MTS Suspended from Federal Gov’t Contracts

News that MTS has been suspended from federal government contracting caused the company's stock price to slide on Monday.

MTS Systems Corporation on Monday announced that it has been temporarily suspended from federal government contracting for failing to properly disclose that it previously pleaded guilty to violating export regulations.

The Eden Prairie-based test system maker said in a news release that the U.S. Air Force notified it of the suspension, and the company is “cooperating fully and may continue to perform its existing government contracts.”

Although the suspension is temporary, MTS said “an extended suspension or debarment from contracting with the U.S. federal government could have a material adverse effect on MTS' business.”

The company's stock was trading down about 5.6 percent to $42.85 during Monday afternoon trading.

The company has been suspended from federal contracts because it failed to properly disclose former regulatory violations. Since 2008, MTS has failed to disclose in regulatory documents that it pleaded guilty to two misdemeanors for making false statements related to its exports.

Monday calls to MTS seeking details about the alleged violations were forwarded to Chief Financial Officer Susan Knight, who was not immediately available for comment.

Last month, MTS reported in regulatory filings that it had been told by the U.S. Department of Commerce and the U.S. Attorney's Office in Minnesota that it was under investigation for whether it had adhered to federal acquisition regulations.

MTS has 30 days to respond to the suspension.

“This is an important matter that MTS takes very seriously,” Laura B. Hamilton, CEO and chair of MTS, said in a statement. “We are in full cooperation with the government and intend to expeditiously take appropriate action to address the agencies' concern and seek a prompt resolution.”

MTS is a global supplier of test systems and industrial position sensors. It is among Minnesota's 55 largest public companies based on its 2009 fiscal-year revenue, which totaled $408 million. The company reported revenue of $374 million for the fiscal year that ended in October, at which point the company employed nearly 2,000 people.