TolTest, Inc.

Built to last Despite the economic downturn, TolTest, Inc. posted record revenues in 2008—even above their own expectations. Ernesto Enrique gives Ruari McCallion an insight into how it was done. When TolTest, Inc., submitted a proposal to the US Army Corps of Engineers, Louisville District Office, in 1992, it marked a turning point in the company’s development. Until then it had been solely involved in commercial operations; winning that multiyear, multimillion-dollar project as prime contractor led to a major change in focus. “We remain as general contractors, covering traditional construction, environmental remediation and bulk fuel services,” says Ernesto Enrique, vice president, federal division, of TolTest and a 25 percent owner of the company. “Eighty percent of our work is now for the federal government, primarily the military.”TolTest is based in Maumee, Ohio, which is about 60 miles south of Detroit, an area of the country that has been hit particularly hard by the current downturn in the economy—in the auto industry especially. But not TolTest. It finished 2008 with revenues $52 million higher than the anticipated level, at $277 million. It is fortunate in having experienced significant growth doing work for federal government clients in both the Middle East and across the US. The growth came from a combination of new contracts and efficient completion of existing projects. Both elements are important to the company.“Safe and efficient project execution—on time and within budget—with delivery of a high-quality project, is what our clients expect and what we consistently deliver,” Enrique says. “It’s the work we do and our reputation that allows us both to compete in new markets and with new clients, and brings us the repeat business that has been essential to our continued growth.” Its reputation for reliable and efficient delivery has led to some significant contract awards in 2008. Under its existing indefinite delivery/indefinite quantity (ID/IQ) contracts with Department of Defense clients, it undertook projects in the US ranging from a $120,000 project to demolish a fuel tank and hydrant system piping at Columbus Air Force Base (AFB), Mississippi, to a $19 million project to demolish military family housing at Grand Forks AFB, North Dakota. Internationally, its contract wins ranged from a $300,000 project for electrical upgrades at a military installation in Kuwait to an $8.3 million upgrade to dormitories at Andersen AFB in Guam. It has also been awarded two multiple award construction contracts (MACCs) for large and small projects at Guantanamo Bay Naval Base, Cuba, with a combined contract ceiling of $150 million. TolTest was also one of a handful of contractors awarded a $90 million MACC for work at Kandahar Air Base, Afghanistan. All contracts for military clients are tightly specified, and they all have their challenges. Those overseas are even more exacting.“Key challenges for our work in overseas locations include logistical challenges associated with moving personnel, equipment and materials to these remote locations,” Enrique says. In the case of Afghanistan, danger is part and parcel of the operation. Stringent base security requirements include badges for personnel, which can take several weeks and sometimes months to complete. The company makes use of local labor, both for practical, logistical reasons and in order to promote good relations, but skills aren’t always up to Western standards. Throw in difficulties with languages and customs plus stoppages induced by violence, and you have a situation that needs particular expertise. TolTest is justifiably proud of its success in adapting to everything thrown at it so far. “Our adaptation to these challenges is due to a combination of being flexible and adaptable, maintaining and hiring personnel with the right mix of institutional knowledge and specialized skill sets, and working closely with our client to achieve successful outcomes,” Enrique says. With each successful contract, TolTest’s reputation grows, and with a growing reputation comes more contracts. It’s a virtuous circle. “The majority of our awards are based on our clients’ evaluation of such factors as our past performance, experience, personnel and resources, technical capabilities, management approach and project delivery support systems, and cost realism,” he says. Demonstrating the ability to minimize risk to the government, especially in cost or schedule growth, is also key. “Our reputation, our knowledge of our clients and the ability to convey our success in each of these areas allowed them to make a best-value determination to award these contracts to TolTest.” The US is reducing its involvement in Iraq; as a result, TolTest is seeing several projects in Mesopotamia winding down. At the same time, however, the country is ramping up operations in Afghanistan. As well as the new MACC for Kandahar Air Base, it has also recently completed a $25 million project to construct an Afghanistan National Army Air Corps Regional Detachment facility at Kandahar.Enrique is confident that TolTest will continue to function profitably and at levels in line with recent years. It’s not that the downturn will pass it by, rather that its mix of business will change—and it will see more competition in the future.“Not only has our commercial business volume dropped, but we expect to encounter more and tougher competition in the federal government market. Everyone is hungry right now,” he says. Historically, approximately 20 percent of TolTest’s work has been for private-sector clients. The current economic climate, particularly in the commercial construction industry, means that is likely to shrink. But TolTest hopes to regain market share when things improve. In the meantime, it focuses on continuous improvement and ensuring that it keeps delivering on time, within budget and in full. That’s the way to build and maintain its reputation.“We want to maintain controlled and steady growth of 15 to 20 percent in the coming years,” Enrique says. “We will strive to maintain our current mix of clients and services, continue to find and research niche markets, and work to ready and geographically position ourselves in advance to support our customers’ needs around the world.”  – Editorial research by Tim Conlon