HX5’s Strategic Investment in Specialized Systems Sets Foundation for Government Contracting Success

When Margarita Howard launched HX5 in 2004, she made a calculated decision that would distinguish her company from countless other government contracting startups. Instead of prioritizing office furnishings or marketing materials, Howard invested heavily in specialized accounting infrastructure specifically designed for federal service contractors.

“Right from the beginning, we invested heavily upfront in purchasing and implementing a specialized accounting system developed for government service contracting firms,” Howard explains. “A system we knew the government was very familiar with and that would provide us the necessary accounting tools to pass government billing audits and gain government approval for use in the performance of our government contracts.”

This foundational investment proved pivotal in establishing HX5’s credibility with both government agencies and potential prime contractors, setting the stage for the company’s expansion to over 1,000 employees across 34 states and 90 government locations.

Building Trust Through Technical Infrastructure

The specialized accounting system addressed a critical challenge facing new government contractors: demonstrating operational maturity to potential clients and partners. Federal contracting requires rigorous financial documentation and audit compliance that differs substantially from commercial business practices.

Howard’s early investment strategy reflected her understanding of government contracting fundamentals gained through military service and experience with federal programs. The accounting system became immediately attractive to larger contractors seeking qualified subcontractors to meet small business goals.

“That was also very attractive to large businesses, that we were very small at the time and that we already had this government accounting system in place that those large businesses had,” Howard notes.

This infrastructure investment eliminated barriers that typically prevent small contractors from competing effectively. While other startup contractors struggled to establish credibility or required extensive oversight from prime contractors, HX5 presented itself as a ready partner capable of handling complex federal accounting requirements immediately.

Strategic Foundation for Competitive Positioning

The accounting system investment represented broader strategic thinking about sustainable competitive advantages. Howard recognized that government contracting success required more than technical expertise—it demanded operational systems that could support growth while maintaining compliance standards.

“Those were investments a company made that were very key in the beginning,” Howard explains. “And certainly the SBA, the Small Business Administration makes those recommendations, but they don’t force you. It was a risk that we took, and it paid off.”

This calculated risk demonstrated Howard’s commitment to building HX5 for long-term success rather than quick wins. The upfront costs of specialized systems exceeded what many startup contractors considered affordable, but the investment created immediate differentiation in a crowded marketplace.

The system’s government familiarity became particularly valuable when HX5 pursued both prime contracts and subcontracting opportunities. Prime contractors could rely on HX5’s established financial infrastructure, while government agencies recognized the company’s commitment to proper documentation and audit readiness.

Operational Excellence as Competitive Advantage

HX5’s early infrastructure investments extended beyond accounting systems to encompass comprehensive operational readiness. The company’s approach prioritized substance over appearance, focusing resources on capabilities that directly supported contract performance rather than superficial business trappings.

This methodology proved essential as HX5 scaled operations. The specialized accounting system that initially impressed potential partners became the backbone for managing increasingly complex contract portfolios across multiple federal agencies, including the Army, Navy, Air Force, NASA, and General Services Administration.

Howard’s strategic infrastructure investments created compound advantages throughout HX5’s development. The operational credibility established through specialized systems enabled faster contract awards, reduced oversight requirements, and stronger partnerships with prime contractors seeking reliable subcontractors.

The company’s current scope—supporting research, development, testing, evaluation, hardware and software engineering, and mission support operations—reflects the scalable foundation created through early strategic investments. HX5’s ability to handle diverse technical requirements across multiple agencies demonstrates how proper infrastructure investments enable sustainable growth in government contracting.

Howard’s approach offers valuable insights for entrepreneurs entering government contracting markets. Strategic infrastructure investments, while requiring significant upfront costs, can create lasting competitive advantages that differentiate companies throughout their growth trajectory.