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SBA suspends IT vendor GTSI from federal contracts

Oct. 4, 2010 - 06:00AM   |  
By SEAN REILLY   |   Comments

Eyak Technology LLC is dropping its bid to acquire GTSI Corp. following the Small Business Administration's decision to suspend the Herndon, Va.-based information technology firm from future federal contracts.

Eyak, an Alaska Native-owned small business, said in a statement this morning that it was withdrawing its $7.50 per share cash proposal "in order to carefully evaluate the effect of the SBA's action upon GTSI."

SBA notified GTSI of the suspension late Friday afternoon, company chief executive Scott Friedlander said in an open letter to employees and investors posted on the firm's website. "Until tonight, no government agency had made an allegation that GTSI had violated any law or regulations regarding this matter," Friedlander wrote.

"Please be assured that we will fight to restore our good name," he concluded. Last year, some 72 percent of GTSI's $762 million in sales came from the Defense Department and other federal agencies, according to its most recent annual report.

In the Friday suspension letter, SBA official Michael Chodos wrote that "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." An investigation by the SBA inspector general is under way, Chodos added.

GTSI has 30 days to challenge the suspension. In a news release, SBA Administrator Karen Mills said that the suspension was in line with stepped-up oversight by the agency to ensure that "only eligible companies receive the benefits of our business development and contracting programs."

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