Strategy 4: Take advantage of small-business programs

Harrington, chief executive officer of Alexandria, Va.-based Virtual Technology Corp.: "When you look at many larger companies, they are really run as hundreds of smaller businesses that are our size. We can compete with them."

Small businesses can apply for several programs meant to help them move from fledgling to fully competitive firm.

For example, Jack Harrington used the Small Business Innovation Research Program to develop technologies now sold commercially. Alonzo Short Jr. has twice used mentor-protégé programs to tap the expertise of larger businesses.

When Harrington, chief executive officer of Alexandria, Va.-based Virtual Technology Corp., started the company eight years ago, he focused on providing "top-notch talent" to larger contractors. But after a few years, he wanted the company, which specializes in defense modeling and simulation, to be able to pursue prime contracts.

The SBIR program helped position VTC to do that. Through the program, small companies compete for research and development funds in three phases. Phase I is a feasibility study to evaluate the scientific and technical merit of an idea. Phase II is for development of the phase I idea. Phase III is for commercialization of the technology and requires using private-sector or non-SBIR federal funding. VTC has won funds for all three phases.

Today, VTC employs 60 people and had $9.2 million in revenue last year. While the products don't generate huge revenue, they give VTC an advantage over the competition for modeling and simulation contracts, Harrington said.

Several federal departments offer mentor-protégé programs. Through them, small businesses receive advice and assistance from large businesses.

Houston Associates Inc. has reaped many benefits from its yearlong collaboration with mentor Science Applications International Corp., said Short, president and chief operating officer of the Arlington, Va., small business. Houston Associates specializes in design and support of mission-critical networks providing integrated voice, data, video and imagery. The firm has 180 employees and $20 million in annual revenue.

SAIC staff have helped the firm identify future opportunities, provided financial and management training and helped prepare their protégé for recompetition of a Defense Information Systems Agency network operations contract worth $15 million annually.

The preparation included a black-hat review, in which SAIC outlined how competitors will beat Houston Associates; and a red-hat review, in which SAIC staff "tear your proposal apart. It's essential for you to win," Short said.

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