MIlitary Contracts: Steady Revenue in Tough Times

MIlitary Contracts:  Steady Revenue in Tough Times

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“You couldn’t get things like shabu-shabu, sukiyaki and teriyaki meat everywhere in the world — until now,” she says, smiling.

Although her business has grown tremendously over the past two years, Zambo-Fan admits her entire staff right now is just her. With the help of brokers and contractors, Zambo-Fan somehow manages all of her worldwide transactions from her home office. “That just goes to show that anybody can do this,” she says.

Every year, the American Logistics Association, a nonprofit formed by manufacturers, distributors, wholesalers and brokers, holds an event at the Hawaii Prince Hotel for local companies to pitch their products to buyers for the military commissaries and exchanges: the Defense Commissary Agency, the Navy Exchange, the Army and Air Force Exchange, the Coast Guard Exchange and the Marine Corps Exchange. The show draws an average of 90 local companies each year. Zambo-Fan, who serves as the chairwoman of the association’s Hawaii conference, says that last year, DeCA approved about a dozen new local companies and nearly 200 new items.

“I think every company should definitely look into selling to the military,” she says. “For small businesses out there, I would pick up the phone, find out who the buyers are and make an appointment. Introduce yourself as a local company and bring your product in. Meet with the buyer and see if they’re interested. If they are, that’s the first step, and then from that point on, they’ll help you establish a contract. You’ve got nothing to lose.” Rapid Technology, a prototyping and 3D-imaging business, is one of Hawaii’s budding dual-use companies, applying their commercial technologies and services to the military market. What started off as a friendly conversation at a technology expo in 2006 resulted in a project that you’d expect to see on TV’s “CSI.”

The military’s Joint POW/MIA Accounting Command’s Central Identification Laboratory, which is responsible for the search, recovery and identification of U.S. personnel missing from past wars, is located at Hickam Air Force Base. According to Emil Reyes, Rapid’s CEO, once JPAC receives human remains, it tries to identify them within a strict timeframe before they must be interred. That’s where Rapid Technology’s 3-D printers come into play. For example, if JPAC’s lab receives an unidentified human skull, it could take a CAT or 3-D scan of it. Then, using one of Rapid’s 3-D printers, layers upon layers of an epoxy-based substance are printed until a life-size replica of the skull is complete.

“From there, the actual remains can be interred and can go through the processing and be laid to rest,” says Russ Ogi,Rapid’s CFO. JPAC can then use the 3-D replica to complete its forensic investigation. “For example, a person’s image could be superimposed over the skull to determine whether the facial features and skull are a match,” Ogi explains. “Although superimposition is not a new process, the computer software and technology that we provide has made it a much more quantitative process, whereas before, it was much more subjective,” he says. To his knowledge, this is the first time 3-D printing has ever been used in the field of forensics. “And it’s all being done right here in Hawaii. Pretty cool stuff, huh?”

Small businesses in the local construction industry are also benefiting from military spending, especially now, when private clients are cutting projects. Last year, Army Hawaii Family Housing executed more than $550 million in contracts, of which more than 65 percent were awarded to small businesses and more than 95 percent went to local companies. AHFH oversees the construction and renovation of military housing by private companies, plus its maintenance and property management. It has a 50-year contract with Actus Lend Lease, the Army’s preferred developer, and subcontracts with many small businesses. David Gray, the design and construction operations manager for Actus Lend Lease in Hawaii, says subcontracts can range from $20,000 to $10 million. Currently, the AHFH Project is about halfway through its initial 10-year development period, in which 5,388 new homes will be built and 2,506 homes renovated. The entire project is valued at more than $5.35 billion over the 50 years that end in 2054.

“There is a full scope of work that still needs to be done and a lot of opportunity for all different subcontractors to get a piece of the pie,” Gray says. The challenge, he adds, is that the bidding process can be long. “We want to make sure that the due process is followed properly and everyone receives a fair shot,” Gray says.

To bid for jobs, companies must be registered with Actus to get on its database of more than 1,000 subcontractors. At least once a year, Actus holds forums to add new businesses to its database. Gray says the qualifications are simple. “They have to hold a Hawaii contractor’s license in the specific trade that they’re bidding in, whether it’s a general contractor’s license or a subcontractor’s license, and just give some information on your (employee) turnover and perhaps other pertinent information, such as how your business is doing and then you’re on our database,” Gray explains. He says the bidding process can take up to two or three months before a contract is awarded.

Rapid Technology’s Reyes says he waited a year to win the JPAC contract — the company’s first military contract and its biggest job to date, worth about $100,000. “We were able to pay off a lot of bills with that money,”


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