Have a press release or event that you'd like posted, send it to Kim Weir at kim@mava.org.
  

07/08/2011 – Providence Equity Partners To Acquire DC-Based Blackboard for $1.64 Billion

In one of the largest local buyouts in recent years, Blackboard, the DC-based educational software company, has agreed to be acquired by an investor group led by Providence Equity Partners. The all-cash transaction, which will take Blackboard private, is valued at $1.64 billion, in addition to the assumption of $130 million in debt.

07/08/2011 – College Park-Based Zymetis Acquired by AE Biofuels for $1.7M

Zymetis, a developer of products for the renewable chemicals and biofuels industry, has been acquired by AE Biofuels, a publicly traded biofuels company, for about $1.7 million in stock. Founded in 2006, Zymetis is commercializing technologies discovered at the University of Maryland.

07/08/2011 – Virtustream Raises $10 Million in Second Round

Virtustream, a Bethesda-based provider of cloud computing services, announced that it has raised $10 million in its second round of funding. The company has now raised a total of $59 million. Investors in the latest round include Intel Capital, Columbia Capital, Noro-Moseley Partners and TDFunds. Virtustream owns and operates its own data centers in the U.S. and UK, and provides a variety of cloud computing services to large enterprises. The firm said it will use the proceeds from the latest round to "productize" its cloud provisioning platform into a software product. The company also said it would invest in marketing and advertising, and expand its presence in San Francisco and London.

07/08/2011 – FounderCorps Launches "Fellows Program" For Entrepreneurs in DC Region

FounderCorps, a not-for-profit organization promoting entrepreneurial and economic development in the DC region, has announced a new fellows program. The program will provide prizes and assistance to winners of business plan and creation competitions organized by its partner organizations. The organization said it has assisted a number of community groups and universities in business formation and mentorship activities. "We've been able to do a number of meaningful things to help regional entrepreneurship in a very short time. We are hoping that the FounderCorps Fellows Program will allow us to accelerate start up activity in our region and incentivize and support new technology entrepreneurs," said Jonathan Aberman, president of FounderCorps.

07/08/2011 – Grotech's Don Rainey Named to Board of James Madison University

Virginia Governor Bob McDonnell has appointed Don Rainey, general partner at Grotech Ventures, to the board of visitors at James Madison University.

07/05/2011 – Grotech Sells Minority Stake in LivingSocial for $200 MM

Grotech Ventures, the Vienna-based venture capital firm and one of the earliest investors in DC-based daily deals site LivingSocial, has sold a minority potion of its stake in the company for $200 million, according to published reports. The news was first reported by PEHub, and later clarified by Fortune. Grotech, which led LivingSocial's $5 million first round in 2008, sold the shares in private deals to unspecified investors, including "at least one hedge fund," PEHub reported. The news comes on a day when DC-based LivingSocial announced its further international expansion through a trio of acquisitions.

06/25/2011 – Regent Education Raises $4.7M

Regent Education has raised $4.65 million from a $5 million equity offering, taking in the amount from three investors. The Frederick, Md.-based SaaS provider adds to $550,000 from April and $1.3 million from last January.

03/03/2011 – ABS Capital to Invest $25 Million in Syncapse

ABS Capital Partners, a Baltimore-based private equity firm focused on late-stage companies, said it has committed to invest $25 million in Toronto-based Syncapse, a developer of software and service designed to help clients build and manage their presence on social media networks.

02/23/2011 – Sprout Social Gets $10 million from NEA

Sprout Social, a leader in social media management tools for business, announced today the recent completion of $10 million in Series B venture funding led by MAVA Member New Enterprise Associates (NEA) to fuel business development and product strategy.

02/08/2011 – LLR Partners Invests in United Seating & Mobility to Support Company Growth and Acquisitions

LLR Partners has made a growth capital investment in United Seating & Mobility, a leading provider of complex rehabilitation products, including custom power and manual wheelchairs for disabled adults and children. LLR is partnering with the firm's existing management team to help fund the Company's growth and future acquisitions. The firm is headquartered in St. Louis, Missouri.

1   2
  

07/08/2011 – Providence Equity Partners To Acquire DC-Based Blackboard for $1.64 Billion

In one of the largest local buyouts in recent years, Blackboard, the DC-based educational software company, has agreed to be acquired by an investor group led by Providence Equity Partners. The all-cash transaction, which will take Blackboard private, is valued at $1.64 billion, in addition to the assumption of $130 million in debt.

07/08/2011 – College Park-Based Zymetis Acquired by AE Biofuels for $1.7M

Zymetis, a developer of products for the renewable chemicals and biofuels industry, has been acquired by AE Biofuels, a publicly traded biofuels company, for about $1.7 million in stock. Founded in 2006, Zymetis is commercializing technologies discovered at the University of Maryland.

07/08/2011 – Virtustream Raises $10 Million in Second Round

Virtustream, a Bethesda-based provider of cloud computing services, announced that it has raised $10 million in its second round of funding. The company has now raised a total of $59 million. Investors in the latest round include Intel Capital, Columbia Capital, Noro-Moseley Partners and TDFunds. Virtustream owns and operates its own data centers in the U.S. and UK, and provides a variety of cloud computing services to large enterprises. The firm said it will use the proceeds from the latest round to "productize" its cloud provisioning platform into a software product. The company also said it would invest in marketing and advertising, and expand its presence in San Francisco and London.

07/08/2011 – FounderCorps Launches "Fellows Program" For Entrepreneurs in DC Region

FounderCorps, a not-for-profit organization promoting entrepreneurial and economic development in the DC region, has announced a new fellows program. The program will provide prizes and assistance to winners of business plan and creation competitions organized by its partner organizations. The organization said it has assisted a number of community groups and universities in business formation and mentorship activities. "We've been able to do a number of meaningful things to help regional entrepreneurship in a very short time. We are hoping that the FounderCorps Fellows Program will allow us to accelerate start up activity in our region and incentivize and support new technology entrepreneurs," said Jonathan Aberman, president of FounderCorps.

07/08/2011 – Grotech's Don Rainey Named to Board of James Madison University

Virginia Governor Bob McDonnell has appointed Don Rainey, general partner at Grotech Ventures, to the board of visitors at James Madison University.

07/05/2011 – Grotech Sells Minority Stake in LivingSocial for $200 MM

Grotech Ventures, the Vienna-based venture capital firm and one of the earliest investors in DC-based daily deals site LivingSocial, has sold a minority potion of its stake in the company for $200 million, according to published reports. The news was first reported by PEHub, and later clarified by Fortune. Grotech, which led LivingSocial's $5 million first round in 2008, sold the shares in private deals to unspecified investors, including "at least one hedge fund," PEHub reported. The news comes on a day when DC-based LivingSocial announced its further international expansion through a trio of acquisitions.

06/25/2011 – Regent Education Raises $4.7M

Regent Education has raised $4.65 million from a $5 million equity offering, taking in the amount from three investors. The Frederick, Md.-based SaaS provider adds to $550,000 from April and $1.3 million from last January.

03/03/2011 – ABS Capital to Invest $25 Million in Syncapse

ABS Capital Partners, a Baltimore-based private equity firm focused on late-stage companies, said it has committed to invest $25 million in Toronto-based Syncapse, a developer of software and service designed to help clients build and manage their presence on social media networks.

02/23/2011 – Sprout Social Gets $10 million from NEA

Sprout Social, a leader in social media management tools for business, announced today the recent completion of $10 million in Series B venture funding led by MAVA Member New Enterprise Associates (NEA) to fuel business development and product strategy.

02/08/2011 – LLR Partners Invests in United Seating & Mobility to Support Company Growth and Acquisitions

LLR Partners has made a growth capital investment in United Seating & Mobility, a leading provider of complex rehabilitation products, including custom power and manual wheelchairs for disabled adults and children. LLR is partnering with the firm's existing management team to help fund the Company's growth and future acquisitions. The firm is headquartered in St. Louis, Missouri.

1   2
  
News
  

Member News

GRANT THORNTON: Working For The Federal Government: What Technology Companies Need To Know About Government Contracts

By Kerry B. Hall, Government Contractor industry practice leader, and Ricky White, Audit Services senior manager

A growing number of companies across several industries are recognizing the many advantages to providing products and services to the federal government. With a staggering budget, the federal government has substantial needs for products and services, and outsources an expanding number each year. Moreover, its budgets tend to increase annually, and the government is a reliable and credit-worthy customer — a rare and valuable commodity in an uncertain economy.

Of course, there are always downsides: in this case, the many rules, regulations and nuances of working with the federal government and the challenges of dealing with a sluggish bureaucracy. However, if companies know what to expect, they can anticipate and manage these potential drawbacks to ensure they don’t detract from the benefits of being a government contractor.

What follows are some important considerations and need-to-know information for technology companies that are thinking about pursuing government contracts.

Understanding the landscape

While there are a number of benefits to government contracting, it’s important to understand the inherent risks before entering into a contract. First, government procurement regulations often require a rigorous competitive process before contracts are awarded, and selection criteria typically favor price over experience. Contrary to the commercial sector, outstanding prior performance may not be enough to secure future government contracts.

Second, government contract terms and conditions impose unique compliance burdens on practically all aspects of the company’s business, so it’s critical that the company fully understand these terms and conditions before accepting a contract. Third, ongoing programs may be curtailed with short notice because of changing budget priorities or a new administration. However, the regulations provide for generous settlements to any company whose contract is terminated for convenience.

Finally, there are the inevitable audit risks. Costs that have been accepted routinely for years can be challenged by government auditors with potentially severe consequences for the financial health of the business. In such cases, the company must be well-versed in procurement regulations to protect itself from arbitrary or incorrect interpretations of these regulations by the government.

Procurement rules under FAR

Government contracts usually require a company to implement business processes and to comply with contract terms, conditions and procurement regulations that differ greatly from those of commercial contracts. These unique obligations are embodied in a federal statute, the Federal Acquisition Regulation (FAR), and agency-specific FAR supplements. FAR regulations include specific requirements for each phase of contracting, including communications with the government, ethics, pricing, negotiations, accounting, and contract administration and performance.

For example, depending on the type of award, companies need to submit different documentation in their proposals. For contracts that are competitively bid, the documentation is less rigorous than sole-source bids. For a sole-source bid, companies often must provide very detailed cost breakdowns of the proposed price and must certify that the data provided is current, complete and accurate as of the date of the agreement.

The degree to which companies are subject to various portions of FAR depends on the size and length of the contract and other factors, but understanding their obligations under FAR is essential. Failure to comply can result in a variety of consequences, ranging from financial loss, termination of the contract, investigations and allegations of overcharging, to ultimate suspension or debarment from future government contracts.

Types of contracts

There are three main types of contracts awarded by the government: cost-reimbursable, labor hour and firm-fixed-price contracts. With cost-reimbursable contracts, the government reimburses actual allowable costs plus a negotiated profit. Labor hour or time-and-material contracts include a negotiated billing rate, which covers labor costs as well as indirect costs and profit, so a profit is virtually guaranteed. Firm-fixed-price contracts carry more risk for the contractor and put a premium on managing the contract and budget. With the risk, however, comes the opportunity for a higher profit if the contract and budget are managed properly. Keep in mind that while a profit is likely with government contracts, it is generally modest, typically ranging from 1 to 10 percent of contract costs.

Audit risk looms

Government contractors’ records are subject to audit at any time, and audits are likely to increase in frequency as American Recovery and Reinvestment Act (ARRA) funds are awarded. ARRA sets aside substantial funds for hiring more auditors to increase oversight of companies receiving stimulus funds. Audits can pose an administrative burden in dealing with auditors and responding to requests, however, maintaining staff to administer the contract and handle audits is a recoverable cost under certain government contracts.

Currently, the Defense Contract Audit Agency (DCAA) is the largest contract audit resource within the federal government, employing more than 3,000 auditors across nearly 300 offices throughout the U.S. and overseas. Although the DCAA is part of the Department of Defense, it frequently performs contract audits for other government agencies.

Most government contractors are required to be compliant with a code of conduct and business ethics. New compliance regulations require written policies and procedures, as well as formal training for all personnel involved in the performance of the government contract. In addition, the contractor must perform periodic internal or external reviews to make sure these policies and procedures are being followed.

Allowable costs

There are certain costs that are allowable under FAR and others that are prohibited. Costs such as penalties, interest on debt, lobbying, entertainment and bad debt expenses are among the items that are not allowable charges against government contracts. There also are limitations on certain costs, such as executive compensation. For instance, if a company is paying its CEO $1 million per year, only a set amount would be recoverable from the federal government. During DCAA audits, executive compensation is challenged by auditors more often than any other cost.

Accounting system considerations

Companies need to maintain cost accounting records that have the capability to track and allocate costs to the projects they are working on. The cost accounting system also must define direct and indirect costs, provide for the exclusion of unallowable costs, and have a rational basis for allocating indirect costs to projects. Because the cost accounting requirements for government and commercial projects are so different, government regulations permit the use of memorandum records for government contract cost accounting. Commercial companies often want to pursue government contracts without any disruption to the business systems and corporate culture already in place, which may be possible with the appropriate guidance and consultation.

Getting started

Before companies are ready to bid on contracts, they must first familiarize themselves with the regulations and learn how to satisfy the requirements of government contracts. Then, they need to take the time to understand the government’s spending priorities and begin to direct their marketing efforts appropriately. Companies can subscribe to information database services that track trends in government spending and monitor which contracts are scheduled to be out for bid in the coming months. This can be helpful to companies that are new to the government contracting space, as well as those that already are well-established and providing services to the federal government.

Working for the federal government as a contractor offers numerous benefits, particularly in a challenging economy. Yet being successful is predicated on satisfying not just the end customer, but also regulators and auditors. To do so requires the ability to effectively navigate and comply with the government’s many contractual terms and requirements.

Grant Thornton LLP

The people in the independent firms of Grant Thornton International Ltd provide personalized attention and the highest quality service to public and private clients in more than 100 countries. Grant Thornton LLP is the U.S. member firm of Grant Thornton International Ltd, one of the six global audit, tax and advisory organizations. Grant Thornton International Ltd and its member firms are not a worldwide partnership, as each member firm is a separate and distinct legal entity. In the U.S., visit Grant Thornton LLP at www.GrantThornton.com.