Looking beyond 8(a)

Jill Burke

Jill Burke photo
Mark Rodriguez and Jerry Fox of Anchorage-based Environmental Compliance Consultants, Inc.
Mark Rodriguez and Jerry Fox are masters of waste. Abandoned mines. Meth labs. Oil spills. Wherever bad messes lurk, they're ready to come clean up. In recent years, the former military aircraft mechanics have turned their environmental and hazardous waste knowhow into a booming business.

But the success of Environmental Compliance Consultants Inc. came after hard work and humble beginnings.

"When we started we were just two guys and a shovel," Fox said in an interview last week from the company's newly renovated headquarters on Post Road in the industrial section of downtown that follows Ship creek east toward the mountains.

The men worked other jobs while they built their business and used their military retirement checks to help subsidize the operation. The bottom line was so tight, at one point they had to sell a plow to make payroll, Fox said.

Eleven years later, they own 27 trucks and 14 properties and boast 45 employees. They've also purchased the building in which they rented the first office for their business -- a sprawling complex complete with warehouse space, retail store and staff offices. Soon, 1,600 square feet of the basement will be dedicated to employee recreation, complete with showers, workout equipment, pool table and dance floor. Fox, adopting the military camaraderie he experienced to his burgeoning business, believes spaces to exercise and socialize are building blocks for a good work culture.

Fox entered the military at 17, Rodriguez at 18. Decades later, while working together as non-commissioned officers at Elmendorf Air Force Base in waste management, they decided to make a go of it on their own.

"We thought we could build a better mouse trap," Fox said.

Their aim? Do things better, faster, smarter. Initially, they didn't make as much money as they thought they would. A series of government programs designed to help small businesses develop and grow helped them gain footing, but the early days weren't easy. A lot of money dried up during the Gulf War. That, combined with the emergence of a Goliath class of competitors -- Native-owned small businesses -- seemed to make smaller contracts harder to come by.

Under the U.S. Small Business Administration, ECC, with Rodriguez the majority owner, became eligible for contracting preferences for minority-owned and service-disabled-veteran-owned companies. Federal agencies are required to set aside a specific percentage of contracts to fulfill award quotas within certain classes of small businesses. Businesses with economically disadvantaged owners -- designated as 8(a) contractors -- are to get 5 percent of all federal awards, service-disabled-veteran-owned businesses 3 percent, small disadvantaged business 5 percent, businesses with headquarters and employees from historically underutilized business zones (HUBzone) 3 percent, and woman-owned businesses 5 percent. Companies may register under all categories for which they qualify. According to the SBA, ECC qualifies for four of the five classes (it's everything but woman-owned) and is only one of three service-disabled veteran firms to also be simultaneously enrolled in the 8(a) program.

SBA records for Alaska show most small businesses in the Last Frontier are woman-owned -- 569 of them as of this writing -- while 350 are veteran-owned, 129 are service-disabled-veteran owned, 270 are enrolled with HUBzone, 270 are designated as small disadvantaged businesses, and 243 are certified under the 8(a) program.

Rodriguez and Fox said the ability of Native-owned firms to pursue contracts of any value, unlike other 8(a) firms, like ECC, which function under lower award limits, blocked them from work they felt ECC might otherwise have had a shot at. It's easier to award a huge contract covering a big job than parcel out several smaller jobs to more companies, they said.

Still, ECC has enjoyed success as a subcontractor in service to Native-owned firms that have landed big awards.

The men thought registering for service disabled veteran business status might help them land additional work from federal agencies, but aside from a $350,000 award from the U.S. Coast Guard in 2007, they haven't had much success. They suspect it's because veterans, as with women and minorities, self-certify their status and the SBA does not ask for proof unless investigating a complaint. That may make procurement officers leery of doing business for a firm they can't be sure isn't a fraud, Fox said.

Those concerns may exist, but a greater "chilling" effect on awards to service disabled veteran firms may be a lack of competition, said Sam Dickey, deputy district director of the U.S. SBA in Anchorage.

"It all comes down to best value for the government," Dickey said. "If you are the only person in your field that provides that service, a contracting officer is not likely to write a contract for that firm."

In 2008, $6.4 billion in federal contracts went to service-disabled-veteran-owned firms -- about half of what it would take to meet the SBA guidelines for award levels in that class, based on total awards for the year. Yet some forecast this class of business could see explosive growth similar to what happened with Alaska Native-owned small businesses in the last decade, particularly with the number of young injured veterans returning from war.

Still, ECC admits it had more success pursuing other types of awards, most notably set-asides for historically underutilized business zones, or HUBzones. Nearly the entire state of Alaska qualifies as a HUBzone. ECC, which intentionally located its office space in a HUBzone district to take advantage of the perks the designation brings, isn't alone in taking that step.

"We are seeing more and more offers come out as HUBzone set-asides than we ever did before," Dickey said.

In Alaska, 60 firms have enrolled in the program since February alone, he said.

Nationwide, in 2008, HUBzone businesses pulled in $10.1 billion in federal awards. But, as Alaska Native corporations have found, with success comes scrutiny -- an effort Dickey is personally undertaking.

"It's one of those deals where I am going to pull into the parking lot and call you on the phone and ask to come in, so there's no chance for you to fake that you have an office because I'm already there," he said. "If I pull up to an empty lot it's going to be pretty hard to convince me that you are a working business out of that location."

To reduce waste, fraud and abuse, Dickey plans to make surprise visits to 60 Alaska HUBzone businesses this year. Last year, 40 were dropped from the program after it became clear they weren't operating in an economically needy neighborhood.

Of all of the small business development programs -- 8(a), HUBzone, disadvantaged business, service-disabled veteran, women-owned -- HUBzone is the one really making a difference at the moment for ECC, Rodriguez and Fox said.

Meanwhile, the company will graduate from the 8(a) program in November 2011 (firms can stay in the program for up to 9 years), having become bigger, smarter and ready to move on.

By then, if Fox has his way, ECC's Anchorage headquarters on Post Road will have a large back deck overlooking Ship Creek. And in another 10 years, he and business partner Rodriguez would like to see the company become employee-owned. They'd like to keep their hands in the mix, but in spurts and from afar: Fox from a beach, Rodriguez from a Harley Davidson motorcycle.

"The program worked for us," he said.

Contact Jill Burke at jill(at)alaskadispatch.com.