Part Time High School Football Coach Turned Small Business CEO wins ~$70M Defense Contract at Port Hueneme

(Port Hueneme, Ca) Engineering Services Network, Inc. (ESN) a Service-Disabled Veteran-Owned, Small Business (SDVO-SB), announced that it has won a $69.6 million contract from the Naval Surface Warfare Center, Port Hueneme Division, a field activity of Naval Sea Systems Command (NAVSEA).

ESN was established by Mr. Raymond F. Lopez, Jr. in 1995 to provide mission-critical services in the areas of engineering and technical support, program management, testing and evaluation, operations support, and information technology to the Department of Defense (DoD) and other government agencies.

Mr. Lopez stated, “About 90% of the hiring will be in Ventura County.” The Woodbridge, VA based company currently has an office in the area but is now working to lease a larger space in Oxnard. The staff of 31 could expand as high as 74 people as the contracts ramps.

Over the last 4-5 years, there has been a slowdown in defense contract awards. Numerous continuing resolutions in the  and sequestrations by Congress created tightness in the defense budget. Mr. Lopez shared that the tightness of money available to defense may have led to at least 18 small business defense contractors he was aware of to go out of business.

“Buying chips and airplanes is good for the country. There are lots of moms and dads out there and I want to make sure we are providing the right equipment for their sons and daughters. We are assisting our government partners at PHD to provide the best equipment and engineering services to protect our nation,” shared Lopez.

ESN will deliver Technical, Engineering and Logistics Support Services to the Naval Surface Warfare Center, Port Hueneme Division (NSWC PHD) Air Dominance Department.  These services will include engineering, test and evaluation (T&E), interoperability, technical, computer programming, materials management, and specified logistics services necessary to support the AEGIS Combat System, major weapon systems programs (including Ballistic Missile Defense), T&E and post-event analysis.  Support services are required at shore sites, land based test facilities, shipyards, and aboard ships in ports and at sea for the U.S., allied nations, and foreign military sales customers.  This contract combines purchases for the US Navy; and the governments of Norway, South Korea, Spain, Bahrain, Italy, Australia and Japan under the Foreign Military Sales program. The work will be performed primarily in Port Hueneme, CA., the five (5) year contract includes a base year plus four one-year options.

 

“We’re honored to have been awarded this contract and to continue to work with the Naval Surface Warfare Center,” said ESN CEO Raymond F. Lopez, Jr., a military veteran who served 29 years in the U.S. Navy. “We have been a steadfast partner with NSWC PHD Air Dominance Department, with a track record of implementing cost effective solutions through innovation and LEAN methodologies.  We are excited to be able to provide a broader range of engineering and logistics support to enhance the Navy’s BMD and AEGIS products to NSWC PHD and our Warfighters”.

The Ray Lopez, Jr. Story

During his 29 years in the Navy, Lopez served as a part time football coach for 12 years to local schools in Virginia called Franklin High School (now Pendleton County High School) and Princess Anne Junior High. After starting the company in 1995, he hung up his coaching hat to work full time on his newly formed business.

“I was not the model sailor,” states Lopez. He shared that chief petty officers took an interest in him and taught him the right way of doing things. This included how to be responsible and thoughtful for his actions.

“Before becoming an officer, between my wife and a senior chief petty officer, I got on the straight and narrow and I was commissioned for the next 19 years. I worked my way up and then fortunately became the commanding officer of a base (Naval Radio Station, Sugar Grove, West Virginia). I worked for a lot of tough people but they taught me a lot including what is an acceptable risk. You have to take risks.”

Today, Lopez shared that he reads publications like CEO magazine and hears how some CEO’s get paid $175M a year. He conveyed that is not his life as a small business CEO. “We share with our employees. Our margins aren’t what they are at big companies. We are a small business. My wife sends out a birthday card with a Starbucks gift card to each employee for their birthday. We pay for those out of our own pocket. Those are the things we do to show our people that we care.”

Lopez was disabled during his time in the Navy and received his designation as a Service Disabled Veteran. He explained that this has to get certified by the Veterans Administration and can be quite daunting.

Lopez described how his time in the Navy gave him great training in leadership but there were some things he wasn’t necessarily prepared for. “Business, Financials, EBITDA, I didn’t know any of that. What I left the Navy with was a lot of leadership, self-reliance, and the focus to do-the-right-thing.”

Lopez praised the Department of Defense’s Mentor-protégé program, which was started in midst of the first Gulf War. Lopez was partnered with Anteon (later purchased by General Dynamics). He explained how he was given access to sit down with Anteon’s Chief Financial Officer (CFO) and Chief Operating Officer (COO) so he could ask questions and or get help addressing issues. This included helping him think through solutions and prompting him to problem-solve on his own. ESN later received the coveted Nunn-Perry Award in 2001 for its revenue gains and superior business maturity achieved during the program.

Business Wins & Lessons Learned

Lopez grew the ESN business and later transitioned from small to large business and then again back to small business. By Defense Contract standards, large businesses are those with over $38.5M revenues in engineering services according to the national code.

“We became a large business and didn’t pay attention to what was happening. We had lots of big salaries. We got up to $50M in revenues and people stopped knocking on the door and the phones stopped ringing. I had to make tough decisions.” Lopez explained how he and other staff had to cut their salaries by as much as half to continue on. “Some could do it and some couldn’t and had to move on. It was a tough time that I never want to go through again.” Lopez shared that once they got back to being a small business they started winning awards again.

“This is not for the weak,” joked Lopez.

The Request for Proposal (RFP) for the NSWC PHD Air Dominance project was introduced last year on May 5, 2017 with 30 days to submit their proposal.  Since then, ESN had been awaiting word on the approval. The award was announced on May 8, 2018. The contract officially begins July 27, 2018.