MERRITT ISLAND, Fla. — When the wars in Afghanistan and Iraq started, Jim Barfield and his partners saw an opportunity.

With his background as a medical services consultant for the U.S. military, Barfield knew the armed forces would be sending more of its medical personnel overseas and others were retiring. That would mean staff shortages at domestic military bases.

So he and partners Glen Bottomley and Rich Hall formed Luke & Associates in 2004 and opened an office on Merritt Island, Fla. Their goal was to become a medical staffing agency for the military.

Mission accomplished.

In 2006, when they won their first contract, the company had a staff of six and annual sales of $200,000. Today, they have more than 150 medical personnel working at 27 military bases in 22 states, including Hawai'i and Guam, and are expecting 2008 sales to exceed $20 million.

With typical profit margins of 10 percent to 25 percent, they quietly have become a small-business success story despite the downbeat economy.

So far, Luke & Associates has competed for military medical services contracts set aside for small businesses. However, because of its growth, the company expects next year to compete against larger companies for more lucrative contracts.

The firm, named after the apostle Luke, a physician, provides military bases with a variety of medical professionals, from surgeons to medical assistants. A lot of them once served in the military.

Barfield, the firm's president, said the agency is an attractive employer for physicians because military doctors are not required to have malpractice insurance, the pay is good and they can get away from working in the "managed-care environment" that many nonmilitary physicians must contend with.

Luke & Associates caters to an ongoing need in the military for medical personnel.

"I will tell you that recruiting qualified medical personnel is an ongoing challenge for all branches of the armed forces," said Air Force Capt. Thomas Wenz, a Pentagon official who works with military medical services.

The firm provides personnel at 26 Air Force bases from California to Delaware. It also provides personnel for the Army's Fort McPherson near Atlanta.

Luke & Associates received its first contract in August 2006 — an Air Force deal to provide clinical support services at Air Force installations in the United States, including Hawai'i and Guam. The contract is potentially worth $1.92 billion over 10 years, Barfield said.

The firm is competing for a contract to provide physicians to the Army. It is expected to be worth $500 million over a number of years.