Last Friday afternoon, information technology firm GTSI Corporation was informed that the U.S. Small Business Administration (SBA) was suspending the company from any future contract awards from the federal government. GTSI is accused of improperly obtaining contracts set aside for small businesses, according to The Washington Post. The SBA alleges GTSI formed sham subcontracting arrangements with legitimate small businesses—including Alaska native corporations (ANCs)—under which GTSI performed most of the work and received most of the revenue.
SBA rules define what is a small business in terms of the number of employees and the average annual receipts. Generally, this means no more than 500 employees and $7 million in average annual receipts. GTSI has more than 600 employees and reported $762 million in revenue last year. It was awarded over $400 million in federal contracts in fiscal year 2009, so being cut off from government business for a prolonged period of time must be a terrifying prospect for the company.
This is not the first time GTSI has tangled with the SBA. In 2006, GTSI was nearly debarred after the SBA Inspector General discovered it had falsely misrepresented itself as a small business in order to win an IT contract with the U.S. Navy. POGO wonders if this incident factored into the suspension decision.
According to the American Small Business League (ASBL), small businesses have lost over $75 billion in federal small business contracts to big businesses this year, an amount that is literally growing by the second.
-- Neil Gordon
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- Federal Contractor Misconduct Database: GTSI Corporation