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Small defense contractors are big successes

By: WAYNE HEILMAN
August 26, 2012
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photo - Brad Michelson is vice president of Infinity Systems Engineering. Photo by JERILEE BENNETT, THE GAZETTE
Brad Michelson is vice president of Infinity Systems Engineering. Photo by JERILEE BENNETT, THE GAZETTE 

Several small and midsize military contractors in Colorado Springs are thriving and adding staff, while their larger competitors are looking to layoffs in the face of automatic Department of Defense cuts scheduled to take effect in January.

Boecore, Braxton Technologies, Infinity Systems Engineering, Intelligent Software Solutions and TechWise each have added more than a dozen employees in the past year, have open positions to fill and plan to continue hiring during the rest of the year to complete pending military contracts. All five companies specialize in software development, systems engineering, information technology or training, mostly for various Air Force commands, and so far have not been affected by recent Defense Department budget cuts or the upcoming cuts required by the Budget Control Act of 2011.

A recent study by George Mason University estimated that 1 million aerospace and defense workers — including more than 17,000 in Colorado — would lose their jobs if the automatic cuts take effect. The cuts could be felt as soon as the end of October under federal laws that require employers to give 60 days notice for layoffs of 50 or more workers.

Defense contracting has been among the fastest-growing parts of the Colorado Springs economy. Contracts awarded in El Paso County grew by nearly five times since 2000 to $3.88 billion, including nearly 30 percent growth last year, according to a database compiled by governmentcontractswon .com. Contracts held by companies in the county account for nearly half of the statewide total and have grown nearly twice as fast as in the rest of the state, according to the site.

Boecore President Tom Dickson said his company and smaller contractors continue to grow because “there is still a lot of focus on small business” with both the DOD and the rest of the federal government, including work that is set aside for smaller companies or those owned by veterans.

For example, Boecore was one of 385 contractors selected by the Navy last month to compete for up to $5.3 billion over the next two years in logistics, engineering, information technology and training tasks, much of it set aside for small firms.

Brian Binn, former president of military affairs for the Greater Colorado Springs Chamber and EDC, said small defense contractors also have been winning more contracts in recent years because they generally have lower overhead costs than defense giants such as Lockheed Martin, Northrop Grumman and Raytheon.

“All of this is good for our community and local economy, even if all of the jobs aren’t created locally. Since all of these companies are based in Colorado Springs, the profits stay here,” Binn said.

INFINITY SYSTEMS ENGINEERING

Infinity Systems Engineering has nearly doubled its staff and revenue during the past five years as its contracts for software used to control the Global Positioning System network of satellites have expanded and it has won additional work on a new military communications satellite network.

The Colorado Springs-based company employs 90 and expects to generate $18 million in revenue this year, with more than half of its staff working on contracts involving the GPS satellite network, said Brad Michelson, Infinity’s vice president. Infinity’s software engineers maintain the satellite network by uploading new timing and mission data to add additional capabilities and ensure the data from each satellite remains the most accurate possible. The company also is a subcontractor to Lockheed Martin to develop the next generation of the network.

Infinity won an $8.2 million contract, its first major prime contract, in June to provide technical services, systems administration and software development during the next 4½ years on the Milstar/Advanced Extremely High Frequency communications satellite network. The contract had been awarded 1½ years ago to Infinity and subcontractor Integrity Communications Solutions, but the previous contractor unsuccessfully protested the award. Integrity has added five people to its three-person staff to complete the subcontract.

Infinity was started in 1996 by Andreas “Andy” Wilfong, who previously worked as a systems engineer on the GPS system with both ARINC and Overlook Systems Technologies.

“We want to hire brilliant people and give them opportunities throughout their career so they stick around with the company. That saves money on restaffing and retraining,” Michelson said. “Our mission and vision is to have highly qualified staff who have a passion for supporting the war fighters. We offer fully paid health and dental insurance, bonuses, profit-sharing, a contribution of 10 percent of our salaries to our 401(k) retirement accounts and a five-day company-paid trip, all of which has helped us retain a large percentage of our staff.”

The benefit package has helped Infinity to be named by ColoradoBiz magazine as the best state’s best small company to work for in four of the past five years.

The company also operates offices in Denver, Arizona, California, Pennsylvania and
Virginia. Michelson said Infinity could add up to 50 employees if it wins two contracts on which it has bid as prime contractor that are scheduled to be awarded by year’s end.

ISS

Intelligent Software Solutions is hiring so many people that the Springs-based defense contractor has opened a small office in Greenwood Village to tap into the Denver area’s “strong technology workforce” to fill some of its software-development openings that had remained unfilled for months.

About 15 of the company’s 825 employees work in the Greenwood Village office, which opened last month. Before opening the office, the company had 50 open positions it couldn’t fill because workers from the Denver area were didn’t want to commute to jobs based in the Springs, ISS President Jay Jesse said.

The Denver expansion hasn’t slowed the company’s growth in the Springs. ISS has moved into another 25,000 square feet of office space in a nearby building in the Colorado Springs Technological Center off Rockrimmon Boulevard. About 500 of the company’s employees work in about 150,000 square feet of office space in the two buildings, with the rest of its workforce scattered among offices in Florida, Massachusetts, New York, Virginia, Washington, D.C., Afghanistan and various military bases.

“We typically add four or five people every pay period and generally have 20 to 25 open positions at any one time. If we win the three contracts we are bidding on by the end of the year, we will probably add another 40 to 50 people,” Jesse said.

ISS expects to generate a record $200 million in revenue this year, but Jesse said he expects the company’s growth to slow next year amid defense-budget concerns. Even if the automatic cuts happen, he said ISS would slow its hiring rather than lay off any employees.

“We thrive in environments like this because our value proposition is that we offer low cost and efficiency, building systems for 20 or 30 percent less than the large contractors because we can complete them faster,” Jesse said. “We are very conservative in our hiring and our technology crosses over dozens of projects.”

TECHWISE

TechWise has doubled its staff to nearly 200 employees in the past year, after winning $26 million in training program-development contracts and contract renewals with the Air Force, Army and the government of the United Arab Emirates.

The Colorado Springs-based company has hired 70 people to work in its office in Dubai to help the United Arab Emirates government design training programs for military, homeland security and emergency preparedness. Another 30 new hires are working on new or renewed contracts for military training development, logistics and facility support at Peterson and Schriever Air Force bases, Fort Benning in Georgia and Fort Sill in Oklahoma.

The expansion is the product of a two-year effort begun when TechWise launched a subsidiary in Dubai to seek contracts in the Middle East and Europe in the wake of staff cuts that claimed half of its workforce as military customers shifted work from contractors in-house. TechWise CEO Shawnee Huckstep said the growth is expected to boost the company’s revenue to a record $20 million this year;  she expects revenue to jump to $35 million next year.

“Smaller companies can be more agile, responsive and flexible,” Huckstep said. “It is no longer business as usual. The days of getting a contract then having it automatically renewed are over. We have to constantly prove our value and come up with new and innovative ideas.”

BRAXTON TECHNOLOGIES

Braxton Technologies has added 20 employees in the past year to expand its staff to 105 from additions to contracts with the U.S. Department of Energy and Air Force Space Command, said Kenneth O’Neil, the company’s president and chief operating officer.

The military software-development contractor has thrived by offering budget-conscious government customers a lower-cost option of buying and customizing off-the-shelf software that can be completed in a few months rather than several years, O’Neil said.

“Under Braxton’s Energy Department contract, the company is helping the Lawrence Livermore National Laboratory in California turn research into marketable commercial products. As that contract has grown, the company’s workforce on that project has grown from four to 22, O’Neil said.

Much of Braxton’s work for Space Command in the Springs and the Air Force Space and Missile Command in Los Angeles involves automating tasks such as satellite control.

The company could add up to 60 additional employees in the next six months if it wins contracts on which it is bidding, O’Neil said.

“We are teaming with smaller players in the defense industry to put together more nimble teams for work where the government is looking for a much cheaper alternative,” O’Neil said. “In the past, the contracting model was that the government would reimburse your costs. That has changed to the lowest-priced, technically-acceptable bid. That means you are bidding a fixed price, so you need a team to deliver a project on schedule because the team has to eat any overruns and lose money.”

Braxton is growing so fast it has already outgrown a downtown building that a limited liability company including its majority owner, O’Neil Group, acquired a year ago. O’Neil said the company is looking for office space in nearby buildings.

BOECORE

Boecore has added 22 employees in the past year to expand its staff to 160, mostly due to a $12 million subcontract awarded late last year to continue work on the Ground-based Midcourse Defense element of the ballistic missile defense system.

The Colorado Springs-based software-development and information technology defense contractor works with Northrop Grumman on mission engineering, modeling and simulation, enterprise networks, cybersecurity and training under a seven-year contract valued at $3.48 billion awarded to a team headed by Boeing. The ground-based element is designed to destroy intermediate and long-range ballistic missiles in mid-flight; the latest contract is for development, manufacturing, testing and training for the system.

Boecore President Dickson said the company has five to 10 openings and could add up to 60 employees if it wins other contracts that are set aside for small businesses.

Contact Wayne Heilman: 636-0234 Twitter @wayneheilman

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