Making it big with mentors
For small companies trying to grow in the government market, a relationship with a big brother might be just what's needed.
Both large and small businesses are learning how to take advantage of mentor/protégé
programs. Whether operating under the Defense Department's 14-year-old program, under a civilian agency's guidance or even informally, businesses are finding ways to increase the value of such relationships, according to observers.
"I have seen a tremendous change in the program since it's been around," said Alicia Dudley, EDS' program manager for the mentor/protégé program. "Companies are doing more homework before they get into the program these days. They understand better the expectations that the mentor firms are having. Companies are being educated on what the programs both offer and require."
Not only are companies learning, "the program is also maturing," said Sharon Jones, director of the Defense Information Systems Agency's Small and Disadvantaged Business Utilization Office. "We're finding things that give it more [value] for the protégés."
Large companies are free to form relationships with smaller companies at any time, but the formal programs provide funding and agency oversight. DOD gets about $26 million a year in appropriated funds, spread among its various branches and agencies, to run its mentor/protégé program.
"This is a program that allows you to be so incredibly creative to help a small business," Jones said. She has run DISA's program since 1999.
Some civilian agencies also are running mentor/protégé programs. Mike Sade, director of the Office of Acquisition Management at the Commerce Department, is structuring the agency's Commerce Information Technology Solutions (COMMITS) NexGen contract — which is reserved for small businesses — so that the largest small firms will have to mentor smaller players, he said.
"What we have seen, where it works well, is [mentors] really are helping [protégés] understand how to grow and how to market," Sade said. "A lot of these companies are growing and moving up the food chain. We want to fill the pipeline with companies that can deliver."
"When that formal relationship is not there, you get lost in the shuffle," said Thomas Asefi, president of Global Analytic Information Technology Services (GAITS) Inc., a Springfield, Va.-based systems integrator and EDS protégé. "With that formal relationship, we can pick up the phone at any time if we have any kind of hiccup, any opportunities or any questions."
Making the match
Choosing partners is always a painstaking process, for both the mentor and the protégé. Both sides have a stake in the outcome of the relationship. The mentor wants to cultivate the smaller firms' skills in technologies or services, which the mentor can then tap, making the protégé a partner. Protégés want help in developing their skills and their business reach.
AT&T Government Solutions undertook a new mentor/protégé relationship earlier this year, under a $170,000 Air Force contract. The one-year deal stipulates that AT&T officials will provide technology expertise and training in quality management and business development to Native American Information Technologies (NAIT) Inc., based in Santa Fe, N.M.
NAIT, a systems integrator with seven employees, specializes in designing and implementing communications networks, including frame relay, private line, IP virtual private networks and broadband connectivity.
The contract also calls for AT&T's team to train NAIT officials in DOD contracting procedures. The small firm's leaders will learn how to submit proposals, comply with government financial systems and hire employees with security clearances.
Like many large firms, AT&T is experienced with mentoring, said Lou Addeo, president of AT&T Government Solutions. "We have an excellent track record for mentoring small firms looking to break into government contracting," he said.
Steve Hogan, director of AT&T Government Solutions in Albuquerque, N.M., will be the hands-on leader of the relationship with NAIT. In choosing small firms to guide, AT&T officials look at what the small firms want to do, he said.
"The process started for me with going out and meeting several small businesses to understand their goals and objectives," he said. "I'm looking at companies who are interested in the [information technology] world. We're looking at companies that have an interest in the telecommunications world. One of NAIT's interests is learning how to do continuity-of-operations planning, so we're going to be working with them on that."
Building the right relationship takes trust, especially for the smaller partner, said Jack Richtsmeier, a vice president at NAIT. He had a bad experience a few years ago when he was working for another company, Native American Systems Inc., he said. That company, a hardware reseller, signed up for a mentor/protégé relationship with another DOD contractor that didn't deliver.
"They didn't provide us with the technology transfer that they" had promised, Richtsmeier said. "They didn't provide us with subcontracting opportunities. They didn't put us on teams. It was clear that they just wanted us as a source of hardware. We ended up terminating" the arrangement.
When Hogan and AT&T officials approached NAIT, Richtsmeier said, they came with a history of successful mentor/protégé pairings, which gave them credibility.
The small companies must bring something to the table too, said Tom Burlin, IBM Corp. vice president of federal government industry.
"My practice is to get to know the senior management in each of our protégés," he said. "One thing [IBM requires] is that they have a vision. When I have these conversations, if most of it circulates around 'What kind of business opportunities do I get from IBM in the short term?' it's probably going to be a short conversation. If they talk about what their company will be after this is over, that's the start."
In some mentor/protégé programs, mentor companies have rules to guide their choices. DISA, for example, requires protégé companies to be at least 8 years old, earn a minimum of
$3 million in annual revenues and have a minimum of 45 employees, Jones said. Each DOD agency runs its own program under congressional mandate, so their rules are not identical, she said.
"We will consider waivers," she added. However, she said
her agency has determined that the youngest, newest start-ups are generally not ready yet for a mentor relationship.
"What everyone's starting to realize is that you can't work with a one- or two-person company," Jones said. "The company should have a significant amount of business experience."
At EDS, the focus is on developing long-term partnerships, Dudley said. The program generally has about six active relationships at any one time, she said.
To sift through interested businesses to find those that are complementary, EDS officials have designed an extensive process to help them figure out what a potential protégé lacks that EDS might help supply, and also where the small company's leaders want their company to be in one, three and five years.
"We do not approach the mentor/protégé program as a cookie-cutter program," Dudley said. "We realize all small businesses are different."
GAITS recently became one of EDS' protégés under a DISA contract, and Asefi said the selection process was meticulous.
As Richtsmeier said, the protégé firms have some choices to make as well.
"You want to really pick a company that you think would really add value to your strategic plans and direction," said Joe Fergus, president and chief executive officer of Communication Technologies Inc., an IBM protégé better known as ComTek. "One of the vice presidents at IBM and I met at a conference, and immediately we agreed that some type of relationship between the two companies made sense."
"It's quite a little courting ritual that goes on," Burlin said. "We've had experiences where companies wanted to go off into an area where we really didn't feel we could afford them the kind of expertise to get [them] to where they need [to be]. There's got to be a synergy in business to make it work."
Making it happen
Once the mentor/protégé relationship is established, the day-to-day relationship can take many forms.
Officials at protégé firms should realize that they may not get a great deal of immediate subcontracting work, Dudley said. "A lot of them, their primary focus is business development, teaming relationships and increased revenue," she said. "That is not something any company can guarantee."
Apart from subcontracting opportunities, officials at the protégé firms can expect a variety of benefits. Mentors help them develop their technology offerings, gain needed certifications, train their employees and learn to navigate the federal procurement maze.
DISA requires mentors to help protégés earn certifications, Jones said. "Government is almost mandating [certifications
for contractors] in everything that they do," she said. "If companies are doing the majority of their work in DOD, and that's become almost a DOD mandate," then it makes sense for the mentor/protégé program to help the smaller firms meet that
EDS will help GAITS earn a Capability and Maturity Model (CMM) rating of 3, which demonstrates that the company has instituted systematic, repeatable processes for many tasks, Asefi said. The mentor company also will sponsor some of GAITS' managers to earn project manager professional certification and will cover the costs for several officials to earn Certified Information System Security Professional certification.
AT&T officials are helping NAIT develop a security program, Hogan said, along with an accounting and timekeeping system, so the protégé firm can meet government requirements.
Hogan said he believes that the formal elements of the program should be balanced with informal discussions between his team and NAIT's leaders.
"I want to make sure they understand what they're getting into," Hogan said. "We discuss pretty extensively what it's like to do business with the DOD. I talk to them about the way they run their business. I want to make sure they have ethical standards and won't run into trouble down the road. My reputation is at stake, too."
IBM helped ComTek earn ISO 9001 certification last year, Fergus said, and that was a significant boost for the firm. Without IBM's help, ComTek would have borne the cost of getting the quality certification — more than $100,000.
"They were the catalyst behind our going through that program," he said. "Not only did they provide guidance, they brought to bear all of the resources that we needed to build a quality program."
Making it through
When the formal mentor/protégé relationship ends, the smaller companies should be bigger and the larger companies should have new partners.
"We hope to have a relationship with AT&T that extends beyond this Air Force program," Richtsmeier said. "I don't see us ever becoming a Lockheed [Martin Corp.], but I would like to see us become a stand-alone IT service provider whose principal business is with the feds."
ComTek, which had about 300 employees when it started its formal relationship with IBM two years ago, has almost tripled in size and will have about 1,200 employees in another year, Fergus said. Now he is trying to strengthen the company's skills in IBM-related areas that will enable the two companies to continue to work together.
Jones pointed to the IBM/ComTek relationship as one of her primary success stories. "That's what I really like, when a company gets it," she said of ComTek. "Some companies do not utilize the mentor/protégé program in the way that they could."
Being a mentor is "good business, just because if you're going to work in the public sector, you're going to work with small businesses," IBM's Burlin said. "The better those companies are, the lower your risk is."