WashingtonExec spoke with SMRC President and CEO Neelu Modali about plans for his company, a recent graduate of the 8(a) program, and how it will spread its wings and expertise in the larger federal contracting ecosystem.
The 8(a) cliff: that defining moment for every 8(a)-certified small business when training wheels come off and you’re suddenly pushed into the big leagues.
As the President/CEO of S M Resources Corporation (SMRC), a Sterling, Va.-based government contractor, I reached my own 8(a) cliff in 2012. At that time, SMRC had been in business for 24 years as a niche Science and IT firm supporting the National Oceanic and Atmospheric Administration (NOAA) and the National Aeronautics and Space Administration (NASA). In 2003, we received our 8(a) certification. It took five years into the 8(a) program to see significant growth from four to 95 employees and $400K to $9M in revenue.
Fast approaching the cliff, I explored every available option to avoid a nosedive, maintain current work, ensure continued growth post 8(a), and achieve the next level of corporate maturity for SMRC. For this reason, I began learning everything I could about the successes and failures of 8(a) Mentor/Protégé (MP) Joint Ventures (JVs) in the Federal market.
Through independent research and consulting with trusted advisors, I selected dozens of young 8(a) firms to interview as potential protégés. I looked for key factors:
- Under $2M in revenue;
- Minimum of six years remaining in 8(a) status;
- Proven success in winning federal contracts;
- Solid experience with subcontracts;
- Sound infrastructure (e.g., accounting systems, clearances, benefits, lines of credit).
Throughout the interview process, I did encounter some roadblocks. Many companies weren’t local, limiting the capacity for in-person collaboration; others wanted to bypass 8(a) rules; and some were nervous about losing control through this type of partnership.
Eventually, the most critical factors surfaced, among them JV leadership philosophy, decision-making style, work ethic, and attention to detail.
At the end of the interview process, I walked through pre- and post-award scenarios with my top protégé candidates on the following:
- Making bid decisions;
- Dividing work share;
- Negotiating each option year;
- Handling turnover;
- Jointly managing each contract.
Finally, we selected two small businesses to create Agility One (A1) and Digital MindTrust (DMT). These JVs are truly collaborative efforts based on trust, transparency, and open and frequent communication. We offer our partners equal participation, educating them and involving them in every step of the bid and award process, and setting up regular checkpoints with them to keep our communication channels flowing.
According to Carlo Marfori, President of protégé CTR Management Group, SMRC has created strong practices and internal infrastructure for the JV. “The quality of SMRC Leadership has been key to our successful partnership. Through this JV, we have won two prime contracts and have multiple opportunities on the horizon.”
President Cindy Ford of our second protégé firm, WTI, recommends that any small business consider a JV partnership after a recent prime contract award. “WTI and SMRC both believe that when we take care of our employees, they become ambassadors of the company that work every day to not only meet, but exceed expectations.”
In the end, SMRC successfully avoided the cliff. Today, we have 200+ employees, $15M in revenue, and approximately six percent of total revenue attributed to the success of our JVs.
Even with this steady growth, I continue to soak up knowledge in planning for long-term growth and diversification through new agencies, IDIQs, and partner collaborations.
I am eager to hear your strategies and methods for post-8(a) success. We invite you to share experiences and best practices via e-mail at email@example.com.
Neelu Modali is President and CEO of S M Resources Corporation. He is currently building and leading the government contracting firm, with prime contracts providing science, technical, medical and professional services to federal agencies including Department of Homeland Security (FEMA), Department of Treasury (IRS), Department of the Army, Department of Commerce (NOAA, USPTO) and Department of Health & Human Services (NIH, HRSA).