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Tuesday, Oct 3, 2023

When Pentagon Needs Paperclips

The company Phil Ochoa and his wife Sharyn own could described as the “Amazon of the Pentagon.” Federal Defense Industries Inc. in Moorpark, provides parts and supplies to the U.S. Army, Navy and Air Force. Since the couple started the company out of a garage in Santa Barbara, they have fulfilled more than 38,000 contracts in a niche market. Phil Ochoa sees a paradox in the company’s business model – simple yet complicated at the same time. “The simplicity is they ask for a part and you supply that part,” he said. “The complication is to do it perfectly.” And considering the breadth of the products it ships, a comparison to Amazon.com Inc. would not be inappropriate. “We like to model ourselves after that with quick turnaround and accuracy,” Sharyn Ochoa said. “That’s a good description.” However, “very rarely do we supply the same thing more than once,” Sharyn Ochoa added. Federal Defense employs 23 workers in the its office and warehouse facility it has occupied for about 10 years. From its building at 5231 Maureen Lane it ships out supplies and parts to the U.S. military and those of allied countries, among them Germany, France, Japan, Brazil and the Philippines. While the company does not handle guns, ammunition or classified parts, anything else the military needs comes through its doors. It can be something as mundane as socks or as exotic as helicopter blades – and at times the checklist might include cockpit and communication equipment, tires, wheels, brakes, engines and trucks. While there are competitors, there are not many companies that run the gamut that Federal Defense does, Phil Ochoa said. “We compete on orders of every kind,” he explained. “We did medical tents that were shipped to Brazil before the Summer Olympic games (in 2016). We’ve done all kinds of test equipment.” Retired Navy Rear Admiral Dan Stone serves on the board of the privately held company. He said that that the Ochoas have both hands on the wheel and they run a solid business. “The things that we (the board) do are just helping to make it better,” Stone said. Stone joined the board in August 2016, at the same time as retired Air Force Brigadier General Ron Huntley. Both have played a role in contributing to strategic planning for Federal Defense. “We have been blessed in that way,” Phil Ochoa said. “They have really helped us grow,” Sharyn Ochoa added. Open to advice It was on the advice of their accountant that the Ochoas started their own business. The couple had a big tax bill come due and their accountant said that if they owned a business, they would see benefits from being in a different tax profile. So, Phil Ochoa left his job at Integrated Procurement Technologies, in Santa Barbara, a distributor of aerospace parts to U.S. and foreign military customers. As Federal Defense got going, Sharyn stayed on her job as an office manager at Vetronix Corp., a manufacturer of auto test equipment. Federal Defense opened its doors on March 1, 2000 and didn’t get its first order until mid-May. It was for 500 soft-sided eyeglass cases for a foreign military. “We couldn’t believe it was so difficult to get an order but that was because the government doesn’t want to order from just anybody,” Phil Ochoa said. After a few tiny orders, the couple were visited by three investigators with the Defense Contract Management Agency out of Port Hueneme. They spent the day asking questions of the pair in the garage the business operated out of. “They decided even though we were in primitive conditions, we knew what we were doing and we could supply parts accurately and had good principles,” Phil Ochoa said. “Shortly after that we started receiving more orders.” For the first couple of years, the company averaged about 22 contracts a month. Then in 2005, there was one month when they received more than 1,000. “That was a real turning point,” Phil Ochoa recalled. “That took us from being a tiny mom-and-pop to a bigger company.” When the couple first began discussing starting the business, they agreed there would be no gray areas – no compromises on quality. Everything would be 100 percent the way it should be, Sharyn Ochoa said. “The parts that we supply are important and sometimes lifesaving,” she added. “If you supply the wrong part to someplace, it could cost a soldier his life.” Low profile In 2007, the company’s board suggested investing in a database. Hundreds of thousands of dollars were spent making the database do everything the couple thought it should do. This included part number correlation between what the military is looking for and the potential parts suppliers; tracking the entire procurement process from start to finish; prioritizing work; and allowing buyers to provide perfect bids. There is an emphasis on perfection because supplying military customers is an unforgiving business, Phil Ochoa said. “If you make a mistake on something, it could cost you a fortune,” he added “It’s all about reaching a level of perfection.” The process starts when an end-user sends out requisition a form of what supplies are needed. The company looks those over and determines which one it can fill, Sharyn Ochoa said. The procurement department then makes phone calls and sends out emails to find the vendors for the items requested. The vendors give a price and Federal Defense submits a bid to the end-use customer. “If we are competitive in that bid, we get an award (for a contract),” Sharyn Ochoa said. A purchase order is then sent out to the vendor. The item is first shipped to Moorpark, where it is completely documented, including with photographs, and the appropriate paperwork is done. It is then repackaged and shipped out. Turn around time on items can range from three days to a week. Federal Defense does not do a lot of marketing. In fact, the military prefers that the company keep a low profile. “If you think about it, if we attracted a lot of attention there could be wackos who could show up,” Phil Ochoa said. Yet despite that, the company does want to grow. “The way we do business every day is with the desire to continue to grow,” Sharyn Ochoa said. Stone, the board member, said there is no doubt that the Ochoas understand the tactical side of their business and do it very well. It is on strategic considerations that he believes he and the other board members provide their value. “The board offers them someone who can step back and look into the future and ask questions and provide some guidance,” Stone said. Phil Ochoa called Stone, Huntley and the other board members “brilliant” in their suggestions for strategic thinking. “I can see the company doubling or tripling in the next couple of years because some of the foundation they have guided us toward,” Phil Ochoa said. The Moorpark location is the seventh the company has had in its nearly 19-year history. The Ochoas have considered opening other offices but have never pulled the trigger although the board believed it was a good idea. “We still discuss it every once in a while, but right now I don’t think so,” Sharyn Ochoa said. Growth opportunities exist for Federal Defense from other government agencies beyond just the military. The couple are looking at possibly supplying the Department of Homeland Security and the Transportation Department. There is also the potential to supply commercial entities that need perfect supply, Phil Ochoa said. “That is what we are good at – perfect supply,” he added.

Mark Madler
Mark Madler
Mark R. Madler covers aviation & aerospace, manufacturing, technology, automotive & transportation, media & entertainment and the Antelope Valley. He joined the company in February 2006. Madler previously worked as a reporter for the Burbank Leader. Before that, he was a reporter for the City News Bureau of Chicago and several daily newspapers in the suburban Chicago area. He has a bachelor’s of science degree in journalism from the University of Illinois, Urbana-Champaign.

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