GTSI loses about 100 employees after SBA suspension

(Nikki Kahn/The Washington Post) - The SBA lifted its suspension of GTSI after the company restructured its upper management. Now the company is in hiring mode to fill key positions.

Herndon-based GTSI has lost more than 100 employees since the U.S. Small Business Administration suspended the company from federal work in October.

Though the suspension was lifted last year, the contractor, which resells computer hardware and software and provides related information technology services, said it will take time to rebuild its staff.

Sterling E. Phillips Jr., named GTSI's chief executive and president in late November, said in a call with investors earlier this month that the company now has 431 employees after laying off 30 and watching 73 leave voluntarily.

Among the most prominent was Sandra Gillespie, the company's senior vice president, who resigned as of March 3. She is now a vice president at Capgemini Government Solutions.

“We are making progress on backfilling key positions, with almost 20 new hires since Dec. 1,” Phillips told investors. Additionally, at the time of the call, GTSI had eight offers outstanding and another 10 in process.

GTSI had far more employees at the end of the 2009 -- nearly 640 -- but had reduced that number by about 100 before the SBA action, mostly through restructuring, Phillips said.

The company was suspended by the SBA in October after the agency said it found evidence that “GTSI was an active participant in a scheme that resulted in contracts set aside for small businesses being awarded to ineligible contractors,” according to a suspension letter.

The suspension followed a Washington Post investigation that exposed relationships between GTSI and three small businesses, including Alaska native corporation EyakTek.

GTSI and SBA reached a deal in which the company would remove its chief executive and general counsel and turn over internal business documents to end the suspension.

Phillips said earlier this month that the SBA action “created major turbulence” for GTSI, leading to employee losses as well as financial setbacks.

The company, which had sales of $762 million in 2009, said its gross margin in the fourth quarter of 2010 declined by nearly $10 million and its expenses grew $3.4 million, mostly because of legal costs.

Now, Phillips said, he is focused on improving the profitability of GTSI's resale business and developing a “robust” services business.

“We need to acquire services companies that are attractive and successful on their own and that can complement our core business,” he said, adding that an acquisition would boost GTSI's credentials for performance and provide more mature systems and processes.

 
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