GSA cancels PC Connection contract

The General Services Administration canceled a contract with tech reseller PC Connection Inc., company officials said today.

GSA officials sent a 30-day cancellation notice on Oct. 16 and confirmed it last week, the officials said. A two-year government review of GSA's contract with PC Connection's GovConnection subsidiary looked at systems and procedures that may have resulted in underpayment of fees or sale of unqualified items, the company said. The contract goes back to 1997.

ComTeq Federal became GovConnection after being bought by PC Connection in 1999. The government audit — which covered the period from 1997 to 2001, according to company officials — indicated that some items sold by ComTeq Federal and subsequently GovConnection may not have been on the GSA contract at the time of sale. Since 1997, products have moved on and off the contract rapidly, officials said.

GSA told PC Connection that the matter has been referred to the Justice Department, the company said.

Don Weatherson, GovConnection's chairman, has been appointed the unit's CEO, replacing Gary Sorkin, who had been the subsidiary's president. Sorkin has been placed on on a leave of absence, PC Connection officials said.

GovConnection's special government contracts counsel and an independent auditor are conducting a review of the matter for PC Connection's board, the company officials said.

"Our approach in this matter is to conduct a full, complete and independent review of records and filings associated with our GSA business," Weatherson said. "That review is already underway."

The cancelled contract generated $56 million in GovConnection sales for the first three quarters of this year, company officials said. It's a substantial amount for the company — PC Connection officials now expect GovConnection's fourth quarter sales to fall more than 20 percent from the third quarter.

GovConnection could get a new GSA contract within two months, company officials said. GSA officials have "given a commitment" that they would consider the company's new contract offer, Weatherson said. "I have no anticipation whatsoever that we'll get very far into the new year without having a new contract in place," he said.

According to GovConnection's Web site, the company takes part in blanket purchase agreements for several federal agencies, including the National Institutes of Health, Treasury, Coast Guard, Environmental Protection Agency, Federal Emergency Management Agency, National Imagery Mapping Agency and the Smithsonian Institution.

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