These should be exciting times for Scientex Corp., a District-based engineering and management services company. With market economies emerging in Eastern Europe, the company, which specializes in helping Third World countries transfer state-owned businesses to private ownership, would seem to be looking at more business.
But the roads to Poland, Hungary and the Soviet Union are rough, especially for a 13-year-old firm that has reached a crucial point in its development.
Scientex's centerpiece is the Center for Privatization, a business unit developed to handle a contract that the company received from the Agency for International Development (AID). The center, a part of Scientex's international division, has worked under contract with AID for five years and has completed privatization projects in more than 50 countries.
But the $23 million AID contract expires Nov. 30, and winning another contract against a rapidly expanding field of competitors will be no easy task. Some firms working as subcontractors under the AID project plan to bid for the entire contract, sources said.
"I think we have a very good shot at it. I don't think that anyone has the inside track," said John D. Wilson, vice president of Scientex International.
The AID project is "Scientex's most significant single contract," Wilson said. Of the firm's estimated annual revenue of $10 million, probably half comes from the AID contract, Wilson said.
To reduce its dependence on the AID contract, Wilson said, the company is looking for new ways to attract clients and has been broadening its client base by working directly for international organizations and different governments. "We'd like to see a greater diversity of clients and areas in which we work," he said.
For instance, Scientex reached an agreement last week with the Polish American Enterprise Fund to coordinate joint ventures between Polish and American businesses. The center will work with the Polish government to identify state-owned businesses that would be more profitable in private hands, and to help make such shifts. It has completed similar projects in Laos and Kuwait.
Working in Eastern Europe poses other challenges. Despite the many projects involved in the shift toward privatization, Scientex is only one of many competitors for the work. Big accounting and consulting firms are targeting Eastern Europe as a prime market for their expertise. So are many think tanks and nonprofit organizations.
"International consulting firms tend to be slower to react, and they tend to be expensive," said Eddie Neal, president of Scientex. "Think tanks and nonprofits ... often have some kind of a political thrust that might limit a country's interest. We can provide an independent approach."
Company officials like to point to a project in Hungary as proof that Scientex can compete in Eastern Europe. Center employees are creating a State Property Agency that will function as the focal point for Hungary's efforts to privatize nearly 2,000 state-owned businesses.
But experts say that skills developed working with Third World nations are not easily transferable to Eastern Europe.
"I think the whole thing in Eastern Europe is going to be extraordinarily difficult," said Wilson, but he added, "It's going to be a struggle anywhere."