Large defense contractors looking for small business partners face a quieter problem than most people realize. Many qualified small firms simply lack the administrative infrastructure needed to handle government billing, and a failed audit can derail a partnership before it produces any results. Margarita Howard understood this dynamic when she built HX5, and she addressed it years before it became a limiting factor.
In 2004, with HX5 still a single employee company, Howard spent her limited capital on an accounting system purpose built for federal contractors rather than office space or equipment. The system was already familiar to government auditors and to the prime contractors HX5 hoped to work with eventually.
Solving A Problem Before It Existed
That familiarity turned out to be the point. Howard said the software was “very attractive to large businesses” specifically because HX5 already had a government accounting system in place while still a small company. Prime contractors did not need to worry about billing disputes or spend time walking an inexperienced subcontractor through compliance requirements.
That reduced friction gave HX5 access to partnerships that similarly sized firms without the same infrastructure could not reach. Primes could bring HX5 on with confidence that its books, audits, and cost reporting would hold up to federal scrutiny. In an industry where small business subcontracting goals matter to large primes chasing their own contract requirements, that confidence carries real weight.
The approach paid off over time. HX5 now employs more than 1,000 people across more than 20 states and about 70 government locations, and it has won recognition as Prime Subcontractor of the Year. The company operates today as both a prime contractor bidding on its own work and a subcontractor to larger defense firms, a dual role built on infrastructure decisions Howard made when HX5 had almost none.
The pattern points to a broader truth about federal contracting. Prime contractors do not simply want a lower price from a subcontractor. They want assurance that paperwork, billing, and cost tracking will hold up under review, and Margarita Howard built that assurance into HX5 long before most competitors thought to bother. Visit this page for more information.
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