The Business of Defense

How employee ownership helps fuel federal contractor’s growth, success

Employee stock ownership plans may be less common among government contractors than in the commercial world, but an ESOP helped Calibre Systems build a successf...

When an employee is also an owner, it changes the dynamic of the entire company, Richard Pineda believes.

“Being an owner of a company, the decisions you make — the plans you make — don’t just feed shareholders on Wall Street or feed private equity,” said Pineda, president and CEO of Calibre Systems. “It feeds 100% the employee owners of the company — to grow the enterprise and value of the company and to accumulate wealth for all our shareholders, which are 100% employees.”

Employee stock ownership plans (ESOPs) are less common in the government contracting community than they are in the commercial sector, he shared during the American Society of Military Comptrollers’ The Business of Defense podcast on Federal News Network.

The ESOP has been a major factor in helping Calibre grow, Pineda said. The company was founded in 1989 and focused initially on providing support to the Army’s Operating and Support Management Information System, a contract that the company holds to this day.

“We help manage the planning, programming, budgeting and execution (PPBE) process,” he said, adding that the company has helped the Army evolve — from initially supporting a mainframe operation to expanding to a data center and now migrating to the cloud. “We still have a core group of folks providing support to the U.S. Army on that same project.”

The benefit of thinking like owners versus renters

The company launched the ESOP in 1994, and by 1998, employees took over majority ownership of Calibre. The ESOP creates what Pineda called a stickiness to the business, a pride of ownership.

“We want to operate, think and act like owners, not renters,” he said. “We’ve all rented cars, right? You know you don’t take it to the carwash and maintain it and do all the things. In fact, you don’t even worry about where you park it.”

Owners care and that plays out in how the company interacts with the agencies and federal employees that Calibre works with. It shows in the high level of recompetes the company wins, Pineda said. “We had the fortune, pleasure and proud moment last year of winning back 97% of our work.”

Sustaining its base business, which runs 70% defense (mainly Army) to 30% civilian work, is the first part of the Calibre approach to growth. It allows the company to innovate to drive organic growth, followed by new growth through contract acquisition, and finally expansion through mergers and acquisitions, Pineda said.

“The last bit — it’s in everybody’s growth playbook, mergers and acquisitions — is to look at specific companies that can either provide a creative value or a synergy to be able to drive double-down growth where one plus one could equal three,” he said.

Expanding into new areas, helping agencies transform

Over the years, through a series of acquisitions, Calibre gained health care, intelligence, cybersecurity and strategic communications expertise. Today, the company is on the verge of moving from its designation as a small business to an “emerging large” business, Pineda said.

It’s established a technology roadmap with the aim of helping its customers continue to become more efficient, effective and secure in their financial management — “basically innovating and infusing new ways of using IT, whether it be cyber, identity proofing, data analytics, predictive analytics, DevSecOps or agile,” he said.

Continuing to expand the technology offerings of the business and the skill sets of its employees is essential, he said.

“If you look today at the top 100 federal prime contractors, they’re not on the list because they remain stagnant. They renewed themselves,” Pineda said. “From our perspective, not only do we work on the key technology offerings, it’s always to be innovative and provide new technological advancements.”

To listen to the full discussion between Richard Pineda, president and CEO of Calibre Systems, and Rich Brady, CEO at the American Society of Military Comptrollers, click the podcast play button below:

Discover other The Business of Defense podcasts here.

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