GOVERNMENT CONTRACTOR

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1 GOVERNMENT CONTRACTOR QUARTERLY MARKET UPDATE Q In This Issue 1 Government Fiscal Year 2016 Kicks Off 2 Public Company Valuation Multiples & Select Financial Metrics 3 M&A Transactions 4 Select Market Activity 5 Industry and Agency News Government Fiscal Year 2016 Kicks Off acquisition and collaboration. As the new government fiscal year begins, the Federal sector continues to experience uncertainty, Q3 included a number of transactions involving budgetary pressures, and price competition, private equity firms as the private markets continue resulting in continued consolidation among to offer an alternative to public offerings. Veritas government contractors. Notable transactions Capital acquired Alion Science and Technology in in Q3 include the September merger between August and GE Intelligent Platforms Embedded Salient Federal Solutions and CRGT, as well as the Systems in late September. The Carlyle Group announced merger between CSC s Government picked up Coalfire Systems, a cybersecurity spinoff and SRA International. contractor serving the public and commercial sectors, and also announced a definitive agreement Government IT contractors have responded to the to acquire Novetta Solutions in late August. uncertainty and decreasing margins by streamlining their portfolios, and refocusing bid and proposal The domestic Federal spending outlook for efforts on higher-margin opportunities, while GFY2016 is marginally positive, with slight divesting underperforming and peripheral business spending increases projected above sequestration units. Additionally, contractors have responded caps. Given the current environment, SC&H Capital to increased demand from allied overseas expects the M&A marketplace to remain active governments by bolstering international product throughout the remainder of the calendar year as the and service offerings both organically and through consolidation and realignment trend continues. 6 Representative Transactions 7 Contact Information SC&H CAPITAL is an investment banking firm dedicated to advising the owners of middle market companies on merger and acquisition transactions, capital raises, and corporate finance projects. SC&H Capital has successfully closed 100+ transactions with industry-leading growth companies. One Year Relative Performance: Over the 52-week period ending September 30, 2015, the Prime Defense Contractor index was up 11.8% [with Accenture (+20.8%) and Northrop Grumman Corp. (+25.9%) driving the gains], while the Other Defense Contractor index fell by 0.2%. Over the same period, the benchmark S&P 500 was down 2.6% while the benchmark Russell 2000 index gave up 0.1%. Indexed at 9/30/2014 Close Year Relative Performance S&P 500 Russell 2000 Primes Other Defense Three Year Relative Performance: Over the 36-month period ending September 30, 2015, the Prime Defense Contractor index gained 94.8% and the Other Defense Contractor index increased by 36.5% compared to the benchmark S&P 500 and Russell 2000 indexes which had gained 32.9% and 31.0%, respectively. Indexed at 9/30/2012 Close Year Relative Performance S&P 500 Russell 2000 Primes Other Defense Source: Capital IQ 1

2 PUBLIC COMPANY VALUATIONS MULTIPLES AND SELECT FINANCIAL METRICS Large Prime Contractors ($ in Millions of USD, except for per share info) Recent % off Trailing Twelve Months Forward Stock Price 52 - Week Market Enterprise EV / EV / EV / EV / Company Ticker 9/30/2015 High Cap Value Revenue EBITDA Revenue EBITDA The Boeing Company BA $ (17.6%) $ 88,979.9 $ 88, x 9.3x 0.9x 8.4x Honeywell International Inc. HON $94.69 (11.8%) $ 74,025.0 $ 74, x 10.5x 1.9x 9.0x Lockheed Martin Corporation LMT $ (2.8%) $ 64,376.9 $ 69, x 10.8x 1.5x 10.1x Accenture plc ACN $98.26 (6.7%) $ 61,579.7 $ 57, x 11.2x 1.8x 10.7x General Dynamics Corporation GD $ (10.3%) $ 44,520.2 $ 43, x 9.5x 1.4x 9.4x Raytheon Company RTN $ (3.6%) $ 33,165.7 $ 36, x 11.0x 1.6x 10.3x Northrop Grumman Corporation NOC $ (6.2%) $ 31,097.8 $ 35, x 10.0x 1.5x - Large Prime Contractors Median 1.5x 10.5x 1.5x 9.7x Large Prime Contractors Mean 1.5x 10.3x 1.5x 9.6x Other Defense Contractors ($ in Millions of USD, except for per share info) Recent % off Trailing Twelve Months Forward Stock Price 52 - Week Market Enterprise EV / EV / EV / EV / Company Ticker 9/30/2015 High Cap Value Revenue EBITDA Revenue EBITDA Harris Corporation HRS $73.15 (13.7%) $ 9,043.3 $ 13, x 12.5x 1.8x 8.7x L-3 Communications Holdings Inc. LLL $ (21.4%) $ 8,396.3 $ 12, x 10.2x 1.0x 9.6x Computer Sciences Corporation CSC $61.38 (16.3%) $ 8,490.8 $ 8, x 8.8x 0.8x 4.5x Leidos Holdings, Inc. LDOS $41.31 (12.4%) $ 2,976.9 $ 3, x 8.9x 0.7x 9.4x CACI International Inc. CACI $73.97 (19.8%) $ 1,789.7 $ 2, x 9.5x 0.8x 9.0x Engility Holdings, Inc. EGL $25.78 (47.4%) $ $ 2, x 14.0x 0.9x 8.7x ManTech International Corporation MANT $25.70 (27.1%) $ $ 1, x 8.3x 0.6x 8.5x ICF International Inc. ICFI $30.39 (30.5%) $ $ x 9.0x 0.8x 7.8x NCI, Inc. NCIT $13.27 (20.9%) $ $ x 7.6x 0.6x 7.0x Other Defense Contractors Median 0.9x 9.0x 0.8x 8.7x Other Defense Contractors Mean 1.1x 9.9x 0.9x 8.1x Government Services Average EBITDA Multiple Samples 9/30/2014 9/30/2015 Government Services Average Revenue Multiple Samples 9/30/2014 9/30/ x 1.8x TEV/EBITDA 10.0x 8.0x 6.0x 4.0x 2.0x 9.8x 10.2x 9.7x 7.7x 7.6x 10.4x TEV/Revenue 1.6x 1.4x 1.2x 1.0x 0.8x 0.6x 0.4x 0.2x 1.3x 1.4x 0.6x 0.8x 1.2x 1.5x 0.0x Aerospace & Defense IT Services Diversified 0.0x Aerospace & Defense IT Services Diversified Source: Capital IQ Note: Data as of 9/30/14 and 9/30/15 Aerospace & Defense: NOC, LMT, GD, BA, RTN, HON, LLL IT Services: LDOS, CACI, MANT, EGL, NCIT Diversified: CSC, HRS, ICFI, ACN 2 Government Contractor Quarterly Market Update Q4 2015

3 NOTABLE M&A TRANSACTIONS SALIENT FEDERAL SOLUTIONS AND CRGT MERGE In August, Salient Federal Solutions announced that it was merging with CRGT to form a new company called Salient CRGT. Salient CRGT will generate approximately $375 million in annual revenue and employ more than 1,700 people. The combined company is backed by two private equity firms, Bridge Growth Partners and Frontenac Co. The deal was finalized in September. CSC S GOVERNMENT SPINOFF AND SRA INTERNATIONAL TO MERGE Computer Sciences Corp. (CSC) recently announced that its spinoff, Computer Sciences Government Services (CSCGov), will merge with SRA International. CSCGov will assume $2.7 billion in debt, including a $390 million cash payout to existing SRA shareholders. The combined company, to be named prior to closing, will become the largest pure-play IT services provider serving the U.S. government sector, with combined FY15 revenues of approximately $5.5 billion, nearly 19,000 employees and among the industry s leading profit margins. COUNTERTACK ACQUIRES MANTECH CYBER SOLUTIONS Big Data Endpoint Detection and Response (EDR) provider CounterTack announced that it acquired ManTech Cyber Solutions International (MCSI) in July. The acquisition enhances CounterTack s leadership position in the EDR market, and will enable CounterTack to combine real-time operating system-level behavioral threat detection with in-memory threat analysis that maps to the entire cyber kill chain and scales enterprise-wide, according to a company press release. VERITAS CAPITAL ACQUIRES ALION SCIENCE AND TECHNOLOGY In August, Veritas Capital acquired Alion Science and Technology. The deal will allow Alion to reshape its capital structure and strengthen its financial position, and is estimated in the $300 million range. In June, Alion filed for an IPO as a way to raise capital to pay down its debt. However, this deal allows the company to forego this initially planned public offering. ACCENTURE ACQUIRES FUSIONX Accenture acquired FusionX, a cybersecurity firm that offers cyber attack simulation, threat modeling, cyber investigations and security risk advisory services. The acquisition will augment Accenture s Security practice, allowing its customers to protect against and detect vulnerabilities and ward off attacks, improving business results. The deal was closed in August. RADIANT GROUP ACQUIRES HUMAN GEO GROUP The Radiant Group has acquired data analytics and software development capabilities through the purchase of the Human Geo Group. The acquisition will enhance The Radiant Group s technology offerings in the areas of mission focused data analytics, high-end technical services, and unparalleled technical staff. THE CARLYLE GROUP TO ACQUIRE NOVETTA Private equity firm the Carlyle Group has agreed to buy data analytics company Novetta. Novetta is a leading provider of advanced analytics solutions for dealing with massive and disparate data sets to support national security missions. Terms of the transaction were not disclosed. 3 Government Contractor Quarterly Market Update Q4 2015

4 SELECT MARKET ACTIVITY Date Closed / Announced* Target Buyers/Investors 10/01/2015 Johnson Controls Security Systems Deal Value ($mm) Business Description Versar Inc. (NYSE:VSR) 20.0 Johnson Controls Security Systems, a subsidiary of Johnson Controls, is a physical and network security systems integrator serving the federal government and defense contractors. 10/01/2015 Axios, Inc. LGS Innovations LLC - Axios delivers communications and signal processing solutions to the Department of Defense and the intel community. The company focuses its efforts on providing missionattached services and application development. *09/22/2015 GE Intelligent Platforms - Embedded Systems subdivision Veritas Capital - GE Energy Management's Embedded Systems subdivision is a supplier of open architecture electronic systems used by the aerospace, defense, and heavy industrial markets. 09/16/2015 Coalfire Systems, Inc. The Carlyle Group (NASDAQ:CG); The Chertoff Group - Coalfire is a cybersecurity and technology services provider offering risk advisory services, compliance assessments, technical testing, and software services for the federal government, state and local governments, and commercial clients. 09/15/2015 CRGT Inc. Salient Federal Solutions, Inc. - Salient Federal and CRGT agreed to a merger of equals in September, and the two private equity firms that own the two companies - Bride Growth Partners and Frontenac - will reportedly continue to own the combined entity. 08/31/2015 Turnberry Solutions, Inc. - Cybersecurity division 08/31/2015 IMC - Defense & Public Sector unit, Health & Life Sciences unit SageNet, Inc. - Turnberry's cybersecurity division offers security assessments, audit and compliance assessments, risk management, cloud security, security intelligence, managed security programs, and virtual CISO services. CALIBRE Systems, Inc. - Information Management Consultants (IMC) provides enterprise content management, health analytics, and IT solutions to the government including the NIH, as well as the health and life sciences industry, and commercial enterprises. *08/31/2015 SRA International Computer Sciences Corp. (NYSE:CSC) - U.S. Government Svcs. unit *08/27/2015 Novetta Solutions The Carlyle Group (NASDAQ:CG) - The CSC Government Services unit (CSCGov) and SRA have announced a definitive agreement to combine in a merger reported to be completed in Q4-2015, following the CSC division's separation from the company. - Novetta is a government IT contractor specializing in IT analytics, data protection, cybersecurity, and other technology-enabled solutions. The company's customers include the DoD, DHS, other government agencies, and commercial enterprises. 08/24/2015 Kratos Defense & Security Solutions (NYSE:KTOS) - Electronics Products division Ultra Electronics Holdings PLC The Electronics Products Division (formerly Herley Industries Inc.) is Kratos' electronic warfare division, a leading RF and microwave supplier to the U.S. and international markets. 08/21/2015 Alion Science and Technology Corp. Veritas Capital - Alion provides engineering services to the federal government, with services ranging from naval architecture and engineering to systems analysis and modeling and simulation. Alion's customers include the U.S. Navy and DHS. 08/18/2015 Iron Data, LLC MicroPact Inc. - Iron Data and MicroPact agreed to a merger in mid-august. Both companies are industryleading providers of case management and business process management software. 08/14/2015 Symbolic Systems, Inc. - Federal IT assets 08/06/2015 International Communications Group, Inc. (ICG) Data Systems Analysts, Inc. (DSA) Rockwell Collins Inc. (NYSE:COL) - Symbolic Systems' Federal IT services practice is an IT services and data management provider offering technology-based solutions with a focus on data management, enterprise information management, and biometrics ICG designs, develops, and manufactures communications systems and solutions for military and civilian aircraft, including satellite-based global voice and data telecommunications products and services. 08/04/2015 FusionX LLC Accenture plc (NYSE:ACN) - FusionX is a cybersecurity firm offering cyber attack simulation, threat modeling and risk advisory services for government organizations as well as commercial customers in financial services, manufacturing, and IT. *07/20/2015 Sikorsky Aircraft Corp. Lockheed Martin (NYSE:LMT) 9,000.0 Sikorsky is a military and civilian helicopter manufacturer in the United States, delivering light turbine and piston helicopters to governments around the world. The company also offers maintenance, repair, and overhaul services. 07/15/2015 ManTech Cyber Solutions International (MCSI) CounterTack, Inc. - The ManTech Cyber Solutions International, a commercial software division of ManTech Int'l. Corp. (NASDAQ:MANT), provides big data endpoint detection and response (EDR). 07/08/2015 The Human Geo Group, LLC The Radiant Group, Inc. - HumanGeo is a data analytics and software development company with expertise in mission-focused data analytics and high-end technical services. HumanGeo serves organizations in the defense community as well as commercial customers. Note: *Announced not yet closed as of 10/02/ Government Contractor Quarterly Market Update Q4 2015

5 INDUSTRY AND AGENCY NEWS SENATE PASSES BILL TO AVOID GOVERNMENT SHUTDOWN President Barack Obama signed a stopgap funding bill, which was approved by the House and the Senate, to temporarily avert a government shutdown. However, this legislation will only keep the government funded through December 11th. Many experts believe that there will be an upcoming congressional battle between Democrats and Republicans as this deadline looms. DESPITE MAJOR BREACHES, NEW REPORT GIVES GOVERNMENT HIGH SECURITY MARKS A new report finds that, despite recent high-profile breaches, the federal government has the second highest cybersecurity performance rating when compared with private-sector industries. According to Bitsight s third annual Insights Industry Benchmark Report, even though federal government breaches have made the news recently, they are not as numerous or as severe as those affecting other spaces, such as education and energy. THE MILITARY S PROLIFERATING MIX OF SMARTPHONES AND TABLETS Smartphones and tablets are rapidly making their way into military operations, trimming costs and giving warfighters tightly focused capabilities, Defense Systems Magazine reports. But these benefits raise a host of challenges, ranging from security and the need for rugged tools, to requirements for peripherals that link to devices designed for consumers, not soldiers. GSA LAUNCHES PORTAL FOR QUICK IT PURCHASES The General Services Administration has launched a program that the agency says will make it easier for the government to buy pre-competed IT products, FierceGovernment reports. The program is part of the department s Advantage marketplace, GSA s online shopping and ordering system for products and services already under GSA contracts. DOD TO SPEND UP TO $330 MILLION ON ID PROTECTION The U.S. government is initiating protections for the 21.5 million people affected by the hack of the Office of Personnel Management, with the Navy awarding a $133.3 million contract to ID Experts for data breach recovery services, Defense Systems Magazine reports. The contract could grow to $330 million if all options are exercised. ARMY LOOKS FOR LONG-TERM IT PLAN The Army has short- and medium-term plans for IT modernization but is still in search of a long-term vision, according to Federal Computer Week. As such, the Army is developing an industry and defense coalition to develop a long-term plan that would help contractors plan their R&D investments, as well as allow the Army to deliver IT services through commercial and DISA-managed cloud services. DARPA S NEW MIND-CONTROLLED ROBOTIC ARM The Defense Advanced Research Projects Agency (DARPA) recently made major headlines when it announced that it has created a robotic arm connected by wires that link to the user s motor cortex, allowing the wearer to control the motion of the arm. It also has pressure sensors that connect back into the sensory cortex so the wearer can experience the sensation of touching something a groundbreaking innovation for wounded veterans. POPE VISIT SHINES LIGHT ON DHS SECURITY EFFORTS The Pope s recent U.S. visit shined a light on the Department of Homeland Security s comprehensive effort at keeping His Holiness and U.S. citizens safe. According to FCW, these efforts included establishing communications and information exchange operations involving federal, state, and local agencies in Washington, Philadelphia, and New York. 5 Government Contractor Quarterly Market Update Q4 2015

6 REPRESENTATIVE TRANSACTIONS 6 Government Contractor Quarterly Market Update Q4 2015

7 CONTACT INFORMATION SC&H CAPITAL is an investment banking advisory firm to middle market businesses. We support our investment banking activity with a full suite of strategic and financial advisory resources to help companies develop and execute strategic plans and initiatives. The firm s committed team of senior professionals average nearly 20 years of transaction advisory experience across a broad array of industries. Our holistic and customized approach to advising clients enables us to deliver unparalleled results in maximizing shareholder value and achieving strategic objectives. SC&H GROUP puts our subject matter expertise to work for clients in the following areas: Audit Services Tax Services Consulting Services Investment Banking & Advisory Services Personal Financial Planning Services Sell Side Representation Buy Side Representation Capital Raises ESOP Design Feasibility Analysis Transaction Structuring Transaction Financing ESOP Implementation Transaction Valuations Fairness Opinions S-Corporation Tax Opinions AREAS OF EXPERTISE MERGERS & ACQUISITIONS Recapitalizations Management Buyouts (MBO) Divestitures EMPLOYEE STOCK OWNERSHIP PLANS (ESOP) VALUATION ADVISORY ESOP Administration Annual Valuations Plan Audits Accounting Assistance Company Financial Statement Audits Valuations for Financial Reporting Valuations for Consulting & Other Valuations for Tax & Compliance Purposes Purposes Appraisal Services For further information on our Government Contractor Services, Baltimore, MD (410) please contact: SC&H CAPITAL McLean, VA (703) Christopher Helmrath Managing Director chelmrath@scandh.com Matthew Roberson Principal mroberson@scandh.com Greg Hogan Principal ghogan@scandh.com Kevin O Sullivan Principal kosullivan@scandh.com This communication does not represent a solicitation of an offer to sell securities. Securities offered through Stout Causey Capital Corporation, Member FINRA/ SIPC. Licensed to sell securities in California, Connecticut, District of Columbia, Florida, Maryland, Massachusetts, Missouri, North Carolina, New Jersey, New York, Pennsylvania, Tennessee, Virginia, and West Virginia. SC&H Capital is a registered trade name of Stout Causey Capital Corporation, a subsidiary of SC&H Group, Inc. SC&H Group, Inc. is a member of SC&H Group, LLC. 7 Government Contractor Quarterly Market Update Q4 2015