Though the cuts to Defense Department funding is a close second, the shock of GTSI’s suspension by the Small Business Administration from receiving new procurement work on October 1st reverberated through the government contracting space. Though the suspension lasted just a few weeks and has since been lifted, the allegations GTSI improperly subcontracted through other firms to gain access to contracts set aside for small companies caused significant damage to its reputation and led to the resignation of its CEO. According to analysts, this was the most significant suspension of a top-tier contractor that many in the industry can remember, helping to make it our #1 story of 2010.
Why did the suspension of GTSI mean so much to the GovCon space?
Written by: Jeff White, Founder of govWin
This story was significant, because GTSI become the biggest of the top-tier government contractors to get suspended. Of course, even that is just the tip of the iceberg.
After the suspension was announced, GTSI entered into an agreement with the government to provide internal documents core to its government practice, including emails, teaming agreements, contracts and much more. This will expand the scope of the SBA’s investigation into other businesses and stretch out the impact into 2011.
So, the key lessons from GTSI’s suspension for government contractors were:
- Know who you’re partnering with by conducting thorough research. The penalty for a lack of due dilligence is the potential for a long and costly investigation from the government, and a serious dent to your business reputation.
- Ensure that your own company is following the rules by reviewing your ethics policies frequently and hiring the right compliance specialists. GTSI kicked off an even bigger wave of events and training sessions around ethics and compliance. This will continue into 2011. In fact, not long ago, we brought in PricewaterhouseCoopers Partner Jim Thomas to talk to members about the audit climate for government contractors. He told us in detail about clients facing a new level of scrutiny.
We all know the Obama administration is serious about cracking down on fraud and waste in government programs, and they are especially keen on going after government contractors. In my view, this trumps the DOD cuts (albeit slightly), because it means companies at every level, not just those involved in defense or homeland security, need to take every precaution that their business partners are as vetted or verified as can be. This is a critical consideration as companies continue to explore opportunities in the months and years ahead.
Does the govWin Top 10 list mirror your view of the Top 10 GovCon Stories in 2010? If not, post a comment and let us know.