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Successful 8(a) Firm Acquired by another Former 8(a) Firm

On January 1st, 2005, Computer & Hi-tech Management, Inc. (CHM) announced that it had been acquired by FCBS, Inc., a former SBA 8(a) firm based in Northern Virginia. CHM had been in business since 1994 and has seen ten years of success in the government contracting marketplace. James S. Cheng, Founder and Principal stockholder of CHM, attributes a great deal of CHM’s success to the support and efforts of the US Small Business Administration, especially the Administration’s 8(a) program.

The 8(a) Business Development Program is an essential instrument for helping socially and economically disadvantaged entrepreneurs gain access to the economic mainstream of American society. SBA has helped thousands of aspiring entrepreneurs over the years to gain a foothold in government contracting. Participation is divided into two phases over nine years: a four-year developmental stage and a five-year transition stage. Participants can receive sole-source contracts, up to a ceiling of $3 million for goods and services and $5 million for manufacturing. While SBA helps 8(a) firms build their competitive and institutional know-how, the agency also encourages them to participate in competitive acquisitions.

To qualify for program certification, a small business must be owned and controlled by a socially and economically disadvantaged person. Under the Small Business Act, certain presumed groups include African Americans, Hispanic Americans, Asian Pacific Americans, Native Americans, and Subcontinent Asian Americans. New rules make it easier for non-minority firms to participate by proving their social disadvantage.

CHM was founded in 1994, when Mr. Cheng purchased the assets of a small computer repair contractor. The company started in Virginia Beach, VA with 6 employees and sales of about $300K. CHM received its SBA 8(a) certification in 1995 and by 1996, it was awarded its first major contract – $25 Million multi-year Information Technology support contract with the Navy at the Washington DC Navy Yard. With that contract, CHM gained financial stability and was able to hire the support staff and infrastructure to grow in future years. But more importantly, CHM was able to leverage the experience and track record from the successful performance of this contract, and win several other contracts.

By 1999, CHM’s sales had grown to about $20 Million. The company’s remarkable growth resulted in the company winning the Virginia Business Magazine’s 1999 Vanguard Award as the fastest growing private company in the Commonwealth of Virginia and achieving national ranking in Inc Magazine’s Inc. 500 for several years (including #12 fasted growing private company in 1999).

CHM continued to grow and open offices. The company wisely competed to win several important “Government Wide Acquisition Contracts” (GWACS). This would prove to be a great strategy, as GWACs were becoming the contracting vehicle of choice for government agencies. Since most of these contracts were fully competitive, it was also an important part of the company’s plan for survival in its “post-8(a) life”.

In recent years, In 2001 Mr. Cheng was awarded the KPMG Entrepreneur of the Year for Hampton Roads. In 2003 CHM was recognized as the first Greater Washington Area Government Contractor of the Year (for businesses under $100Mil) by the Fairfax County Chamber of Commerce and the 7th largest Asian-American owned business in the US by Asian Business News magazine. CHM has also been recognized as one of the top 100 Federal prime contractors by Washington Technology magazine, and had been in the magazine’s “Fast Fifty” for numerous years.

A large part of CHM’s success can be attributed the company’s commitment to quality and process improvement. By late 2003 CHM was independently assessed at SEI CMM level III for software development and was also certified as ISO 9001 compliant. In late 2004, CHM had also received certification for SEI CMMI Level II.

By late 2004, CHM had offices in Virginia Beach, VA; McLean, VA; St. Louis, MO; Pensacola, FL; Oklahoma City, OK and Shreveport, LA. The company had grown to over $85 million (2004) in annual revenues and a staff of over 500. By end of 2004, CHM’s DoD client base included DISA, Navy and Air Force. CHM’s Civil agency clients included Dept. of Commerce, Treasury, Agriculture, State, Department of Homeland Security, HUD, DEA, AID, FAA, HHS, Justice, Transportation and GSA.

8(a) Firm Named One of the Fastest Growing Value-Added Resellers and Solution Providers in the Country

Ellie Nazemoff emigrated from Iran to the United States in 1977 seeking opportunities not available to women in her native country. She began her career 24 years ago as a college student studying computers at Southeastern University in Washington working as a programmer for one of her professors. After earning a master’s degree from Strayer University, she started her own consulting business, marketing an office management software program for doctors that she designed and developed. Marketing brought the realization that many doctors did not yet have computers in their offices, so she bundled hardware and software together and began to sell packages.

Four years later in 1989 she started seeking out federal contracts for her business. She was forced to subcontract instead since she had no track record with the federal government. It was not easy for a woman business owner in the information technology field. Nazemoff learned the pitfalls of subcontracting when DataTech lost a number of contracts after the prime contractor it was working with lost its contract or was acquired by another firm. By 2001 DataTech had built up sufficient credentials to become a prime contractor on state and federal contracts. However, the business suffered a setback after the 9/11 terrorist attacks when the federal government cancelled some of its contracts with DataTech. Ellie applied for and received an SBA loan and went after new contracts, redirecting the firm’s emphasis to include security technology. This strategy paid off, and the firm was ranked No. 2 in the Fast Growth 100 for the 12 months ending June 30, 2004.

Also in 2004, the firm was certified under the SBA 8(a) Program. The firm is an SDB (Small Disadvantaged Business) and HUBZone certified. The SBA 8(a) Business Development Program is an essential instrument for helping socially and economically disadvantaged entrepreneurs gain access to the economic mainstream of American society. SBA has helped thousands of aspiring entrepreneurs over the years to gain a foothold in government contracting. Participation is divided into two phases over nine years: a four-year developmental stage and a five-year transition stage.

Today DataTech Enterprises, Inc. has grown to 15 employees and reported over $2 million worth of business last year. DataTech now has a string of contracts to its credit. Their clients include the Pentagon, U.S. Postal Service, Defense Logistics Agency, the Dominican Republic, and the Federal Aviation Administration. The firm’s mission is to provide premier information technology, engineering and product sales and support to DataTech’s clients with maximum return on investment.

Nazemoff credits the firm’s success to passionate dedication to customer service and her talented, dedicated staff. The company is qualified to provide work in a number of fields, but specializes in project management and has developed several software programs to help businesses in the Fredericksburg area.

A Hands-On Approach to Building a Business

Elizabeth Kent’s interest in interior design and crafts began with sewing projects she was assigned as a child by her mother. She developed her abilities into a serious hobby over the next 35 years. With the assistance of the Richmond Career Advancement Center Elizabeth earned an Interior Design Career Studies Certificate from J. Sargeant Reynolds Community College in 2001.

In 1993 she obtained a business license and began Decorative Walls and Creative Arts. Through this business she combined her love of craft and home design and specialized in faux finishes. Elizabeth’s Classic Designs (ECD) began providing interior design services to the public in 1994 through her business, Decorative Walls and Creative Arts. Although business was steady and the work interesting to the proprietor, Elizabeth Kent, she began to move toward specialty furniture design, particularly focusing on custom made upholstered ottomans.

In March 2001, Ms. Kent obtained a patent for her unique ottoman design which uses the interior compartment as storage space and creates a versatile top, to be used either as a table top or cushion. This design makes an especially useful ottoman, one that is comfortable, and adds to table surface and storage. The usefulness of the general design and the array of decorative choices also make these ottomans a practical and attractive choice in any space in the home or office.

Ms. Kent immediately saw the market in the custom-made ottomans and has created more than 50 one-of-a-kind pieces during the past several years, all of which can serve as prototypes in future production.

Ms. Kent stumbled on the Commonwealth collegiate theme and has developed those contacts and themes as a central portion of her business. She presented her University of Richmond spider mascot ottoman to the licensing agency for the college and was accepted as a vendor in September 2004. Ms. Kent currently has a license with North Carolina State University and is researching several other state colleges, including William & Mary, James Madison, UVA and Virginia Tech.

Last year when Elizabeth began researching manufacturing options for her collegiate ottomans, she contacted New Visions, New Ventures, an SBA Women’s Business Center in Richmond, for help. New Visions New Ventures helped Kent to create a business plan. They put her in touch Mississippi State University who has a furniture manufacturing program. Jilei Zhang of Mississippi State University has been working with Kent and suggested that she consider manufacturing her product in China. Kent recently sent her first samples to China to identify manufacturers who would be interested in producing the collegiate ottomans. Locally in Richmond she is setting up a Richmond warehouse and manufacturing location for her domestic line of ottomans at the Jefferson Davis Enterprise Center.

Along with the collegiate lines, Ms. Kent plans to develop a home interior line, featuring a diverse collection of floral and geometric patterns. Some will also have popular themes, such as chess, gardens and books. The home interior line will be manufactured in Richmond and features hand craftsmanship.

Elizabeth also shares her artistic talents with the local community. Last year she taught a Chesterfield County Adult Education Class on Innovative Decorating w/Stencils and Faux Finishes. In the past she has donated furniture items for a silent auction to support the PTA of a local elementary school.

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