Petaluma, Calif. – 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,” ASBL President Lloyd Chapman said.