VAR Sees Red-Letter Days After Sealing State Government Deal

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Micro League just joined the big leagues. The Los Angeles-based solution provider, which ranked fourth on CRN's 2006 Fast Growth 100 list with 2005 revenue of $6.3 million fueled by a 538 percent growth rate, just won a state of California contract with Office Depot. Micro League President Ned Yousefzadeh said the contract covers 120 agencies and about 480 locations and guarantees his company $3 million to $5 million in additional revenue for the next two years, with one-year renewal options for an additional three years. And Yousefzadeh hopes the annual revenue guarantees may be just the tip of the iceberg.

"The business that goes through the state funnels through us. We do the invoices, and Office Depot does the fulfillment," he said. "Office Depot is the distributor, but the customers belong to us."

The contract places all of the office products sold through Office Depot's catalog online through a Micro League portal. Micro League handles the invoices and provides customer training to state agencies on how to use the site. But more important, Micro League is free to sell the state higher-end computer products not offered through Office Depot.

"We are in a position to offer solutions and products not on the contract," he said. "Office Depot has a small amount of computer-related equipment compared to what the channel has. That's where we come in and one reason that Office Depot chose us as a partner."

The Office Depot/Micro League contract comes on the heels of an executive order by California Gov. Arnold Schwarzenegger, mandating that at least 25 percent of all state contract dollars go to small businesses and a minimum of 3 percent to Disabled Veterans Business Enterprises (DVBEs).

In part because of the Micro League alliance, Office Depot has committed to a 98 percent contract participation rate from small businesses and a 34 percent participation rate from DVBE contractors, according to the California Department of General Services (DGS).

"By devising creative ways to involve small businesses and DVBEs in their supply chain, this Office Depot contract achieves an amazing breakthrough that would have been considered impossible before strategic sourcing," said Ron Joseph, director of the California DGS, when the contract was announced last fall.

The California DGS said the contract is projected to save the state 48 percent compared to what it historically paid for comparable supplies.

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