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Chesapeake federal contractor wins small business award

AVMAC LLC co-founder and CEO Roberto “Bert” Ortiz was floored to learn he was named Small Business Person of the Year for the Small Business Administration’s Virginia District. He was also second runner-up for the SBA’s National Small Business Person of the Year. “I couldn’t believe it,” Ortiz says of the awards handed out in May.

Chesapeake-based AVMAC is a federal contractor for aviation and shipboard maintenance, logistics and program support. The company was SBA Virginia’s 2014 Sub-Contractor of the Year and in 2016 was named SBA’s Region III Prime Contractor of the Year. AVMAC also received the 2016 Virginia Governor’s Award for Best Veteran Hiring Practices.

Ortiz was chosen for this year’s SBA awards in large part because of the company’s community involvement. “Their whole focus is to give back to the veteran community. They are involved in a variety of community projects,” says SBA Virginia District Director Carl Knoblock.

Ninety-four percent of AVMAC’s employees are veterans and the company supports several veterans organizations. “We like to target vets for employees,” Ortiz says. “We understand the culture and want to keep that culture.”

A three-person panel made up of employees from federal agencies chooses the annual SBA Virginia winner. Judging is based on community involvement, company success, longevity, and financial and employee growth.

A retired U. S. Navy commander, Ortiz co-founded AVMAC in 2009 with fellow retired Navy Commander Don Buzard. AVMAC now has more than 385 employees. “We got our first subcontract in 2010, and since then we have doubled our revenue every year except the last two years,” says Ortiz. “We’ve had an upward climb in growth.”

Currently the company has 18 contracts and works with the Navy, U.S. Marine Corps and the U.S. departments of Defense and Transportation as well as a commercial client. “At Air Station Miramar in California, for example, we do aviation maintenance and work side-by-side with the Marines. It was one of our first contracts, and it’s still an active contract,” Ortiz says.

The company hopes to win contracts with the U.S. Army and Air Force. “We want to pursue a more engineering slant and provide test support for the Army, Air Force and NASA,” Ortiz says.

‘Extreme events’

It’s rare to get through a week without some type of weather-related event threatening or impacting millions of people across the nation. Climatic disasters — ranging from hurricanes and floods to droughts and wildfires — appear to be on the rise.

Last year, the U.S. experienced 14 separate billion-dollar disasters, according to the National Oceanographic and Atmospheric Administration (NOAA). It was the fourth-highest yearly total number of such events, following 2011, 2016 and 2017. This year — as of early April — there had been two events (flooding and a severe storm) in the U.S., each with losses of more than $1 billion.

In the future, look for “more extreme events and conditions such as higher tides,” says Kristiane Huber, resilience fellow at the Center for Climate and Energy Solutions in Arlington. “The 2018 National Climate Assessment lays out the impacts we’ve already observed and can expect in the coming decades.”

Global temperature has increased by about 1.8 degrees Fahrenheit since the beginning of the 20th century, and “we expect another 2 degrees of warming by 2050,” Huber says. “The past four years — 2015, 2016, 2017 and 2018 — were the four hottest years in modern history.”

Changes affecting the weather give businesses “a whole new area of risk to explore and plan for,” says Andrea S. Brazil, executive vice president of the risk management and consulting group at Towne Insurance in Virginia Beach. “They need to consider the impact of increased flooding or windstorm damage, supply-chain delays from vendors and, for some agricultural customers, changes to their growing season and crops.”

A ‘safety culture’
Changing climate conditions require business leaders to be fully engaged in protecting their assets, risk management experts say. “It’s forcing businesses to create and cultivate a safety culture,” says Nancy Ahrens, risk adviser for Scott Insurance in Richmond. “Climate falls into that fabric of safety. It has to be an all-the-time, every-time mindset. Everyone in the company has to be fully engaged.”

Businesses should spend time putting together business continuity plans that include how to prepare “for an approaching storm or flood, how to react in the short term to damage and to ensure some measure of continued operations, and, lastly, how to maintain their customer service in the long term,” says Brazil.

Businesses often don’t put enough attention on planning for weather-related disasters. Companies that don’t think about a plan “until a weather watch or even a warning is issued have much lower chances of survival,” says Rob Stiles, senior vice president, risk services, at Marsh & McLennan Agency in Richmond. 

“The key components of a business continuity plan need to be in place well before a natural disaster strikes to ensure that a company is prepared, can respond and, more importantly, can recover to normal business operations with minimal downtime,” he says.

Exposure to risk
Businesses also need to take weather into consideration when they are considering acquisitions or expansions in their operational footprint. “You want to do your due diligence as it relates to the potential for catastrophic weather events,” says David Schaefer, president and CEO of Leesburg-based AHT. “When you are considering expanding, merging or opening a new location, review the exposure to catastrophic risk, particularly if there will be significant assets potentially in harm’s way.”

Hampton Roads is among the areas in the state most susceptible to hurricanes, flooding and high winds because of its coastal location. Nonetheless, families and businesses continue to build in flood-prone areas. “Nobody wants to stifle the economy, so more and more coastal development continues,” says Ahrens. “People love coastal property, so we have to proactively manage the risks inherent in these areas.”

Businesses located in coastal areas may have higher deductibles on their property insurance policies because of their exposure to high winds, hurricanes and flooding. “In Virginia Beach, for example, some insurance companies may want higher deductibles on wind and the flood coverage placed through the federal government. They may put a percentage deductible of 5% on the value of the building,” says Roy Bucher Jr., chairman of Lunsford, a Trustpoint Company, in Roanoke.

A company with a $1 million building and a 5% wind deductible, for instance, would be responsible for the “first $50,000,” Bucher says, noting some insurance companies apply the higher wind deductible to areas east of Interstate 95. “Some don’t want to write property coverage at all, and some add the higher deductible. These are things that risk managers have to deal with when you are in this area.”

Sea-level rise
Coastal Virginia also is vulnerable to sea-level rise. “The whole Chesapeake Bay area is a result of an ancient meteor strike 35 million years ago that made a crater that filled with water,” says Schaefer. “The land around that strike is still subsiding, and the ocean is now rising. As a result, high-water events caused by ocean rise and extreme weather are exacerbated. In addition, as we continue to build in these areas, more insured property is at risk for water inundation.”

The rising global sea level complicates the situation. Global average sea level has risen by 7 to 8 inches since 1900, according to the 2018 National Climate Assessment. That level is likely to rise by a half a foot to more than 1 foot by 2050 and by 1 to 4 feet by 2100, the report says.

Flooding is a significant issue for any business, whether it’s located in coastal areas or farther inland. Flooding is happening today in areas that were “historically dry, safe areas and not considered flood prone,” says Ahrens. “We are seeing more wild swings of increased rainfalls. Small rivers and swamps simply can’t handle the increased levels of rain.”

Cities such as Houston and New Orleans have seen devastating downpours — 6 inches of rain in 4 hours in Houston and 4 inches in 90 minutes in New Orleans. “The risk of these types of downpours are not foreign to Virginia, so businesses need to know where they have property exposures,” says Ahrens.
Businesses in coastal areas along the East Coast are paying more for property insurance today than in the past. “If they have no losses, it’s a minimum 10% increase,” says Alan Renkin of Marsh & McLennan Agency in Richmond. “If they have loss issues, it could be up to a 100% increase.”

The insurance industry also is asking businesses to bear more of the risk for extreme weather through higher deductibles and co-insurance. “There is a significant difference in building on the sand at the water’s edge than two miles inland,” says Schaefer.

“The cost of insurance is beginning to impact the decision on where to build because of the additional expense in high-risk areas,” he says. “We are seeing this across the board but particularly in areas prone to catastrophic risk. Property insurance is going up for these areas with little prospect that it will ever go back down, at least in our lifetime.”

Tackling problems

The mission of the University of Virginia’s School of Engineering and Applied Science is to prepare students to solve global challenges. That makes it a good fit for the Commonwealth Center for Advanced Logistics Systems (CCALS), a coalition aimed at addressing logistical problems faced by companies and government agencies.

“We’re excited about what we have been able to do here at U.Va. with CCALS,” says Thomas Polmateer, research program director in the department of engineering systems and environment. “It’s made a big difference for our undergraduate and graduate students.”

Faculty and students benefit by exposure to “real-world problems and industry partners,” he adds. “It also improves student soft skills.” 
CCALS’ roots go back to 2010 when the Virginia Logistical Research Center was formed. “The center was basically a strategic plan with no articles of incorporation,” says Mark Manasco, president and executive director of CCALS. “We formally stood the organization up with bylaws and membership and called it CCALS.”

The public-private partnership utilizes the research expertise of U.Va., Virginia Commonwealth University, Longwood University, Virginia State University and Old Dominion University to tackle logistical issues. Because of its highway, rail and port assets, Virginia has been identified by consultants as one of the most promising logistics hubs on the East Coast.

Graduate students at U.Va. have worked with the Port of Virginia, the Center for Innovative Technology and the Virginia Department of Transportation on a variety of issues, such as technology innovations in container port operations.

“We are also in discussions to address advanced logistics challenges with the Virginia Department of Emergency Management and Virginia Department of Corrections,” Polmateer says.  “Health-care material and services is our next opportunity to be value-added by reducing costs through operational efficiencies, such as improving the integration and visibility of clinical and financial data.”

CCALS has broadened students’ experiences at VSU, university officials say. The organization gives undergraduates the opportunity “to meet and network with graduate programs,” says Lessie Oliver-Clark, information logistics technology instructor at the university.  “It exposes them to companies that would hire people with their skills.”

VSU students have worked on projects ranging from drone technology and autonomous vehicles to blockchain technology and the internet of things. “CCALS is a real collaborative environment for solving logistic challenges. It exposes our students to future logistic technology through research works and internships,” says Dawit Haile, dean of VSU’s College of Engineering and Technology. 

The Port of Virginia became involved with CCALS about four years ago.

“They have taken our data and broken it down for efficiency. They’ve helped with capacity expansion and improvements through modeling and simulation,” says Joe Ruddy, the port’s chief innovation officer. “We are on a tremendous expansion project of over $700 million. It’s nice to have new equipment and great systems, but in order to maximize our benefit we have to make sure our systems are optimized.”

Students have worked, for example, on projects involving ship arrivals and departures and the movement of trucks in and out of the port’s gates.

“Automation is not automatic. You are continuously looking to improve your situation,” Ruddy says. “We look beyond our gates to the railroads and the Port of Richmond. We are fortunate to have these assets and to optimize them. Groups like CCALS play a role in that. CCALS brings us closer to our customers.”

Funding, whether from private or government entities, continues to be a challenge for CCALS. “In order for us to be more successful we are going to have to figure out how to leverage more state support,” says Manasco. “We will need more funding. That is the realization. We have operated this as a startup but now are ready to move forward.”

Bank is Valley’s fourth publicly traded company

Scott Harvard saw a slight jump in First National Corp.’s stock in April the day after an announcement that the bank would begin trading on the Nasdaq Capital Market stock exchange.

“That jump was a positive,” says Harvard, the president and CEO of First National, the parent company of Strasburg-based First Bank. “The price of the stock two weeks later had increased by 10 percent.”

Trading on Nasdaq is a plus for the company. While large banks, such as Wells Fargo & Co. and Capital One, are traded on the New York Stock Exchange, “the majority of banks across Virginia are not publicly traded on a national exchange,” Harvard says, “That puts us in nice company.”

First National is now one of only four publicly traded companies headquartered in the Shenandoah Valley. The others are Edinburg-based Shenandoah Telecommunications (Shentel), American Woodmark Corp. and Trex Co. Inc., both based in Winchester.

Being on the Nasdaq creates more visibility for the company and its stock, Harvard says. “It validates us as a company and gives us credibility,” Harvard says.

Companies listed on Nasdaq have to meet and abide by certain criteria related to issues ranging from share prices to governance. “We had best practices in place for governance and that was a positive,” Harvard says.

The company chose to list on Nasdaq rather than the New York Stock Exchange because it was a “little more affordable,” Harvard says. “It has a much broader population. It’s able to accommodate large, moderate and small cap companies. We also like its ease of use.”

Being on a national exchange makes the company’s stock available to additional investors, including individual retirement accounts (IRAs) and 401(k) plans.

“Brokerage houses won’t allow clients to buy stock in small companies that aren’t listed on a national exchange,” Harvard says. “Now more people can buy our stock. Large mutual funds can buy our stock and put it in their pool of stocks.”

The Nasdaq listing also will help if the company decides to acquire or merge with other banking companies. “In the banking industry, it’s good to have currency [stock] that is credible and traded on a national exchange,” Harvard says.

In January, First National reported record net income of $10.1 million for the year that ended Dec. 31. The following month it announced an 80% increase in the quarterly cash dividend on common stock to 9 cents per share.

Grant would be utilized to create homesites

A regional industrial development authority is seeking federal funds to redevelop abandoned mine land.

The newly formed Lonesome Pine Regional Industrial Facilities Authority has applied for a $1.6 million federal grant that would fund the first phase of the Appalachian Homestead project. The project aims to convert about 165 acres of abandoned mine property.

“If successful, this type of project could be replicated elsewhere on abandoned mine land throughout the region, utilizing both public and private resources,” says Joe Fawbush, chairman of the authority.

The initial funds would be used for remediation of the mine land and development of 5-acre homesites that will be available to qualified applicants. The first stage “will also include construction of three model/demonstration homes. Phase I may also contain common properties for recreation, agriculture, etc.,” says Fawbush.

The authority also is investigating the possibility of instituting a land grant entity. “This approach could potentially increase public/private partnerships and access to other funding opportunities. This would certainly serve as an innovative approach that, if successful, could be replicated throughout the Coalfield region,” says Fawbush. 

The project also includes a test project on the benefits and cost savings from the development of small-scale solar power projects.

In addition to its federal grant application, the authority has received funds from the LENOWISCO Planning District Commission to help with infrastructure development design.

“We fully intend to look at other state and federal funding opportunities as we develop the Project Homestead concept more,” says Fawbush.

The authority also has an application that has been recommended and sent to the U.S. Office of Surface Mining Reclamation and Enforcement for approval of a 200-acre regional industrial park.

“The level of cooperation between all of the Lonesome Pine Regional Industrial Facilities Authority members localities (counties of Lee, Scott, Wise and Dickenson and the city of Norton) has played an invaluable role in their success to secure funds for innovative, regional focused projects,” says Del. Terry Kilgore (R-Gate City).

The authority hopes to begin abandoned mine land remediation and site development and planning in late spring 2020 with construction hopefully beginning in mid-summer 2020. 

“Project Homestead truly is just one of the approaches/examples that leaders in Southwest Virginia are using to think ‘outside of the box’ to let the rest of the world know what we have here,” says Duane Miller, executive director of the  LENOWISCO Planning District Commission.

South Boston building to serve many purposes

A collaboration between Microsoft and Mid-Atlantic Broadband Communities Corp. (MBC) has led to plans for the first new office building to be built in downtown South Boston in more than 40 years.

Plans for the SOVA Innovation Hub call for a 15,000-square-foot, two-story building that will house MBC’s headquarters on the second floor.  MBC operates a 1,900-mile fiber network designed to promote economic development in Southern Virginia.

Development of the Hub sprang from MBC’s need for more space. “We were out of space in the Southern Virginia Technology Park. We said if we are going to invest in a new property, let’s do it creatively,” says MBC’s president and CEO, Tad Deriso.

The Hub’s first floor will include offices, co-working space, collaborative work areas and event and training space as well as a base for Microsoft’s TechSpark Virginia efforts. Southern Virginia is one of the six TechSpark regions across the U.S. in which Microsoft provides expertise in areas ranging from computer science education to rural broadband access.

At the Hub, Microsoft will work with area residents “to acquire new skills, transform their businesses and launch new enterprises,” says Kate Behncken of Microsoft Philanthropies. “We are excited to play a role in MBC’s vision to create a world-class center that will enable this entire community to grow with the digital economy.”

MBC will spend more than $5 million in constructing the Hub. It will be located in downtown South Boston on the site of a former tobacco warehouse destroyed by a fire in 2002. Microsoft will provide programmatic support for the building project.

The Hub will work with regional partners such as community colleges, higher education centers, nonprofits and industry partners to help people learn new skills and start new businesses.

“We want to leverage what Microsoft does with what we do,” Deriso says. “An office technology building like this doesn’t exist in downtown South Boston now.”

The building will serve not only South Boston but also surrounding localities, from Emporia to Farmville to Danville.

Groundbreaking will take place this summer with a projected completion date of summer of 2020.

“What this does is it brings in Microsoft’s talent and commitment to improve digital skills training,” says Deriso. “If we want the rural community to prosper in this digital age, we want the right skills and resources. This will create those digital skills.”

Manufacturing center designed to jumpstart operations

Mark Gignac expects to see Danville’s economic development efforts rise to a new level in 2021.

That is when the $25.5 million Center for Manufacturing Advancement opens on the campus of the Institute for Advanced Learning and Research (IALR). The new 51,000-square-foot facility is expected to help the area attract up to 20 new businesses over 10 years while creating 3,600 to 4,200 jobs.

The manufacturing center is “not a business incubator,” says Gignac, IALR’s executive director. “This is purely for existing businesses to lure them to our region and start the process quickly.”

The center is designed to reduce the time it takes companies to become fully operational in a new manufacturing site. Startup time generally runs 12 to 24 months. Three of the five bays in the new building will be used as rapid-launch spaces.

“They will enable new businesses to begin limited operations offsite while they wait for their factory to be constructed and equipped to support full operations,” says Gignac. “Someone could come in with machinery and get up and running almost immediately.”

Local officials already have seen the benefits that a Japanese company, Kyocera SGS Tech Hub, found in using IALR’s building for a rapid-launch site. “In our main facility we had a high bay, and they began building their cutting tools in that space,” Gignac says of Kyocera. “Last September, they opened their new facility across the street from us.”

Following Kyocera’s example, three British companies that are coming to Danville are using the IALR building now to jumpstart operations. “We have four examples of what we will be doing in the new building,” Gignac says.

Two of the spaces in the new building will be dedicated to a process called manufacturing optimization. “Companies could rent the space to set up a piece of an assembly line to work out any kinks before they put the process on their existing line,” Gignac says.

“This is a new concept. I don’t think there is anything like it in the country for advanced manufacturing.”

The manufacturing center also will include an inspection lab and a training and demonstration facility. “It will be a platform to learn about new and emerging technology around manufacturing,” says Troy Simpson, IALR’s director of advanced manufacturing. “It’s being looked at as a technology-transfer facility where companies can transfer technology into their processes without disrupting operations.”

Critical juncture

A $20 billion federal government contract was a turning point for FedBiz IT Solutions.

In May 2015, Leesburg-based FedBiz was among the companies winning part of the 10-year NASA Solutions for Enterprise-Wide Procurement (SEWP) V contract.

“The award went to multiple resellers,” says Don Tiaga, the company’s president. “We were one of the Historically Under-utilized Business Zones companies awarded the contract.”

As its part of the deal, FedBiz provides IT-related products and support services. All federal agencies and authorized contractors can order from the government-wide acquisition contract. “To date, we have done over $125 million in the three years we have had the contract,” says Tiaga. “We have received over 500 orders.”

Tiaga and his wife, Nina, both Air Force veterans, started the company in 2011. While Don has an extensive IT background, Nina is CEO and CFO of the business, drawing on her background in accounting, office management, consulting and sales with various nonprofits and small businesses.

The company began the bidding process for the NASA contract in 2013. Winning it two years later “changed our revenue immediately,” Don says. “We went from $1 million in the first half of 2015 to another $20 million by December.”

From 2014 to 2017, FedBiz saw its revenue increase 4,375.70%, making it the company with the highest growth rate in the 2019 Fantastic 50.

The NASA contract has been a blessing for Fedbiz, but Don says the company faced some early challenges in meeting its demands. “Initially, you have to buy systems to support the contract,” he says. “You have to get them in place and provide sales team training. We had to put all of this into place to support the contract and our customers. We look at these type of challenges as opportunities.”

Don’s IT involvement began during his military service. He worked with large Department of Defense (DOD) contracts and also led the Air Force Small Computer Technical team, which provided technical support for more than 500,000 DOD users.

After the leaving the military, Don spent more than 20 years helping Beltway companies with their technology needs. During that time, he managed several federal, state and local contracts valued at more than $50 billion.

Just before the Tiagas started FedBiz, Don was vice president of business development at FedStore Corp. “We were at a point in our careers that we were ready to branch out on our own,” he says of founding the company. “We initially started as a bids and proposal consulting team. We supported other small and large business resellers as well as manufacturers with their proposal efforts.”

FedBiz focused on consulting for three years before going after IT contracts. The company’s services now range from professional services and enterprise storage systems to data-center management and cloud/virtual solutions. The company also specializes in expert-level bids capture and proposal consulting services.

The company, which has 10 employees,  works with hundreds of manufacturers to fill requests from agencies ordering through the NASA contract. “As we win more contracts that require more employees, we will bring them on,” Don says.

When the NASA contract ends in April 2025, “they will create a new contract, and we have to bid all over again,” Don says, noting his company also will bid on other government contracts.

The dramatic revenue growth at FedBiz has attracted attention beyond the Fantastic 50. The company won a spot on the Washington Technology Fast 50 in 2016 and 2017. It also was ranked on the Inc. 5000 list of the fastest-growing private businesses in the U.S. from 2016 to 2018, leading all Virginia during the first two years. FedBiz also ranks as the seventh-largest veteran-owned company on the Inc. list.

FebBiz supports several veteran organizations, including Veterans Moving Forward. The Dulles-based nonprofit provides service dogs and canine therapy services at no cost to veterans with physical or mental health challenges.  

“As a veteran-owned company, we are committed to giving back to the veteran community by supporting veteran-focused organizations through marketing, volunteering and making donations,” Don says. “Veterans have given so much to our country and continue to contribute to our community. FedBiz IT is committed to helping people in any way we can.”

‘I work for U’

Lena Trudeau has a pat answer for people who ask where she works. “I work for U,” she says. “That always starts a conversation.”

Trudeau, CEO of Arlington-based U.Group (formerly Byte­Cubed), wanted customers “up front and center” when the company rebranded in February after three acquisitions last year. “Although we have a lot of capability in the technology arena, we deploy for problems that people have,” she says. “We have a mix of technology, design, data science and consulting.”

Last year, ByteCubed acquired Chief, a well-known creative firm in Washington, D.C. “We also made two smaller acquisitions,” Trudeau says. “That allowed us to expand our emerging technology.”

Founded in 2010, U.Group now has close to 300 employees working in its Crystal City headquarters and offices in Washington, D.C. and Portland, Ore. “We also have teams that are embedded in client sites all across the Washington, D.C., area. Most are in Northern Virginia,” Trudeau says.

The company started seeing a jump in revenue in 2013. “We had gotten to the level of size and capability that we were able to differentiate ourselves with the quality of our technology and delivery,” Trudeau says. “We had organic growth through expansion of our customers. We grew with customers that took a chance on us when we were smaller.”

Last year the company was listed No. 183 on the Inc. 5000 of the fastest-growing private companies in America. It was the firm’s third time on the list.

Study finds Jefferson Lab has a national economic impact

Stuart Henderson was surprised by a recent study’s findings on the wide-ranging impact of the Jefferson Lab in Newport News.

“We returned more than three times what taxpayers invested,” says Henderson,  who is director of the federally funded laboratory, which is part of the U.S. Department of Energy Office of Science. “To see this come back so strong was very exciting for us and confirmed what we thought all the time — that there is a return on investment in the basic sciences; that science is good for driving the economy.”

The study, commissioned by the Southeastern Universities Research Association, found that the laboratory generated $556.9 million in national economic impact last year, providing income for 3,448 workers. “We provided 2,240 jobs in Virginia. We are a lab of 700 people so that’s phenomenal,” Henderson says.

In Hampton Roads alone, the lab, whose official name is the Thomas Jefferson National Accelerator Facility,  was credited with generating $269.1 million in economic impact, resulting in 2,015 full- and part-time jobs.

“The lab is a center for innovation, drawing highly skilled workers to Newport News,” says Florence Kingston, the city’s director of economic development. “It spurs the development of unique technologies, techniques and expertise that leads to the commercialization of products benefiting society.”

The lab’s economic benefits are traced to its direct spending, the commercialization of lab-developed technologies and research programs benefiting universities and schools.
Because it is a national facility, “more than 1,600 scientists from around the world come to the lab. Most are from universities,” Henderson says. “One-third of all nuclear physicists produced annually in the U.S. did their research at Jefferson Lab.”

The lab will have even more of an economic impact if the Department of Energy chooses it for the construction of a $1.5 billion electron-ion collider.  Jefferson Lab and Brookhaven National Laboratory in New York are the only sites being considered. No date has been set for a decision.
“The benefits to the region that lands such a facility have a scientific lifetime measured in decades,” Henderson says.