8(a) Companies Learn the Secret to Partnering
Prime contractors and 8(a) firms find that flexibility is the key to successful partnerships
Like many other small businesses that have leveraged larger partners to expand their sales, Signal Corp. of Fairfax, Va., is finding flexibility to be its single greatest weapon inside the federal marketplace.
Roger Mody, Signal's founder, said the 8(a) integrator's growth is related solely to its partnering with prime contractors, a strategy it expects will help the integrator capture $50 million in revenue this year.
Among the qualities Mody underscores as helping make his company an attractive partner is a pricing strategy that is not too rigid and offers the flexibility to service large government customers.
Satyendra Shrivastava, president and chief executive officer of Anstec Inc., McLean, Va., said his company's past performance and high-octane marketing led to more subcontracting opportunities with primes.
"We put a lot of good people on the proposal team and we dazzle them," said Shrivastava, whose company graduated from the Small Business Administration's 8(a) program earlier this year.
"Because of our [record], primes come to us now for subcontracting opportunities," he said.
Anstec has teamed with Computer Sciences Corp., El Segundo, Calif., on the Defense Enterprise Integration Services II contract and the Information Technology Omnibus Procurement contract.
According to Shrivastava, contracts like these could mean $10 million to $20 million in revenue for the company.
Anstec has three contracts with CSC and five bids pending for subcontracts with CSC on other projects.
"They realized we were not another small company looking for a handout," said Shrivastava.
Between 1987 and 1992, Signal focused heavily on forming partnerships with large primes, said Mody, the company's president and chief executive officer.
In early 1987, Mody recognized an increase in outsourcing as government agencies downsized. After five years, he joined the 8(a) program to penetrate the government market more quickly.
Signal's strongest teaming partner is Westinghouse Electric Corp., Pittsburgh. In 1988, Signal supported the proposal for a defense contract called AN/SQQ-89. Westinghouse then chose Signal as the subcontractor on the contract, which was awarded in 1992. The company provides systems engineering, information technology services and logistics support to the Navy's surface ship combat system. The $31 million contract ends in 1997.
What started off as a 12-person effort in 1992 has peaked to 200 Signal employees in 1996 supporting the contract, said Mody. "This contract was a catalyst to get this company kick-started."
Signal got into the 8(a) program when revenues were about $5 million. The company, which will graduate from the program in November 2001, will hit $75 million in revenues by 1997, Mody said.
Approximately 22 percent of the company's revenues are generated from 8(a) contracts, he said.
Mody said the competition to attract prime contractor partnerships is difficult because there are more small businesses than large primes.
Factors in establishing successful partnerships with prime contractors include past performance and sufficient financial backing, Mody said.
For his part, Shrivastava said a successful prime partnership is based on equitable and fair terms where each partner provides due share to nurture the partnership.
Tom McDonald, vice president of Anstec's information systems division, said it's important to build camaraderie from the beginning of the relationship.
"It's important when dealing with the big guys. You go to the top and work your way down," said McDonald. "We have the same skill level as the big guys, we just don't have the same amount of people."
Bob Dornan, senior vice president of Federal Sources, a market research firm in McLean, Va., for federal, state and local infotech markets, said the only way to define a successful partnership is to measure the success of the 8(a) firm after graduation from the program.
"The ultimate objective [of a partnership] is to develop a company that is self-sufficient," said Dornan.
According to Dornan, there are two kinds of partnerships -- temporary and strategic. A strategic partnership nurtures both prime contractor and subcontractor; a temporary partnership is developed for individual procurements.
Dornan said there are a lot of those kinds of partnerships being formed.
Jack Daniel, vice president of the information processing center in the systems sciences division of Computer Sciences Corp., said an 8(a) company or a small, disadvantaged company should have experience in the customer's area, an understanding of the business and enterprise activities and should demonstrate an ability to bring well-qualified people to the project.
"We look for good, stable support -- financially and technically," said Daniel.
Pat Ways, group vice president for business development at CSC, said very few companies have all three qualities.
"Not every partnership is perfect," said Ways. "But the majority of our relationships have been positive."
Ways said CSC has set a goal that 10 percent of its business be subcontracted to small, disadvantaged businesses, not necessarily 8(a) firms. CSC, which reports $1.6 billion in federal business, has already exceeded that goal this year, Ways said.
"We are strong supporters of small, disadvantaged businesses," said Ways. "But we're not always in agreement with the 8(a) program. We try to be corporate citizens."