Sole-source contracts, awarded without open competition, can sustain a small business for a while. Margarita Howard did not want HX5 to depend on them. From the company’s founding in 2004, she aimed to make HX5 able to compete openly and win.
That goal drove her early spending. Howard said HX5 knew which investments it needed “to compete and not wait on those sole sources,” and to become attractive to both government customers and large businesses.
Infrastructure Over Image
The most notable of those investments was a high-end accounting system designed for government contractors and approved by the government. Howard chose it over the stylish offices and furniture that many startups favor. The system was expensive by small business standards, but it was the same kind used by large prime contractors and understood by federal auditors.
Other decisions followed a similar pattern. HX5 spent on skilled personnel rather than prime real estate, on compliance tools rather than advertising, and on financial reserves rather than early hiring sprees.
Federal requirements did not force her hand. The Small Business Administration encourages compliant accounting but does not require specific software, and accounting adequacy rules apply only to certain contract types. Howard invested anyway because she saw compliance capability as a ticket into bigger competitions.
Competing on Both Sides
The approach worked. Prime contractors were drawn to a small firm that could bill the government properly and pass audits, which opened teaming opportunities. Those partnerships built a record that let HX5 pursue larger awards.
Today the company holds large prime contracts uncommon for its size and also works as a subcontractor to major defense firms, earning Prime Subcontractor of the Year honors. “And then we’re a very good subcontractor as well,” Howard said.
HX5 has grown from one employee to more than 1,000 across more than 20 states. Margarita Howard’s refusal to wait for easy awards, paired with early investment in the tools competition requires, shaped a company that wins on merit. Read this article for related information.
Find more information about Howard on https://www.itsecurityguru.org/2025/11/12/what-will-defense-contracting-look-like-in-10-years/
