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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.