majority of its revenue from federal contracts and had warned investors that the suspension might affect its ability to continue as a going concern. (SAA, 10/8) SBA lifted the suspension Oct. 19 after GTSI accepted tough restrictions on its business practices. Under terms of the 32-paragraph agreement with SBA, the company’s CEO and general counsel resigned, it agreed to stop working with small businesses serving as prime contractors, will no longer participate in mentor-protégé programs and will hire an SBA-approved monitor to ensure its compliance with laws and regulations. The company will turn over a truckload of documents and cooperate with an investigation to determine whether it should be debarred. “The continuing investigations of GTSI could result in administrative, civil or criminal penalties,” GTSI chairman John Toups said in a statement. “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,” Toups said. CEO Scott Friedlander and Charles DeLeon, a senior vice president and general counsel, have resigned. Three other executives were suspended for up to three years, including the head of GTSI’s civilian business and the head of major contracting divisions. Two senior vice presidents, Sandra Gillespie and Peter Whitfield, were named interim co-CEOs. Friedlander told Washington Technology he resigned in order to save the company. “We right away started feeling what I’ll call the pain of trying to resolve this, and that was in week one,” he said. “By week two, the employee base was nervous and so were the banks. In fact, we were not far off of a default notice.” In week three of the suspension, GTSI folded its hand. In imposing the suspension—a rare penalty against a major contractor—SBA said, “There is evidence that GTSI’s prime contractors had little to no involvement in the performance of contracts, in direct contravention of all applicable laws and regulations regarding the award of small business contracts. 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, and with contracts not being performed in accordance with applicable law, regulations and contract terms.” After GTSI outgrew small-business status, it served as a subcontractor to several small-business prime contractors. SBA said GTSI employees used email accounts of its small-business partners to conceal its involvement in contracts. According to internal GTSI documents obtained by the Washington Post, a company vice president emailed that one of its small-business partners was “very open to the concept of GTSI doing ALL the work” on a contract. Another document said GTSI would receive 99.5% percent of the revenue from a contract with the Department of Homeland Security, even though it was a subcontractor to a small firm. SBA has not responded to questions about whether GTSI’s small-business partners are under investigation.