Rodney P. Hunt has a lot on his plate. His 14-year-old son, Bradley, has a basketball game, one of hundreds for the year. Then there are the finishing touches on his palatial 52,000-square-foot home, a meeting for his charitable organization, and the drive to his mother’s house to prepare her income taxes.
Oh, by the way, Hunt also runs RS Information Systems Inc., a consistent growth leader of the BE 100S. Ranked No. 16 on the BE INDUSTRIAL/SERVICE 100, the firm grossed $328 million and has 1,600 employees.
A visit to the company’s McLean, Virginia, offices reveals both the success of the business and the CEO’s involvement in community affairs. Gilded plaques proclaiming RSIS a vendor of choice and model of business excellence by more than a dozen government agencies are mounted beside crystalline awards recognizing the 46-year-old Hunt for his charitable endeavors. In fact, nearly 10% of the company’s profits are used for altruistic pursuits.
But such things would not have been possible without the meteoric success of RSIS, an information technology powerhouse that provides a host of technical services for the U.S. government. They include a $37.2 million upgrade of 158 Doppler weather radars that improved the national weather forecasting system and a $111 million contract to provide a range of technology services–most likely top-secret–for the Defense Advanced Research Projects Agency, an arm of the Department of Defense.
Then there’s the Department of Energy award for which Hunt formed a joint venture with 1 Source Consulting Inc., another black-owned contractor, to land the $1 billion deal. That contract, other subsequent awards, and the funneling of certain RSIS business into the new joint venture named Energy Enterprise Solutions Inc. (EES) transformed 1 Source into a BE 100S company in its own right. “Thanks to the team agreement with RSIS and a significant amount of their help, we were able to land just shy of a $400 million contract with the Department of Homeland Security,” says William Teel, CEO of 1 Source. “His outreach to small businesses has just been tremendous. But for some reason, he decided to take a chance on me, mentor me, and give me some opportunities. I don’t know why, but I’m more grateful than words can ever describe.”
This alliance is an example of something all too rare in the world of black business: a black-on-black joint venture. It’s also a good example because it worked. That would not have been possible without Hunt’s mandates for RSIS to do business with smaller and minority-owned vendors. “It’s no secret that the Small Business Administration 8(a) program helped us develop the strong foundation on which to grow,” says Hunt. “I’m grateful for that, so I decided to emulate the government and set up an internal small-business rep to create a portal in which companies that want to do business with us can submit their qualifications.”
Perhaps the most successful graduate of the 8(a) program, RSIS is on an impressive growth track, maintaining double-digit revenue increases for just about every year since its incorporation in 1992. An 8% drop on the top line for 2006 is attributed to migrating some $80 million in existing contracts (and a few hundred employees) to the EES joint venture. However, with a 49% ownership stake in that business, RSIS gained about $7.5 million in profit. Because of this phenomenal growth, the future prospects of the company, and its CEO’s penchant for mentoring other entrepreneurs, BLACK ENTERPRISE has named RS Information Systems its 2007 Industrial/Service Company of the Year.
DOING I.T. RIGHT
The government services marketplace has been a very active and favorable business environment. It’s generally not subject to the peaks and valleys of commercial sectors, which are susceptible to the ebb and flow of corporate spending. In the commercial space, a contractor could gain 25% one year and none the next. A company properly positioned in the government arena, however, can expect 5% to 10% annual growth. The expansion and relative stability of businesses in this area has attracted a lot of private equity, especially black-owned government contractors.
hunt’s success in information technology is creating opportunities for other entrepreneurs.
RSIS consists of three divisions. Its Defense Programs unit is the largest, representing 39% of the company’s revenues. It handles all the business for such agencies as the Department of Defense. The Civilian Programs division (36% of revenues) oversees government agencies directed toward the populace, such as the Department of Transportation and the Department of Labor. The Science & Engineering division (25% of revenues) handles technical projects for such agencies as NASA.
Much of RSIS’ growth is attributable to defense contracts. “When I started, I think it was the smallest of the three, but now it’s the largest and we see it continuing to be that way,” says Kirk Herdman, senior vice president of Defense Programs. “Our growth numbers indicate that we expect it to go up 15% to 20% this year.”
Maintains John C. Allen, co-head of the defense and government services group for BB&T Capital Markets/Windsor Group, a Reston, Virginia-based investment banking firm, “They’ve played it right. They leveraged some set-aside opportunities and now have become more full and open, competing out there on the same playing field that everyone else is and continuing the success they had in their earlier days when they were competing for small-business set-aside opportunities. It shows you what can be accomplished.”
AN ENTREPRENEUR FROM THE BEGINNING
There’s an old adage: Entrepreneurs are born, not made. That maxim holds true in the case of Hunt. He started his first business–mowing lawns–at 14. A year later, the native of Fort Washington in Prince George’s County, Maryland, had dozens of kids working for his business, which he says generated substantial revenues. When he was 16, a major-league baseball team drafted him out of high school, offering him a five-figure signing bonus to pitch in its minor-league system. But at the time, an academic scholarship to Cornell University was also on the table, and it was his parents’ dream that young Hunt become the first member of the family to attend college.
After graduating from Cornell, Hunt played in the minors for the Washington Black Sox while working as a systems engineer for IBM and Kenrob and Associates during the off-season. That is, until a torn rotator cuff ended his career at the age of 26. “Though I loved the game of baseball, I was always a student first,” Hunt says. “So as tough as it was to have my career end so early, I was prepared for and looking forward to a professional life after sports.
With his athletic career grounded, the 6-foot-7 Hunt continued to gain critical experience as a senior associate for Booz Allen Hamilton, a $3.7 billion global strategy and technology consulting firm, where he led the Technical and Engineering Systems Group in providing support to government and commercial clients. In 1990, Hunt became marketing director for Information System Networks Corp., a Bethesda, Maryland-based IT firm. It was there that Hunt learned of the SBA’s 8(a) program, which enabled minority businesses to gain set-aside contracts from government agencies. He also met W. Scott Amey, who would become the ‘S’ in RS Information Systems (the ‘R’ stands for Rodney).
The partners applied for the 8(a) designation. In September 1992, RS Information Systems was incorporated, with Hunt as majority shareholder through his ownership of 60% of the business.
It takes money to make money and, as with most startups, getting adequate funding was no small feat. Hunt and Amey put up $5,000 in cash and secured a $150,000 line of credit with First Union Bank, putting up both of their houses as collateral. They also brought in a minority in
vestor, Ron Trowbridge, who is currently the company’s executive vice president. In their first year of business, the company generated $327,000 in revenues.
AN OVERWHELMING LOSS
Only months after launching the business, Hunt suffered a devastating loss when his wife of three years was killed in a traffic accident, leaving then 32-year-old Hunt a widower with a 14-month-old toddler. “I just didn’t want to be another one of those guys who says, ‘Here mom and dad, you raise him while I go and chase my dream,’ he says. “I probably never even thought about the sacrifices I made. It was just something I had to do.”
Hunt split his energies between his son and the business, but Bradley always came first. “I was in a meeting one time and Bradley was maybe 3 or 4, and I got a call from an official at his school who said he had a temperature of 100.3. At 100, they call you and you have to go pick him up. And I was in the middle of a presentation and I didn’t think twice about it. I just excused myself and said I had a family emergency and said I had to go right then and there.”
While the business grew quickly, success didn’t come easily, and there were some missteps along the way. In 1994, RSIS took on a project that Hunt admits the fledgling company wasn’t ready for: a fixed-price contract to deliver a document imaging system for the Department of the Interior. “It was a new technology, and we weren’t as knowledgeable about it as we should have been,” recalls Hunt. The $270,000 contract cost RSIS nearly $600,000 to deliver since at the time it did not have the software development expertise. “We took a bath. For a company doing $1 million a year, at 10% profit, it ate up the profits and then some.”
Hunt says the turning point for the company came in 1995 when RSIS was generating about $3 million in revenues. “We had more inquiries for our services and expertise than we could handle with the size of the staff,” he says. “We knew that the next year we would triple and be a $9 million to $10 million a year business. What I thought we would achieve in 10 years, we achieved in three years.” Hunt points to outsourcing as a large contributor to the company’s growth when it was still in its beginning stages. RSIS outsourced support teams to do the payroll, accounting, and taxes.
By 2003, RSIS was graduating from the SBA’s 8(a) program. This is a make-or-break time for some of the program’s minority-owned firms, because leaving the nest means no more bidding on contracts reserved for “disadvantaged” businesses. It also means being a smaller fish in a much bigger pond, where the small fish often get eaten. “We’re no longer small by any government standards, so we can’t bid on any restricted procurements,” says Trowbridge. “This means every day we wake up, we have to book new business. And we have to do that competing against Lockheed-Martin, Northrop Grumman, CSC–the big guys.”
But the RSIS team is up to that challenge, providing a host of services for any IT project and maintaining and updating it throughout its lifespan. “I like to design things and see them through implementation and into an operational mode. If you go in and say, ‘Here’s a study we did and here’s a roadmap to getting it done,’ it becomes a $300,000 paperweight,” Hunt says. “We combine the management consulting and engineering approach with the systems integration and implementation approach to provide a lifecycle contractor.” This approach has led to rave reviews from government clients.
“Having worked in the technology field for over 25 years, I have found RSIS to be extremely customer-oriented and willing to provide strong customer support,” says Linda Estep, Job Corps IT Manager. RSIS deployed Voice over IP services to 122 Job Corps centers, saving the government more than $1 million annually in long-distance service costs. RSIS also developed a management tool that enables the Job Corps to track the life cycle of a student from the time they walk into a recruiter’s office through training, graduation, job/education placement, and post placement follow-up.
This kind of positive feedback is invaluable in the world of federal contracting. “As the scope of these federal contracts continues to get larger, [agencies] want to find companies that can do it all,” says John Slye, senior industry analyst at INPUT, a Reston, Virginia-based provider of information services to the government IT community. “If companies can’t compete on the huge billion-dollar-plus initiatives, they need to bring something to the table so that they’re a significant subprime player.”
And that’s what Hunt planned to do three years before graduating from the program. “We started bidding on less set asides and focusing on $20 million, $50 million, and $100 million jobs,” he says. “We still had that safe umbrella to maintain and grow, but we needed to understand how to compete in a larger, more competitive arena.”
Two years after leaving the 8(a) program, founding partner W. Scott Amey retired, leaving Rodney to assume the additional role of chief operating officer. Hunt and Trowbridge purchased Amey’s shares, becoming the company’s sole shareholders.
GIVING BACK
Hunt learned from his parents that when one is blessed with success, giving back is required. So when he heard that Prince George’s County’s Run N’ Shoot Athletic Center was shut down, he decided to do something about it. The previous owners pulled out because the high crime rate in the area kept customers away. In its heyday, the 10-court facility hosted two minor-league basketball teams and amateur basketball tournaments. “The catalyst that got me to go forward with it was a story I heard on the news about a young boy that was selling teddy bears to try to raise enough money,” Hunt recalls. “He had no idea what it would take to reopen the gym–the people who were involved before had taken their profit and were long gone. There were liens on the equipment, from the back boards to the nets. But that gym meant so much to this young kid, so I called my attorney and said ‘Let’s go do this.'”
Hunt invested about $1 million in the 113,000-square-foot facility, renaming it the Capital Sports Center. The money helped purchase new equipment and renovate bathrooms, team rooms, the kitchen, store, and other areas. There is also a VIP workout facility where local professional athletes can train privately.
GOING PUBLIC?These days, RSIS is providing several services to the government. A recent project was a war games scenario for the Air Force that included U.S. allies Canada, Britain, and Australia. “We modeled what could happen in the year 2025 against our satellite assets and how we would defend those and launch counterattacks against adversaries, and had parts of the Department of Defense and national intelligence agencies together to play in that war game,” says Herdman. In the simulation, events would unfold and the participants would develop strategies in reaction. Those strategies were examined by a think tank of analysts to determine their effectiveness. Needless to say, the results are classified.
Hunt admits that he’s spent a lot of time pondering the future of his company and weighs the possibility of an IPO, which would make him one of four publicly-traded BE 100S companies. With a backlog of about $1.3 billion over the next five years, it could be attractive to the financial community. “I have thought about going public, merging with another company, acquiring companies,” he says. “I’m basically doing my research now so I can make an informed decision about the direction of the company. We’ll need to do something in the next year or two.”
Often companies of RSIS’ size become acquisition targets for large corporations, or they seek to acquire smaller companies to gain critical scale. “T
here’s been a continuing trend of consolidation, so [there is] more and more shrinkage of those companies in the middle–the $100 million to $500 million a year in business,” says BB&T’s Allen. But there are challenges here too. Going public opens up a whole other box of reporting requirements and administrative overhead that would affect how RSIS’ management team handles its operations and plots its business strategy.
Another option Hunt and his team are mulling over is an acquisition that would place RSIS into strategic markets such as the intelligence community, where the company doesn’t have great penetration. “There are very large budget appropriations there, but it’s very hard to break into the intel world. So we’re looking at firms that have that capability.”
Hunt has achieved wealth, respect, and many levels of success. And he has a lot of big decisions on the horizon, not the least of which are the details of his upcoming marriage to Judith M. Wasserman. But first, there are his mother’s income taxes. Though he can afford a team of accountants, his mother insists he do it personally. Despite his hectic schedule, he finds the time. He believes it is the least he can do for her.
“I probably don’t even know the things she went through to make sure we had a good life,” Hunt says soberly. “I love my parents to death and I would give them my heart if I had to.”
B.E. 100s Flashback
When the Top 100 debuted in 1973, BE profiled Johnson Products Co. and founder George Johnson as the model of black business excellence. With sales of $17.5 million, the maker of Ultra Sheen and Afro Sheen was the sixth largest black enterprise in the country.
In the 10th Annual Report on Black Business in 1982, BE made the Company of the Year designation official, highlighting firms that displayed superior performance. Our editors’ choice: Percy Sutton’s Inner City Broadcasting Corp. No. 20 on our list with sales of $22 million, the radio broadcaster was making its foray into cable television and was considered one of the nation’s largest black media giants