Anthony R. Jimenez grew up in a working-class family and spent 24 years in the Army. After retiring a decade ago as a lieutenant colonel, he started MicroTechnologies in Tysons Corner, hoping to sell computer technology and services to the government as a small-business contractor.
In the years since, MicroTech has received more than $1 billion in federal contracts, a third of it through programs reserved for small firms owned by minorities or service-disabled veterans, federal records show. MicroTech had technology sales of more than $280 million in 2011, putting it at the top of disadvantaged small businesses in the federal market, according to a ranking by Washington Technology magazine. MicroTech called itself “the Biggest of the Smalls.”
The programs helped transform Jimenez’s lifestyle. He began driving a Mercedes-Benz SLS coupe. He bought a $1.6 million house in Great Falls, adding a $256,000 entertainment system. He became a sponsor of mixed-martial-arts “cage” fighting, flying to Las Vegas and other cities to support his favorite fighters. He has been a guest at the White House and lauded by Hispanic groups.
“I am living the American Dream,” he said in a letter to The Washington Post. “I have done this through hard work, education and commitment to a personal honor code that includes integrity, fairness, charity and patriotism.”
Related: MicroTech transformed lifestyle of its chief executive
Competitors have complained that MicroTech was too big to be considered a small business and eligible for government preferences. The Post sought to determine how a company could receive so much in government contracts and maintain its small-business status.
The story of MicroTech’s extraordinary ascent illuminates the challenges and complexities at the heart of government programs to help small-business entrepreneurs — at a time when such contracts have grown nearly 70 percent, to $90 billion, in the past decade. It is a world in which large can be considered small, the wealthy can still be deemed disadvantaged, and many struggle to understand and apply arcane rules designed to help entrepreneurs while preventing abuses.
The Post investigation found that MicroTech’s success was built in part on representations to the government that appear to be inconsistent with company documents and accounts by several individuals who worked for or closely with MicroTech.
In 2005, when Jimenez successfully applied for government assistance as a small, disadvantaged contractor, he certified to the Small Business Administration that he and MicroTech were independent of other firms. Under SBA rules, owners of such firms are not allowed to cede control to others through the sharing of personnel, finances or infrastructure. They also must certify that they devote themselves full time to the business seeking entrance into the program. Those who knowingly make false statements about such matters are subject to criminal and civil penalties.
MicroTech occupied the same office floor and used the same computer networks and payroll services, as well as some of the same employees, as an established firm called MicroLink, a government contractor owned by two men without disadvantaged status, former employees of the two companies said.
“MicroTech has not broken any laws and has conducted itself in an ethical manner,” the company said in a statement. “For nearly a decade MicroTech has employed hundreds of men and women, contributed to our communities, created hundreds of jobs, and built a successful business which provides quality services to the United States Government as well as our commercial customers.”
MicroLink’s owners, David Truitt and Timothy Wharton, were investors in Jimenez’s start-up. Government rules encourage such involvement in disadvantaged firms by outsiders but prohibit those investors from controlling or operating those firms as fronts for or as appendages of their own businesses.
Amy Kemon, a former bookkeeper for MicroLink, said business was sometimes coordinated between the companies. She said she cut checks from MicroLink to MicroTech to help Jimenez pay bills until her departure from MicroLink in August 2005.
“Everything was coming out of MicroLink,” she said. “It was kind of the parent company.”
GRAPHIC: MicroTech’s complex ties
Rabiah Y. Sutton, a former contract specialist at MicroLink, recalled Truitt and Wharton telling her that they were starting a new company with a retired Army officer who is Hispanic “to get access to some socio-economic designations that they couldn’t participate in because MicroLink was owned by two white males.”
In statements, MicroLink and MicroTech said it was legitimate for Truitt and Wharton to partner with a disadvantaged entrepreneur to gain access to certain set-aside contracts.
“Mr. Wharton and Mr. Truitt saw potential in a man who is a military veteran and part of a disadvantaged class; and they are proud of the leadership and success that Mr. Jimenez has independently achieved,” Truitt and Wharton said in a recent statement.
“This is one of the attractions for people who want to invest in minority-owned businesses,” MicroTech said in a statement. “This is a noble and worthy benefit, and Mr. Truitt and Mr. Wharton should be commended for their participation in helping MicroTech flourish as a company.”
Jimenez, who was a contracting specialist in the Army, defended MicroTech and his management, saying he has always followed government rules.
In statements, MicroTech, Truitt and Wharton also said that MicroTech paid “fair market value” for any services it received from MicroLink, including back-office support.
“Mr. Jimenez has always exercised complete control of MicroTech,” the company said.
During an interview on a local cable television program two years ago, Jimenez elaborated on the relationship with Truitt, Wharton and MicroLink. He said that in exchange for “a small percentage” of MicroTech, his partners “were able to fund me through some of the initial six months or a year.”
“They helped me with advice. They helped me with funding,” Jimenez said on the program, produced by the Center for Minority Business Development at Prince George’s Community College. “They helped me with infrastructure support. They provided some of the HR things I needed and some of the basic business back-office support I needed. And then they also helped me get some of the funding that I needed in order to operate the business, by putting themselves down as creditors.”
By the end of last year, MicroTech had close to 400 employees working on more than 100 federal projects. It offered access to more than “a million technology products and services across the government,” including hardware, software and cloud computing, according to the firm’s promotional material.
The company has received recognition for its work. MicroTech has won the SBA Administrator’s Award for Excellence, a regional honor given for “outstanding contribution and service” to the small-business community, the company said.
Jimenez has served on the boards of organizations such as the U.S. Hispanic Chamber of Commerce and the Commerce Department’s National Advisory Council on Minority Business Enterprise. Last year, Virginia Gov. Robert F. McDonnell (R) named Jimenez to the George Mason University Board of Visitors.
“Tony is a successful CEO and his leadership and business background are an asset to George Mason,” the governor’s office said in a statement.
MicroTech noted that Jimenez has also received the U.S. Hispanic Advocacy Association’s Bravo Award and that he was named among SmartCEO magazine’s “Top CEO Philanthropists” in the Washington area.
Jimenez graduated from high school in Lancaster, Calif., in 1975 and enlisted in the Army. He served as an MP for three years before leaving active duty to become a sheriff’s deputy in Colorado Springs.
He attended St. Mary’s University in San Antonio on an ROTC scholarship, earning a degree in business and counseling in 1984. He became a commissioned officer that year.
He continued his schooling while on active duty, earning two master’s degrees, one in acquisition management from the Florida Institute of Technology in Melbourne, the other in computers and information systems from Webster University outside St. Louis.
In 1995, he was named U.S. Army Contracting Officer of the Year, according to his résumé. In 2000 and 2001, he served at the Pentagon and worked as a contracting specialist, immersed in the details and rules of federal procurement.
In the fall of 2003, Jimenez retired from the Army and began his private-sector career at age 47. He worked as an information technology executive for a few months at a couple of large tech firms, Unisys and Resource Consultants, in Northern Virginia before setting out on his own in March 2004, launching MicroTech.
Jimenez has said he came up with the idea for MicroTech at his kitchen table. “I saw an opportunity to put my military experience in technology and procurement to use in the private sector,” he said in a statement.
He said he and his wife tapped their retirement accounts and took loans against credit cards. “I mortgaged everything I could,” he said on a promotional video issued by MicroTech.
MicroTech is classified as a small business owned by a service-disabled veteran. Jimenez received a letter from the Department of Veterans Affairs in December 2004 certifying that he was 30 percent service-disabled. The letter did not specify the nature of his disability, and Jimenez said it was a private matter.
When Jimenez launched his business in the spring of 2004, the government was ramping up spending on the war on terrorism and the conflicts in Afghanistan and Iraq. Congress had recently passed the Veterans Benefits Act of 2003, giving preferential treatment to small businesses owned and controlled by service-
disabled vets, and President George W. Bush would soon sign an executive order urging agencies to spend at least 3 percent of their contracting budgets on such firms.
Jimenez had met his business partners, Truitt and Wharton, in June 2003, while still serving in the Army. They had started MicroLink several years earlier.
Truitt owned 32 percent of MicroTech and Wharton 8 percent, while Jimenez held the remaining 60 percent. Truitt and Wharton said they helped Jimenez plan MicroTech, which began working on the same office floor as MicroLink at 8320 Old Courthouse Rd. in one of the nation’s contracting epicenters, sprawling Tysons Corner, according to documents and interviews.
On April 11, 2005, one year after MicroTech was started, Jimenez applied for entrance into the SBA’s 8(a) Business Development Program for small, disadvantaged businesses. Acceptance by the SBA would give MicroTech an additional coveted status that included access to contracts worth up to $5 million without competition.
The application sought details about Jimenez’s personal finances and relationships with other businesses to establish that his company was operating independently.
Jimenez said “No” to a question about whether any other “individual or entity” was providing “financial or bonding support, office space, or equipment to the firm,” according to the application, which was obtained under the Freedom of Information Act.
Jimenez disclosed that he had investors — the owners of MicroLink — which are allowed under the rules as long as they do not manage or have a controlling financial interest in the applicant company. Jimenez said they had no role in running MicroTech.
“There is no link, relationship, or partnership of any kind” between the two companies, a document in the application file said. “No business has ever been conducted between these two companies.”
To determine whether companies are “affiliated” under federal rules, the SBA considers an array of factors, including the sharing of facilities, employees, managers and economic interests.
Current and former employees of MicroLink and MicroTech told The Post that the MicroLink officials worked closely with Jimenez to launch and operate MicroTech.
MicroLink provided staff to MicroTech to help with draft proposals for contracts and the recruiting of new employees, according to employees who worked in the companies’ offices.
“MicroLink helped in that way to build up MicroTech,” said Dave Tindell, an executive who still works at MicroLink, now a division of Hewlett-Packard.
Ashli Cline, a former MicroLink executive who was involved in recruiting at the time, said, “MicroLink was pretty much the parent company.”
Bradley Smith, a technology executive at MicroLink at the time, said that in its early days, MicroTech could not have existed without MicroLink’s support.
“Together,” he said, “they shared assets, people, infrastructure, physical office space, software.”
Jimenez, Truitt and Wharton said that MicroLink’s resources were never used improperly to sustain MicroTech and that the companies were never affiliated.
“There has never been any parent-subsidiary relationship between MicroLink and MicroTech, and any assertion to the contrary is baseless,” MicroTech said in a statement. “Any services that MicroLink provided to MicroTech were bought and paid for at fair market value. Moreover, there was never any ‘sharing’ of employees. As only the senior management of MicroTech and MicroLink were privy to the contractual relationships between the two companies, it would have been easy for employees of either company to misunderstand the relationship and be confused in that regard.”
Jimenez answered a number of other questions in his application for the 8(a) business development program.
He said “No” to a question about whether he was “an owner, manager or employee of any other firm” aside from MicroTech, documents show. The question related to the SBA requirement that the owners of small firms who apply for the program devote themselves full time to the applicant firm.
Seven months earlier, on Sept. 10, 2004, Jimenez, Truitt and Wharton had set up another small business, GovWare. Each man contributed $800 initially, and Jimenez received 60 percent ownership, according to a copy of the operating agreement obtained by The Post.
Jimenez’s majority ownership of GovWare could have violated the SBA’s 8(a) requirement that he devote himself full time to MicroTech. In addition, if MicroTech and GovWare were found to be affiliated through ownership, that could have affected their ability to get small-business contracts.
On Jan. 1, 2005, three months before filing the 8(a) application, Jimenez sold a majority of his shares in GovWare for $800 to James Hawkins, another service-disabled veteran and one of the first MicroTech employees, documents show.
“When Tony and MicroTechnologies, LLC became aware of potential affiliation concerns, he divested himself of all but 9% of the ownership in GovWare,” MicroTech said later in a statement to The Post. “This was done out of an abundance of caution.”
GovWare’s operating agreement was amended to reflect that Hawkins took on 53 percent ownership, including some shares from Truitt and Wharton, and the title of GovWare chief executive.
Hawkins had served in the Army for more than 18 years, retiring as a staff sergeant in 1999. He had been hired by Jimenez in July 2004 to be the director of enterprise solutions for MicroTech. He was tapped to serve as head of GovWare, Hawkins said, because of his status as a disabled vet.
On May 4, 2005, the SBA official handling Jimenez’s MicroTech application wrote a letter to Jimenez asking about the “relationship, if any, between GovWare, LLC and MicroTech.”
Five days later, a representative for Jimenez sent along the answers, saying he had sold his controlling ownership in GovWare in “an effort to devote the entirety of his time to the management and running of MicroTech, LLC.”
“There is no relationship between GovWare, LLC and MicroTech, LLC,” the response said. “Mr. Jimenez is a passive investor in GovWare, LLC.”
In a recent statement, MicroTech said: “Those statements by Mr. Jimenez were accurate. Mr. Jimenez was a passive investor in GovWare. Mr. Jimenez made all required disclosures to the SBA.”
In late May 2005, with the SBA application pending, Hawkins signed another document. It was titled “Option Agreement,” and it gave Jimenez the right to “purchase from Hawkins at any time and from time to time” 43 percent of the company shares back from Hawkins.
The price: $860.
In a recent interview with The Post, Hawkins said he did not understand the implications of the transaction at the time. He also said he did not feel as if he had any choice.
“I wanted to keep my job,” he said.
Hawkins said that even as he served as GovWare’s chief, he remained a full-time MicroTech employee who answered to Jimenez. “So long as I wanted to receive a paycheck from MicroTech, I had to abide by Tony’s decisions,” Hawkins said. “Tony had the final decision on all matters relating to GovWare and MicroTech.”
In a response to The Post, MicroTech confirmed Hawkins’s employment claims but denied that Jimenez controlled GovWare.
“GovWare was a very small company that did not require full-time management, and Mr. Hawkins tried to run his company while earning a salary working for MicroTech. He was pursuing both endeavors simultaneously,” the MicroTech statement said.
“As an employee of MicroTech, Mr. Hawkins answered to Mr. Jimenez regarding his work and performance at MicroTech,” the company added. “However, Mr. Hawkins had full control of GovWare and possessed the legal authority to make all managerial decisions regarding GovWare.”
On June 10, 2005, MicroTech was accepted into the SBA’s program for small, disadvantaged businesses.
Statements by the current and former employees, along with documents provided to The Post, show that MicroTech, MicroLink and GovWare worked together during this period.
In one internal e-mail on Feb. 27, 2005, Jimenez asked MicroTech employees to work on the Web sites of both MicroTech and GovWare.
In another e-mail that day, Jimenez urged Hawkins and other employees of MicroTech to submit contract proposals for a large government technology contract on behalf of MicroTech, GovWare and another company set up by the three partners, QIT-US.
“This is a very important pre-solicitation conference for MicroTech, GovWare, and QIT-US,” Jimenez wrote.
On another occasion, Wharton alerted Truitt, Jimenez and Hawkins that a proposal that was to have been submitted by GovWare instead went out as coming from MicroTech.
“The sales person screwed up in that they did not submit the bid through GovWare,” Wharton wrote on April 21, 2005.
Why was Wharton of MicroLink writing to MicroTech employees about GovWare business if the three companies were independent entities, as stated by Jimenez on his 8(a) application?
In a statement, MicroTech said the bid was a simple mistake, blaming Hawkins.
A “GovWare sales person did mistakenly submit a bid using MicroTech’s letterhead,” the statement said. “We are not aware of how that mistake originated, but Mr. Hawkins had difficulty managing his company, GovWare, and his duties as an employee of MicroTech.”
Hawkins said a MicroTech employee who was also working for GovWare simply forgot which company he was supposed to be working for at the time.
Also on April 21, an administrative assistant at MicroLink wrote to a MicroTech employee at a GovWare e-mail address, saying she forgot to include a commission in the employee’s GovWare paycheck.
“When I was doing payroll, I forgot to put it in, so we had to cut you an actual check,” said the administrative assistant, Kathryn Waldschmidt.
She told The Post that she had handled payroll for MicroTech while she was still at MicroLink. “There were three different companies in that same little office suite,” she said. “We kind of did as we were told.”
Hawkins said that GovWare at the time had no employees of its own.
On April 30, Jimenez urged Hawkins and another MicroTech employee to arrange a partnership between GovWare and a large contractor called GTSI “to help us with this very large and lucrative bid for GovWare” on a copier lease and services deal reserved for service-disabled vets.
MicroTech said the e-mails show only that Jimenez maintained an interest in a company in which he had invested.
“As passive investors, the owners of GovWare, other than Mr. Hawkins, had no control of GovWare, but did make occasional recommendations as to certain sales opportunities,” MicroTech said in a statement.
Over the next two years, business boomed for MicroTech. It had landed a long-term contract from the Department of Veterans Affairs as a small business owned by a service-disabled veteran, records show. The first year alone was worth $56 million, federal records show. Truitt, Wharton and Jimenez moved MicroLink, MicroTech and GovWare into larger, more modern office suites in a building on Boone Boulevard in Tysons Corner.
In April 2007, Hawkins received word that GovWare had won the ability, through a competitive contracting program run by NASA’s procurement workforce, to sell technology and services to agencies across the government. The agencies that ordered from GovWare and other selected firms could get credit for working with small firms owned by service-disabled veterans.
The next month, on May 30, 2007, Jimenez notified Hawkins that, effective immediately, “I hereby exercise my option to purchase from you a 43% Member’s Percentage interest in GovWare.”
Enclosed was a payment for $860.
“I was naive,” said Hawkins, who reached a settlement with MicroTech in a dispute over the matter, the details of which he cannot disclose. “I was devastated.”
A MicroTech statement said Jimenez “repurchased the shares to ensure that GovWare would not go bankrupt.”
“This option was introduced in order to manage Mr. Jimenez’s financial risk in his personal investment in GovWare,” the statement said. “In fact, at the time that Mr. Jimenez repurchased the shares of GovWare, it had a net operating loss of over $60,000.”
Jimenez was now apparently the majority owner of both MicroTech and GovWare.
That meant he controlled GovWare’s main asset, the company’s position in the potentially lucrative NASA contracting program.
Jimenez and his partners decided to sell GovWare and its assets to MicroTech. The paperwork documenting the transfer of assets from GovWare to MicroTech, including the NASA contracting position, shows that Jimenez, Truitt and Wharton each signed as both seller and buyer.
In a statement, MicroTech said the signatures did not mean that MicroLink, MicroTech and GovWare were affiliated.
“The indication of agreement to the sale and purchase of a company’s assets does not denote managerial control of a company, only consent,” the statement said. “It is customary and prudent to require agreement of a super majority of the owners in order to effectuate such a sale.”
MicroTech said the firm “followed all applicable rules when it purchased the assets of GovWare.” Nothing is publicly known about the value of the transaction.
Before releasing documents on the sale to The Post through a Freedom of Information Act request, NASA allowed MicroTech to recommend what ought to be redacted. More than 13 of 16 pages in the asset sales agreement were blanked out, including the price, under an exception for proprietary business information.
What is known is how lucrative the transfer of the NASA contract turned out to be for MicroTech.
Under the NASA program, the company has received orders worth more than $200 million, according to federal records.
Last year, the SBA conducted another review, in response to an anonymous complaint about MicroTech’s size and possible affiliation with MicroLink, according to a copy of the SBA findings provided to The Post by MicroTech.
The SBA reviewer found that the two companies “were not affiliated” because Truitt and Wharton had sold MicroLink in 2010, severing any meaningful ownership ties between MicroTech and their former company. “Anthony Jimenez has complete control of MicroTech,” the reviewer said.
But before the sale, the reviewer said, it could be “reasonably concluded” that “there was in fact affiliation between Microtech and MicroLink.”
Jimenez, Truitt and Wharton disputed the finding.
“MicroTech is not affiliated to any other company: The Small Business Administration (SBA), on multiple occasions, has examined MicroTech for both size and affiliation issues and has on every occasion found that MicroTech operated within the appropriate and applicable rules,” the company said in a statement.
Coming Wednesday: The Department of Veterans Affairs becomes MicroTech’s greatest benefactor; competitors wonder how a firm with hundreds of millions in contracts can still claim to be a small business.
Dan Keating, Andras Petho and Alice Crites contributed to this report. Petho is an investigative journalist from Hungary who is reporting under the Hubert H. Humphrey Fellowship Program.