Help for small ISR companies struggling with credit crunches and slow payments

Ernst & Young Entrepreneur Of The Year™ 2012 AwardBrian Ippolito By Brian Ippolito SDM ’98

About the Author: Brian Ippolito has served as President and Chief Executive Officer of Orbis Technologies since 2006. Under his leadership, Orbis has established itself as a leader in delivering semantic applications and cloud analytics to the Department of Defense (DoD) and select Fortune 50 companies. A 1998 graduate of the SDM program, he is the recipient of the Ernst & Young Entrepreneur of the Year 2012 Award in Maryland among other honors. The award recognizes outstanding entrepreneurs who demonstrate excellence and extraordinary success in such areas as innovation, financial performance and personal commitment to their businesses and communities.

Cloud Computing Innovations for ISR

The ability of US industry to continue delivering the highest-quality intelligence, surveillance and reconnaissance (ISR) equipment, communications systems, and cybersecurity technologies to government customers depends in large part on innovations designed by small businesses. A case in point is the intelligence community’s shift toward cloud computing. Most of the core technologies for the cloud were developed by small innovators. The government needs to continue cultivating and harvesting innovations from these small companies.

The Problems

  • To keep the innovations flowing, small companies need to get paid in a timely manner and they need access to credit.
  • Without both they cannot hire, invest, and produce technologies critical to the ISR and information technology communities.
  • US banks are making the credit situation worse for small businesses by requiring small business owners to back their companies’ assets with personal assets, a burden that dampens innovation.

The problems are likely to worsen if this year’s budget season produces a repeat of the arduous 2011 process that saw a string of innovation-hampering continuing resolutions.

One Solution: Accelerated Payments Initiative

There is something the government can do to help alleviate the strains on small businesses, short of fixing our broken political system. The US government should broaden its accelerated payments initiative so that it includes subcontractors.

  • The accelerated payment initiative was ordered by the White House Office of Management and Budget in September 2011, and implemented in the defense industry by the Office of Small Business Programs.
  • In many cases, payments by the government to its small prime contractors were shortened to as little as two weeks, down from the 30 days required under the formerly weakly-enforced US Prompt Payment Act.

The accelerated payment initiative would have much more impact if Congress and the White House broadened it to require small businesses that benefit from accelerated payments to share those benefits with subcontractors. This could be done through an amendment to Far Subpart 19.7 that governs small business. The government can create an instant stimulus with no cost to the taxpayer by simply inserting language clearly stating that companies with small business status as defined by the far must be paid in 30 days or less. Last September’s decision to accelerate payments to small prime contractors proved to be encouraging momentum in an otherwise excruciating business environment. The next move should be to ensure that the contractors on the receiving end of those accelerated payments are acting responsibly.

2012 Ernst & Young Entrepreneur Of The Year Award Recipient

Brian Ippolito SDM ’98, recently received the Ernst & Young Entrepreneur Of The Year™ 2012 Award in the Technology category in Maryland. The award recognizes outstanding entrepreneurs who demonstrate excellence and extraordinary success in such areas as innovation, financial performance and personal commitment to their businesses and communities.

Brian Ippolito