WT Business Beat

4 keys to building your international business

We’re used to companies like Lockheed Martin and Northrop Grumman talk about the importance of growing their international business.

Both companies have made investments around the world as a means to offset contraction and slower growth in the United States.

But going global doesn’t have to be just a play by the big boys. I recently spoke with Neil Albert, vice chairman of MCR LLC, a mid-size company with about 600 employees. International growth will play a critical role in the growth of the company as it looks for new clients for its integrated program management offerings.

Here’s a rundown of how they plan to do it.

Building from their base

For several years, MCR has been helping NATO through contracts with the Defense Department and the Air Force. Now, it is beginning to win work directly with the defense agencies of NATO countries, providing engineering services and cost and financial analysis services.

“We’re helping with a lot of downsizing, so they can analyze where they need to put their people and their resources,” Albert said.

Many of the services they provide to U.S. clients in the area of planning and acquisition support also translate to international customers, in both defense and civilian agencies. “That’s our core competency,” he said.

Some of their early success includes work with the Eurocontrol, which is the European agency focused on safe air navigation, and the European Space Agency. The company also has worked with the U.K. Ministry of Defence Cost Assurance and Analysis Service, the Korean National Defense University and the Japanese Aerospace Exploration Agency.

Building partnerships

Currently, MCR only has about 15 employees based outside of the United States, so the company has a lot of subcontractors. “The NATO component countries like to see companies based in their countries on the team,” Albert said.

But as MCR’s foothold grows, it’ll hire more of its own employees.

Building its reputation

Working with a variety of partners, both as the prime and the subcontractor, is important for building a reputation. MCR has partnered with much larger companies such as QinetiQ.

The company also participates in associations and professional conferences in Europe to raise its profile.
The conferences also are a good way to gather intelligence on upcoming opportunities, Albert said.

Help on the home front

MCR has gets about 8 percent of its revenue from international customers and Albert said he’d like to see that number grow to 20 percent to 30 percent over the next five to 10 years.

The McLean, Va.-based company was recently tapped by Virginia Economic Development Partnership to participate in its two-year Virginia Leaders in Export Trade program.

The program will help MCR in several ways including navigating the myriad banking, legal and regulatory requirements of doing business in other countries. Some of these are U.S. requirements such as International Traffic in Arms Regulations, known as ITAR, and other export regulations. Individual countries also will have their own regulations, Albert said.

“They’ll help on those and provide advice and support,” Albert said.

The program, known as VALET, also will help with business development efforts, and MCR might have the opportunity to participate in trade missions.

“The program should really help with our long-term success,” he said.

Posted on Apr 03, 2014 at 10:04 AM0 comments

Alcatel-Lucent, LGS complete separation with $200M deal

LGS Innovations' separation from Alcatel-Lucent is now complete, and the company can now move forward as an independent firm focused on developing networking and communications solutions for government customers.

The company is now owned by the private equity groups Madison Dearborn Partners and CoVant, which paid $200 million for the company. The company will continue on with the same management team led by CEO Kevin Kelly.

LGS has roots that go back to the legendary Bell Labs under the pre-breakup of AT&T.

With the private equity backing, LGS is expected to become a platform for acquisitions, but the separation from Alcatel-Lucent, a Paris-based company, also frees LGS to pursue more U.S. federal business, because it won’t face certain restrictions based on foreign ownership.

“LGS Innovations has long been at the leading edge of developing and delivering highly innovative products and services to the U.S. federal government, and we are pleased to now be in a position to help the team expand its business,” said Doug Grissom, a managing director at Madison Dearborn and the head of the firm’s business and government services team.

Joe Kampf, CEO of CoVant, said that LGS has unique offerings that include intellectual property and patents in the communications and networking technology.

“Our focus will be to help the company build on this platform and deliver its technology solutions to an expanded array of clients around the world,” Kampf said.

The deal for LGS is all cash with $100 million paid at closing and the rest to be determined by LGS’s results this year.

Posted on Apr 02, 2014 at 12:02 PM0 comments

Jimenez, SBA end debarment proceedings

The dark cloud is finally starting to lift from over Tony Jimenez and his company, MicroTech.

Jimenez has signed an agreement with the Small Business Administration that lifts the notice of proposed debarment against him and clears the way for him to return to work as the CEO of the company he founded.

SBA and MicroTech, the company, reached an agreement in January that ended the debarment procedures against the firm, but negotiations were continuing with Jimenez.

Since January, Jimenez has not been allowed to participate in day-to-day operations of the company.

MicroTech and SBA were set on a collision course after a series of Washington Post stories in November accused the company of misrepresenting itself to win small business contracts.

SBA proposed a debarment of the company on Dec. 20 – which effectively stopped it from bidding on new business – while it investigated the Post allegations. (I questioned this process in earlier blogs because it lacks due process.)

While the Post outlined a variety of allegations, SBA’s investigation zeroed in on MicroTech’s application to become part of the 8(a) small business program back in 2005. There were some inaccuracies in that application in how MicroTech’s relationship with two other companies was described.

The companies shared investors, which is apparently what bothered SBA.

Repeatedly in the agreement between MicroTech and SBA, MicroTech is quoted as affirming that its connection with those two companies didn't run afoul of any SBA regulations. And SBA seems to agree.

With the agreement signed this week, SBA says it is satisfied that Jimenez’s “future dealings with the Government, if any, will be conducted responsibly” if Jimenez meets certain requirements.

One requirement is that Jimenez sign MicroTech’s code of ethics.

In a second requirement, Jimenez agrees to participate in contracts compliance training as directed by the company and according to a schedule the company will provide to SBA.

Jimenez also has voluntarily agreed that he cannot resume the CEO position until May 18, but he can meet with bankers and financial institutions and meet with distributors and manufacturing partners.

The agreement also includes other requirements such as Jimenez’s cooperation with SBA going forward.

In a phone call, Jimenez sounded relieved and said that his top priority is rebuilding his company, and he has his work cut out for him. While he didn’t talk revenue, MicroTech has lost more than 100 people because of lost business opportunities. The company now has 190 employees.

“This impacted my business, my reputation and the reputation of my company,” he said. “But the people who know us and trust us still see us as a responsible company.”

He can point to two recent contract wins as being proof – the Air Force NetCents 2 contract for network operations and infrastructure and the GSA OASIS contract for professional services.

“Those are desirable contracts,” he said, and show that government customers trust MicroTech.

He’s also quick to point out that none of the allegations against MicroTech involved accusations that it did poor quality work.

“We have dozens of repeat customers,” he said. “No one said we were a poor performer.”

Posted on Apr 01, 2014 at 1:37 PM8 comments

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