One pill makes you larger, and one pill makes you small

Federal Contractor Suspended

SBA suspended GTSI, a Herndon, Virginia-based company, from receiving future contracts. GTSI posted $762 million in revenue last year, nearly all of that from government contracts.

In a letter sent Friday to GTSI, the SBA said it was suspending the company from federal contracting because GTSI did almost all of the work on contracts that were awarded to other businesses—firms that, unlike GTSI, actually qualified for these small business contracts.

“There is evidence that GTSI’s prime contractors had little to no involvement in the performance of its contracts, in direct contravention of applicable laws and regulations regarding the award of small business contracts,” SBA’s letter read. “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.”

The aftershocks of the suspension were felt today, when Eyak Technology, an Alaskan Native Corporation, withdrew its offer to buy GTSI for $7.50 per share. By noon, GTSI’s stock had fallen by 40 percent, to only $4.34.

GTSI’s relationship with two ANCs were highlighted in a series of stories published last week by the Washington Post. As a result of treaties with Alaskan tribes, there are no size limits on contracts set aside for ANCs. Although ANCs contend they distribute two-thirds of their profits to their shareholders, the Post reported that individual members of Alaskan tribes received little money from ANCs. Much of ANC’s contracting dollars go to their non-native Alaskan managers, and their subcontractors, the Post concluded.

ANCs, however, are just one problem area when it comes to small business contracting. The federal government routinely misses its goal of awarding 23 percent of its contracting dollars to small businesses. But agencies that miss their goals don’t suffer any consequences, other than a poor grade on an SBA scorecard.

Plus, large businesses keep showing up on lists of contracts that supposedly were awarded to small businesses, meaning small businesses actually are getting much less money than the government’s numbers indicate.

Government contracting is a swamp that needs to be drained. Too many companies are gaming the system, getting money that should be going to legitimate small businesses.