THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Monday, October 3, 1994 TAG: 9409290362
SECTION: BUSINESS WEEKLY PAGE: 13 EDITION: FINAL
TYPE: Cover Story
SOURCE: BY CHRISTOPHER DINSMORE, BUSINESS WEEKLY STAFF
DATELINE: HAMPTON LENGTH: Medium: 97 lines
Mahesh B. Shah owes part of the success of his construction company to a federal program created to boost companies owned by minorities.
Shah immigrated to the United States from India 25 years ago, and later founded SEEMA Inc., a Hampton construction company that pulled in $21.7 million worth of federal contracts in the latest federal budget year.
SEEMA is one of dozens of Hampton Roads companies that have thrived in the special 8(a) program, created by Congress to set aside a certain portion of contracts for qualifying companies owned by minorities.
But now SEEMA is on its own. Minority companies are eligible for set-asides for nine years, then must competitively bid contracts on a level playing field just like everyone else. Many don't make it.
Last year was SEEMA's final year as an 8(a) contractor. Nearly two-thirds of the contracts it won in the 1993 federal fiscal year were through the set-aside program.
Under the program, federal agencies set goals for the percentage of dollars they want to spend with minority-owned contractors. To qualify for the 8(a) designation, a company must be at least 51 percent owned by a minority.
Qualifying contractors market their services directly to federal agencies. When a job comes up that a minority contractor can fulfill, the agency negotiates a contract with the company rather than putting it out for bids.
The advantage that gives minority contractors amounts to a tremendous company-building tool. Nearly 50 companies in Hampton Roads won $173.5 million of federal contracts through the program in the federal fiscal year ended Sept. 30, 1993, according to federal procurement data. That's about 8.3 percent of all federal contracts let to companies in the region.
Much of SEEMA's growth came as a result of the program. Shah founded SEEMA in 1980, seven years after graduating from Old Dominion University with an engineering degree. In the interim he'd worked for a variety of Hampton-based federal contractors, but he knew that to get ahead he had to start his own company.
SEEMA, known as Systems Engineering and Energy Management Associates Inc. until it recently outgrew that name, was originally an engineering and construction firm. Its first contract involved installing solar collectors at the airport in Greensboro.
The firm didn't get its first set-aside contract until 1984. ``The company was not started because of the 8(a) program,'' Shah said.
SEEMA blossomed after 1990, when it won about $1.1 million of federal contracts. The company de-emphasized its engineering work and focused on construction. The next year it won about $7.1 million on contracts.
By 1993 that number had tripled, but it was the last year SEEMA was eligible for the minority set-asides.
This year SEEMA's still growing, but not at the same pace, Shah said. The firm employs about 120 at job sites throughout Hampton Roads.
It's growing because the company began planning for the day it would have to compete in the open market several years ago, said Larry Dennis, who was recently named president of SEEMA after seven years with the company.
The company is carving out a niche in long-term general maintenance and construction contracts for military bases. It won a five-year, $24 million contract for such work from Langley Air Force Base in 1992. Last year it won a three-year, $6 million contract for similar work at Norfolk Naval Base.
Both the Navy and the Air Force are increasingly turning to such contracts because they allow bases to use one contractor for small- to medium-sized jobs instead of putting each job out to bid.
And SEEMA's ready to take advantage of the trend. It's competing for such contracts on a national level at bases from the East Coast to Hawaii, Dennis said.
``With the downswing of defense spending, the military's going to have to maintain facilities and upgrade them because they can't get new,'' Dennis said. ``We've been fortunate in the past few years because we've been able to position ourselves as one of the providers of this service.''
Between the maintenance contracts and other jobs, Shah and Dennis now aim to grow SEEMA into a $50 million business within five years.
Shah and Dennis argue that SEEMA has succeeded not so much because of the set-aside program, but because the company is good at what it does. ``You develop based on your performance,'' Dennis said. ``The cornerstone of performance in 8(a) is excellence.''
And ``the great American entrepreneurial spirit,'' Shah said. MEMO: [For realted stories, see page 12 of The Business Weekly for this
date.]
ILLUSTRATION: Staff photo by MOTOYA NAKAMURA
SEEMA Inc. Chief Executive Officer Mahesh B. Shah, left, and
President Larry Dennis.
TOP 10 MINORITY-OWNED FEDERAL CONTRACTORS
STAFF
[For a copy of the list, see microfilm for this date.]
NOTE: This list measures contracts won by companies using the 8(a)
program, but may not include all of a company's contracts or all
minority-owned companies.
KEYWORDS: FEDERAL CONTRACTS MINORITY by CNB