Government contracting rewards operational discipline more than it rewards appearances, though many new contractors learn that lesson only after spending their early capital the wrong way. Margarita Howard’s experience building HX5 offers a clear example of what happens when a founder gets that tradeoff right from the start.

Federal acquisition regulations govern accounting system requirements for certain contract types, but the Small Business Administration does not mandate specific software for new contractors. That gap leaves room for interpretation, and most small firms choose simpler bookkeeping setups early on, planning to upgrade once revenue grows or a contract forces the issue.

Choosing Infrastructure Over Image

Howard skipped that gradual approach when she founded HX5 in 2004. She spent limited startup funds on an accounting system built and approved specifically for government contracting work, well before HX5 had won any major deal. The purchase reflected a broader view that capital should go toward capabilities the company would actually need to compete, not toward projecting a scale it had not yet earned.

That approach addressed a real gap in the market. Large prime contractors regularly need small business partners but hesitate to work with firms that lack the administrative systems to pass federal audits or handle complex billing. HX5’s early investment removed that hesitation, giving it access to partnerships that similarly sized competitors could not offer.

Competing in federal contracting, Margarita Howard has said, requires that a company “know and understand the industry first, then build a good team” before anything else follows. HX5’s growth from one employee to more than 1,000 people across more than 20 states and roughly 70 government locations suggests that framework has held up. The company’s history points to a broader pattern in federal contracting: infrastructure built early tends to outperform infrastructure built in response to pressure.

For newer entrants to the industry, HX5’s trajectory offers a useful reference point. Margarita Howard did not have outside funding or an established reputation when she made her first major purchase. What she had was a clear read on what federal auditors and prime contractors would eventually expect, and she built for that standard from day one rather than growing into it later. Refer to this article for related information.

Learn more about Howard on https://www.itsecurityguru.org/2025/11/12/what-will-defense-contracting-look-like-in-10-years/