VAR Sees Red-Letter Days After Sealing State Government Deal


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.

What propelled Micro League into the forefront of California state computer procurement is the solution provider's ability to leverage its status as a small, minority-owned business into an array of certifications. James Shipp, Micro League's government and commercial sales manager, said the company is, among other certifications, Small Business Administration (SBA) certified, city certified and disabled veteran certified.

"A lot of businesses are unaware that they can take advantage of certain situations because no one bothers to get certified," he said. "You've got to know that it's out there and how to pool all the information together for certifications."

Shipp points out that city, state and federal governments all have their own certification requirements and it takes people who are committed to shepherding through the certifications.

"It's not easy; there are a lot of hoops to go through, and they just don't hand these things out," Shipp said.

For example, he said that of the hundreds of thousands of businesses in California that are considered small businesses, less than 3,000 are certified as such. Not only do businesses have to provide tax forms and company data, but they also have to document that they are capable of performing services required for the certification, he said. In addition, Shipp said it takes time to develop relationships with people within the state who are involved with the process. Those relationships, he said, are crucial when issues arise as certification documents move through the government bureaucracy.

"We got certified [for the state contract requirements] in six weeks; it normally takes six months," he said.

The array of certifications Micro League has earned also greatly expands the value of the state contract. Cities, counties and public schools can buy off the state contract. Shipp explains that state agencies get points if they buy from small businesses and from organizations certified as being associated with
disabled veterans. Those points in effect then can be cashed in to get more money for the agency's budget. "The agencies don't have to go searching for small or disabled vet businesses," Shipp said. "Office Depot gives the same special pricing to any government agency in the state of California. It's really huge."

Yousefzadeh said that Micro League is putting together a vendor event for late
January or early February that will bring together vendor representatives from
Samsung, Ricoh, Hewlett-Packard and other manufacturers so that state purchasing agents can learn firsthand about products that they can purchase on the contract.

"This really helps them [the state purchasing agents] get locked in with us, and it's a big advantage for a small business to meet with them and build strong relationships with them," Yousefzadeh said.