MTS Systems No Longer Banned From Federal Contracts

An agreement between the U.S. Air Force and MTS Systems Corporation suspends a ban that was imposed in March and that barred the company from doing business with the federal government.

MTS Systems Corporation, a maker of test systems and sensors, announced Monday that it has reached an agreement with the U.S. Air Force that will lift a suspension imposed on the company in March.

The Eden Prairie company was barred from federal contracts because it had allegedly failed to properly disclose former regulatory violations on export documents. The agreement-effective immediately-allows MTS to resume federal contracting under certain conditions, which include tighter ethics and compliance programs, expanded employee ethics and compliance training, stricter self-reporting obligations, and the appointment of an independent compliance monitor.

An investigation by Minnesota's U.S. attorney's office into the company's possible export law violations began in January and remains unaffected by the agreement, the company said.

“We are very pleased that the company has reached an agreement with the Air Force,” MTS' interim CEO William Murray said in a statement. “We take our obligations to be a responsible contractor very seriously and we will perform our commitments in the administrative agreement.”

The Star Tribune reported in August that the U.S. attorney's office in Minneapolis had issued grand jury subpoenas related to the alleged violations. That same month, Laura Hamilton-who had been the company's CEO since 2008-resigned without an explanation.

Government contracts accounted for 7 percent of MTS' total revenue in 2010, according to another Star Tribune report. The company also reportedly said that since the suspension, it had lost out on competing for about $13 million in potential contracts through July 2.

In addition to losing out on government contracts, MTS has also reportedly lost business from some customers-such as the University of Minnesota-whose policies prohibit them from conducting business with companies that are banned from doing business with the federal government.

MTS makes test systems and sensors for industries such as aerospace, biomedical devices, and civil engineering. The company employs 1,948 and reported revenues of $374 million for the fiscal year that ended in October 2010.