GTSI buyer Unicom seeking to move past SBA suspension

July 29, 2012

A troubled time came to an end for Herndon-based GTSI earlier this year when an affiliate of California IT company Unicom Systems agreed to acquire the business, which was temporarily suspended by the Small Business Administration in 2010.

Unicom is not well-known in D.C. contracting circles, but Corry Hong, president and chief executive of Unicom Systems, said the buy makes sense for his company as it seeks a larger share of government sales.

Despite the departure of many of GTSI’s employees following the suspension, Hong said the company has benefited from buying Fredericksburg-based Information Systems Consulting Group and absorbing its workforce.

Capital Business talked with Hong last week. What follows are edited excerpts from that conversation.

How did you get interested in GTSI?

We were specifically looking for mid-cap public companies. We immediately recognized [GTSI’s] value right away. That 29-year tradition of providing government services was very, very attractive and was at their core. The second thing that attracted us was their valuation. It present[ed] us a really good value, and then ... we’ve always been looking to expand to serve government.

Did you already have some government work?

We’ve been serving government for about 11 years.

You didn’t have any hesitation about GTSI based on the SBA suspension?

I visited the SBA, and I met with the upper management and also their legal team. So far, the reaction is SBA believes that this [acquisition is] really a positive move. We’re very excited about that, but prior to the acquisition our lawyers — outside lawyers and our in-house [mergers and acquisitions] team and outside due diligence team — carefully reviewed [GTSI ]. We made a determination that the SBA issue was mostly resolved by the newly appointed GTSI management. [We have a] continued commitment to continue through the monitoring program, which will be ending in October next year. We thought that we would be in a position to finish that and also turn around the company immediately.

What will change for GTSI employees?

We have no plans to relocate. Not only will Unicom use GTSI’s current location as GTSI’s primary location, but also Unicom will use that as a Unicom [General Services Administration] support location.

You’ve made another acquisition as well. How will these work together?

We are in position to acquire a company called Network Engines. Network Engines provides hardware appliances and telecom equipment.

You’re not worried about the government budget shrinking?

This will give Unicom a unique opportunity over other competitors, other government IT solutions providers. Now through [Network Engines], we’re able to provide hardware and telecom equipment that we can package at much cheaper [prices], allowing the government to not only meet their budget requirement but also stay up in terms of quality.

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