5 small businesses that integrators know and love

Success stories highlight value of mentor/proege programs

Good help is hard to find. So when integrators find capable — even impressive — small businesses to partner with on government projects, they hang on to them tightly.

An informal survey about the small firms that the top 10 integrators on this year's Federal List regard as promising turned up a wide range of companies. The list includes American Indian-owned firms, woman-owned companies, shoestring operations and larger small businesses with several hundred employees.

Most of them have similar offerings — information technology consulting, services and support — but they've caught the attention of officials at these large integrators.

The companies profiled here are all profitable, according to officials at each. Privately held companies are not required to disclose financial details. Most of the firms achieved their success without the help of venture capital, and they expect to continue to grow, officials said.

Small companies thrive when they can establish themselves as leaders in a niche. For example, executives at Optimal Solutions Integration Inc., based in Irving, Texas, tout their expertise in enterprise resource planning. Meanwhile, Client Network Services Inc. officials are trying to earn the company a reputation as a builder of health care claims databases.

But integrators tend to turn to small businesses that have common attributes. Aside from filling a particular need, a small firm should be able to participate in the bidding process, bring their own government contacts and have an impressive track record, according to integrator officials.

Here are profiles of a few, in alphabetical order. Others are included in the list below.

1. Cairo Corp.: It starts with the huddle

Walk into the offices of Cairo Corp. at 8:30 on a weekday morning, and you will find at least 14 managers huddled with executives to discuss that day's objectives. After the agenda is set, the managers talk to their teams until the morning pep talk trickles down to every employee.

This exercise, which is supposed to take 10 minutes per huddle and be completed by 9:15 a.m., is what has made the firm, based in Chantilly, Va., a growing small business, according to company executives.

"Once we have the right people, we throw a problem on the table, and those people come up with the solutions," said Alba Alemán, president of Cairo. "Nine out of 10 times, it's dead-on."

Cairo provides IT services, including enterprise architecture, enterprise data management programs and large cycle application development support, to federal and state agencies. The small, woman-owned disadvantaged business has done work for the Department of Housing and Urban Development, Customs and Border Protection, the Defense Department and the Florida Transportation Department.

"When we need to muster up support for crisis situations, the company steps in to make sure we get the support we need," said Ronald Poussard, deputy director of defense procurement for defense acquisition regulations.

Cairo officials provide business process analysis, reengineering and technical support for the Defense Department's Acquisition Regulations office.

Science Applications International Corp. officials chose Cairo as a prot €g € in the mentor/prot €g € program based on small-business and subcontractor awards the firm won.

"We selected them on the basis that they are up and coming and do provide some role model for the way small businesses can organize themselves and be successful," said Lee Ann Standish, assistant vice president at SAIC.

Although thousands of companies provide the same types of work — IT services and solutions — Cairo officials have tried to distinguish the company by making every one of the 85 employees responsible for Cairo's success by including them in the daily huddles and through sales contests.

Cairo is named after the code name for Microsoft Corp.'s Windows before it reached the marketplace. And since its launch in 1999, the company has been profitable in every quarter, except one. Cairo posted revenue of $8 million in 2003 and expects to bring in $12 million this year.

That's the short-term goal. Alemán said the company has a "big, hairy, audacious goal" of expanding to 10,000 employees before 2020. The growth will be driven by Cairo's focus on reaching certain goals every 90 days. Officials offer employees rewards and acknowledgment for reaching certain milestones.

"We do corny themes and launches, but it sticks in [employees'] minds," Alemán said. "No one is confused about what we're trying to do right now."

2. Client Network Services Inc.: Always in the hunt

Ask officials at large integrators what they want out of a small-business partner, and most will say that the firm must always be on the prowl for government customers.

That's the characteristic that led officials at EDS to identify Client Network Services Inc. (CNSI) as a notable partner. Officials at the firm, based in Rockville, Md., are constantly trying to improve their qualifications, according to EDS officials.

"They find out what the industry standards are for company certifications and what the government trends are for company certifications," said Alicia Dudley, program manager for EDS' mentor/prot €g € program. "That's an indicator that this is a company that believes in quality and process."

CNSI, a 10-year-old IT and engineering services firm, has been in the 8(a) program since 1998 and is slated to graduate in 2007. It provides IT support and services to federal agencies, including the Energy, Commerce, Agriculture and Homeland Security departments.

But at least 20 percent of CNSI's work is on the state and local levels. For example, the company is developing a Medicaid claims processing system for Maine. Officials said they hope to pursue more state and local government work.

"Even to get a small percentage of that market will be a big shot in the arm," said B. Chatterjee, president of CNSI.

The firm was launched a decade ago by Chatterjee and three colleagues who wanted to run an IT business that gave employees control of the company's growth. Each of CNSI's 470 workers owns a share of the firm.

The company has been profitable since its inception, hitting $63 million in revenue last year, and officials expect to reach $80 million this year.

3. Global Analytic Information Technology Services Inc.: Sizing up for big jobs

Global Analytic Information Technology Services Inc. (GAITS) offers an object lesson for small companies that want to grow. Co-founder and president Thomas Asefi, who was inside the Pentagon during the Sept. 11, 2001, terrorist attack, focused his IT services firm on the defense and intelligence markets and set an aggressive growth plan.

Since then, Asefi and his brother, Tony Asefi, who serves as chief executive officer of the company, have been laying the groundwork to turn GAITS into a multimillion-dollar company.

The brothers want the company to be seen as a high-level IT firm that can handle work normally given to larger players. The company is earning ratings and certifications to show potential customers how qualified it is and also recruiting IT professionals from large firms. Two of the company's executives, for example, came from Signal Corp. a year ago.

"We wanted to strengthen our infrastructure because we know the growth will come," Thomas Asefi said. The company recently won a prime contract from the Federal Aviation Administration and subcontracts on other projects. GAITS will bring in about $16 million this year, he said.

Company officials are slowly moving the firm away from the 8(a) set-aside contracts that helped it grow early on. The company will leave the program in 2008, and Thomas Asefi said he wants to be ready for the shift.

"Ninety-nine percent of the time, I'd rather not have an 8(a) contract," he said. "We look at an opportunity and say, 'Can we do this work?'" That question goes for any opportunity, no matter the size, he said.

EDS serves as GAITS' mentor in a mentor/prot€g€ program. "They are a real key strategic partner because not only are they interested in being a partner in a subcontractor role, they are eagerly interested in being a prime for EDS," Dudley said. "They are aggressively looking for opportunities where they need a large integrator to support."

4.Houston Associates Inc.: An alum makes good

In the late 1990s, Houston Associates Inc. officials learned the hard way that graduating from the 8(a) program can be a challenge. After leaving the program set up to aid small, disadvantaged businesses, they were foundering, attracting little new business.

In 2001, company officials brought in Alonzo Short, a retired U.S. Army general who sat on the company's board, as president and chief operating officer.

Short and John Houston, the company's founder, chairman and chief executive officer, faced revenue that had sunk from $36 million in the mid-1990s to $17million. The two men set goals for bringing in new business and additional talented staff.

The attempted comeback seems to be working.

The company reached $26.5 million in revenue in 2003 and has brought in more than $33 million so far this year. Officials expect Houston Associates to reach more than $42 million in revenue by the end of this year and more than $55 million in 2005.

"The bottom line has been we have had good growth in the company," Short said. "We've been able to refocus the vision of the company."

They chose to join DOD's mentor/prot €g € program. Houston Associates linked with SAIC. The San Diego-based integrator provides training to the smaller firm in Microsoft certification, ISO 9000 project implementation, program management, and technical and business infrastructure. Houston has also teamed with SAIC on DOD work such as communications support during Operation Enduring Freedom.

"They may be small relative to our size, but they're responsive, and they're creative, and they bring innovation, and they know how to play," Standish said.

5. Optimal Solutions Integration Inc.: Ready to talk ERP

Four years ago, Optimal Solutions Integration Inc. wasn't doing work for the federal government. The company was successfully offering IT consulting to the private sector.

But company officials saw an opportunity in Washington, D.C., and opened an office in the heart of the nation's capital three and a half years ago. Now, at least half of its annual revenue is coming from government work.

"The government part of our business has really gone gangbusters in the last two to three years," said Sam Sliman, executive vice president of Optimal. "It's kind of taken over."

Sliman attributed the company's growth in the government space to federal agencies' adoption of enterprise resource planning, Optimal's specialty. The company has also developed a strong relationship and reputation among integrators, he added. For example, the company has gotten work on about 70 government projects with Accenture since 1996.

"Optimal's teaming approach is similar to ours," said Kevin Laudano, an Accenture partner. "They're not there primarily to manage a contract; they're there to be part of the solution."

Optimal was founded 10 years ago as a woman-owned small business and has grown to 180 people with a 35-employee office in Washington, D.C. Clients include the Defense Logistics Agency, NASA, Washington, D.C., and the state of Washington. The company has been profitable every year since its founding, Sliman said.

Although Optimal has a bevy of competitors, he said, the company distinguished itself by getting an early foothold specializing in systems based on software from SAP AG, a business process software developer that makes widely used products.

The company's goal is to gain experience in enterprise architecture, especially as government agencies increasingly adopt enterprise resource planning. Company officials also are working to attract more homeland security clients through their enterprise resource planning experience.

Anderson is a business writer in Arlington, Va. She can be reached at tania.anderson@verizon.net.

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