Small companies build market muscle

Weighty infrastructure, workforce, contracting challenges remain

"The company has grown; now we need to step back and look at our infrastructure. The question is: How do we make sure it's robust enough to continue growing?" asks Ken O'Neal, TKC Communications.

Rick Steele

The Top 100 isn't exclusively the land of giants. Many small and midsized businesses elbow their way onto the list each year.

These smaller companies offer varied IT specialties, but all share a common dream: to continue to grow and become a larger player in the government contracting arena.

But challenges such as building the right infrastructure, hiring the right people and winning the right contracts often lie in the way.

"Growing pains are pretty typical," said Ken O'Neal, TKC Communications LLC's chief operating officer. TKC ranks No. 79 on the 2006 Top 100, with $104.2 million in prime IT contracting revenue.

"The company has grown; now we need to step back and look at our infrastructure," he said. The question he must answer, he said, is: "How do we make sure it's robust enough to continue growing?"

Growth is a foremost concern for other companies as well. Camber Corp. of Huntsville, Ala., an IT services company that specializes in modeling and simulation for several federal agencies, climbed to No. 74 on the Top 100 list, with $110.8 million in prime IT contracting revenue. Camber Chairman and CEO Walter Baston Jr. described his company as transitioning from the highest level of an entrepreneurial or startup company to the first phases of a larger, more professionally managed business.

"We have to have ourselves prepared to make that transition into that larger company," he said.

Baston's three-year goal is for Camber to grow from its current $200 million in total revenue, roughly $110 million of which is federal contracting revenue, to $500 million in total revenue, he said.

But Baston, who calls himself an optimist, said even his own management staff thinks that projection is overly ambitious and has set its expectations at $350 million.

To reach its objectives, Camber faces the same kinds of challenges as other companies on the lower end of the Top 100: hiring more employees, building larger and more experienced management teams, improving IT infrastructure and fundamentally changing the way the company does business, Baston said.

"We can't do it the way we've done it in the past: just going out and winning small contracts," he said. "We've got to go after bigger ones, and we're trying to do that now."

The Air Force's $500 million Aircrew, Training and Rehearsal Support II contract is the largest opportunity Camber is chasing in 2006, Baston said. The contract opportunity calls for training special operations forces on aircraft simulators.

"It's not to train them to fly. It's to train them to do the other stuff you do in a special operations aircraft: kill bad guys, do reconnaissance, search and rescue, all that stuff," he said.

Growth factor

Camber will not be the only small Top 100 company looking for large contracts over the next 12 months.

Force 3 Inc. of Crofton, Md., which ranks No. 93 on the Top 100, with $72.5 million in prime IT contracting revenue, plans to bid as a prime on NASA's $4 billion Scientific and Engineering Workstation Procurement IV contract, as well as on the Homeland Security Department's $3 billion FirstSource contracting vehicle, company CEO Rocky Cintron said. Both are multiple-award contracts.
Force 3, which specializes in voice and wireless network integration and operational support, reorganized its business lines last fall to focus more on selling and installing solutions from Cisco Systems Inc. Implementations of the San Jose, Calif., company's technology accounted for 60 percent of Force 3's revenue in 2005 and likely will constitute 70 percent of its 2006 revenue, Cintron said.

Cisco is "actually driving business to us," he said.

The result, Cintron said, was 16 percent revenue growth last year, and the chance to grow by as much as 25 percent to 30 percent this year.

TKC, an Alaska Native Corporation that moved up 11 slots on the 2006 Top 100, from No. 88 last year, is also looking to expand its business, O'Neal said.

The company, which specializes in telecommunications solutions and IT products and integration services, is looking to increase its call-center and security work this year, O'Neal said.

TKC has partnered with Secure Call Management Inc. of Los Angeles to try and pull call-center work back to the United States from India, O'Neal said.

"We're looking at anywhere from 4,000 to 8,000 call-center seats that are in the pipeline out there," he said.

As each company targets and pursues larger contracts, the need to add personnel to handle the increased workload and its greater complexity skyrockets.

With only 265 employees, TKC will need to expand its workforce, O'Neal said. The company's workforce likely will grow to between 350 and 400 people by 2007, he said. But, he added, TKC may hire between 500 and 1,000 new workers to staff call centers, depending on how successful the company is in winning that work.
TKC of Anchorage, Alaska, is having particular difficulty expanding its Washington office, O'Neal said. The nation's capital is a "tough environment" for hiring IT employees, he said.

Force 3 also needs to expand its 300-person workforce, and that is proving to be the company's biggest challenge, Cintron said. The company wants to hire people with security clearances as well as new engineers, and the scarcity of both is cause for concern, he said.

The lack of public sector IT employees has been a hot topic of discussion for government agencies, as well as private sector companies that are looking for outsourcing opportunities. But the lack of skilled workers also is affecting the private sector labor force, Cintron said.

"It's amazing when you think about how few people are going into the engineering and mathematical fields," he said. "You have supply not meeting the market demand."

Camber's Baston said his company is looking to expand its management staff, and that getting a larger and more sophisticated staff in place ahead of anticipated growth is essential

"We're trying to get out ahead of that, and get some really top managers who I know can manage much more than we're asking them to manage," Baston said.

"Then, when we get the growth, we'll be good to go."

Once a smaller company puts in place its management team and the systems it needs to administer large contracts, it can offer its government clients the best aspects of being a big business while keeping the advantages of being small, Baston said. "We can have the best of both worlds."

Staff Writer Ethan Butterfield can be reached at ebutterfield@postnewsweektech.com.

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