GTSI sues IntelliSys over PC-3 recruiting

Government Technology Services Inc. last week filed suit in Fairfax County (Va.) Circuit Court against IntelliSys Technology Corp. and two former GTSI employees who are now with IntelliSys, claiming theft of trade secrets, tortious interference, breach of confidentiality and nondisclosure agreements, and civil conspiracy.

The two firms in February won the Army's $300 million Personal Computer-3 pact, the follow-on to the Army's PC-2 pact, held by GTSI and Inacom Government Systems. PC-2 will expire May 12.

The suit claims that during the proposal period for the PC-3 contract, IntelliSys recruited Marlene Harold, GTSI's PC-2 - and likely PC-3 - senior program manager and Allison McIntosh, the deputy program manager. According to the suit, both then planned to move to IntelliSys and take confidential information about GTSI's contract with them. Subsequently, two other members of the team were recruited and left GTSI for IntelliSys, the suit claims.

"ITC has been stealing our employees. They are aggressively targeting GTSI employees. They took the whole PC-3 team," GTSI president Dendy Young said. "We invested heavily in those individuals. They know our strategy, our marketing plans and our pricing position."

Because of these actions, "GTSI has suffered damage...including costs incurred in hiring new employees, disruption to GTSI's business operations [and] impairment of GTSI's ability to perform under the PC-3 contract," according to the suit.

IntelliSys president Steve Baldwin did not return phone requests for comment.

The Army has received assurance from both companies that this suit will not affect the contract in any way, said Linda Cook, the PC-3 product leader.

"What they do among themselves is their own business as long as it does not negatively impact their performance," she said. "I have spoken with them and told them both that I expect nothing other than complete professionalism, and they have assured me that is what we will get."

But the dispute has caused comment throughout the industry about recruiting and proprietary information, analysts said.

"That kind of behavior is inexcusable," said Mark Amtower, president of market consulting firm Amtower & Co. "Leaving with proprietary data should not be permitted in this market or any other."

"There are not any trade secrets in this industry," said one company executive, who asked not to be identified because he works with both companies. "They are bidding commodities. Anyone could find out the price for those boxes. As for people, it's a small industry. People do this all the time. If people want to leave, they will leave. The whole thing is silly and could jeopardize both firms' position on Portable-3, which the Army is evaluating now."

"If any of this is true, the potential is very alarming," said Larry Allen, executive director of the Coalition for Government Procurement.

There is no question that GTSI will be affected, Allen said, but whether the recruiting becomes significant depends a lot on whether the former GTSI employees use the information they know about the company's business. "The question is how much did those employees know and how much are they telling their new employer," he said.

"You can't target a whole group of people," Young said. "You can steal one person, or maybe even four people over a period of time, but you can't go after a whole group in this fashion."