Greg Bingham And Richard Haynes Of Tucker Alan Inc.

1. Sarbanes-Oxley: Impact On Government Contractors National Contract Management Association December 9, 2003 Greg Bingham And Richard Haynes Of Tucker Alan Inc.

2. Historical Perspective • 1930’s Stock Market Decline And Beginning Of The Great Depression • Securities Exchange Act Of 1934 • Many Small Accounting Firms • Growth Of U.S. Economy, Multi-National Companies And Accounting Firms • Growth In Importance Of Wall Street

3. Historical Perspective (Continued) • Accounting Firms Gradually Diversify Into More Areas (E.G., Consulting, Computer Systems Installation, Tax Advice) • Natural Tension Between Company’s Desire For Positive Financial Disclosures And Auditors Desire For Properly Prepared Financial Statements • 1980s - Big Eight Accounting Firms With Diverse Practice Areas (More Revenue From Non-Audit Functions Than Audit Functions)

4. Historical Perspective (Continued) • 1990s – Consolidation of Accounting Firms • Late 1990s – Stock Market Run-Up • Early 2000s – Enron, Arthur Andersen, Sarbanes-Oxley, WorldCom, RiteAid, Adelphia, Waste Management, Tyco, HealthSouth, Xerox, Various Mutual Funds, And So On . . . • 2003 – Four Very Large Accounting Firms Left

5. Background • Enron Demise And WorldCom Collapse In Part Led To The Desire For Legislative Action • Sarbanes-Oxley Was Created To Restore Investor Confidence And Hold Corporate America More Accountable • The Act Was Signed Into Law On July 30, 2002, By President Bush

6. Sarbanes-Oxley Act Of 2002 • Title I: Public Company Accounting Oversight Board • Title II: Auditor Independence • Section 201 Prohibited Non-Audit Services • Section 203 Mandatory Audit Partner Rotation Every Five Years • Section 204 Auditor Reports To Audit Committee

7. Sarbanes-Oxley Act Of 2002 (Continued) • Title III: Corporate Responsibility • Section 302 Certification Of Disclosure In Companies’ Quarterly And Annual Reports • Section 304 Forfeiture Of Certain Bonuses And Profits • Section 306 Insider Trades During Pension Fund Blackout Periods • Section 307 Implementation Of Standards Of Professional Conduct For Attorneys

8. Sarbanes-Oxley Act Of 2002 (Continued) • Title IV: Enhanced Financial Disclosures • Section 401(a) Disclosure In Management's Discussion And Analysis About Off-Balance Sheet Arrangements • Section 404 Management Assessment Of Internal Controls • Section 407 Disclosure Of Audit Committee Financial Expert

9. Sarbanes-Oxley Act Of 2002 (Continued) • Title IV: Enhanced Financial Disclosures (Continued) • Section 403ET Mandated Electronic Filings And Website Postings For Forms 3, 4 And 5 • Section 406 Disclosures • Title V: Analyst Conflicts Of Interest • Title VI: Commission Resources And Authority

10. Sarbanes-Oxley Act Of 2002 (Continued) • Title VII: Studies And Reports • Title VIII: Corporate And Criminal Fraud Accountability • Section 802 Retention Of Records Relevant To Audits And Reviews • Criminal Penalties For Altering Documents Or Defrauding Shareholders

11. Sarbanes-Oxley Act Of 2002 (Continued) • Title IX: White-Collar Crime Penalty Enhancements • Title X: Corporate Tax Returns • Title XI: Corporate Fraud Accountability

12. Title I: Public Company Accounting Oversight Board (PCAOB) • Responsibilities Of The Board Include: • Registering Public Accounting Firms That Perform Audits Of Public Companies • Establishing Or Adopting Auditing, Quality Control, Ethics And Independence Standards Related To The Preparation Of Audit Reports

13. Title I: Public Company Accounting Oversight Board (PCAOB) (Continued) • Responsibilities Of The Board Include(Continued): • Conducting Inspections Of Registered Public Accounting Firms • Conducting Investigations And Disciplinary Proceedings Of Audit Firms And Associated Persons

14. Title I: Public Company Accounting Oversight Board Structure • Self-Regulatory Body • Non-Profit Corporation • Not An Agency Of The U.S. Government • Only An Act Of Congress Can Dissolve • SEC Has “Oversight And Enforcement Authority Over The Board”

15. Title I: Public Company Accounting Oversight Board - Key Initiatives • Registering Public Accounting Firms • Revising Generally Accepted Auditing Standards • Inspecting Public Accounting Firms

16. Title II: Auditor Independence Requirements • Unlawful For A Registered Public Accounting Firm To Provide “Non-Audit” Services Contemporaneously With The Audit • Bookkeeping Or Financial Statement Preparation • Financial Information Systems Design And Implementation • Appraisal Or Valuation Services • Actuarial Services

17. Title II: Auditor Independence Requirements (Continued) • Prohibited “Non-Audit” Services (Continued): • Internal Audit Outsourcing • Management Functions Or Human Resources • Broker Or Dealer, Investment Adviser, Or Investment Banking • Legal Services And Expert Services Unrelated To The Audit

18. Title II: Auditor Independence Requirements (Continued) • Non-Audit Services Not Specifically Excluded (Including Tax Services) Must Be Pre-Approved By Audit Committee And Disclosed In Issuer’s Annual Report • Blanket Approvals Not Permissible

19. Title II: Auditor Independence Requirements (Continued) • Mandatory “Cooling Off Period” – A“Corporate Officer” Cannot Have BeenEmployed By The Company’s Audit Firm During The One-Year Period Proceeding The Audit • Lead Partner And The Reviewing Partner Must Rotate Off The Audit Every Five Years • Other Audit Partners Must Rotate After Seven Years With A Two Year Time-Out Period

20. Title II: Auditor Independence Requirements (Continued) • Enhanced, Specific Communications Required With The Issuer’s Audit Committee • Must Report All Critical Accounting Policies And Practices Used • All Alternative Treatments Of Financial Information Within GAAP • Material Written Communications Between The Auditing Firm And Management

21. Title III: Corporate Responsibility • CEO And CFO Must Prepare A Statement To Certify The “Appropriateness Of The Financial Statements And Disclosures” To Accompany The Issuer’s Quarterly And Annual Reports • Must Certify In The Statement That They Are Responsible For Establishing And Maintaining Effective “Internal Controls” • Effective Date: August 29, 2002

22. Title III: Section 302 Certification • Certified By CEO And CFO (Or Equivalent) Acknowledging Review Of The 10-Q or 10-K • Report Does Not Include Any Untrue Statement Of Material Fact Or Omit A Material Fact • Financial Statements Fairly Presented In All Material Respects (Not Limited To Conformance With GAAP) • Signing Officers Are Responsible For Establishing And Maintaining “Internal Controls”

23. Title III: Section 302 Certification (Continued) • Signing Officers Have Evaluated The Effectiveness Of The Disclosure Controls And Procedures • Disclosures To Auditors And Audit Committee Regarding Deficiencies In Internal Control Over Financial Reporting Or Fraud • Disclosure Of Significant Changes To Internal Control Over Financial Reporting

24. Title IV: Management Assessment Of Internal Controls • Each Annual Report Must Contain A Report On Internal Control Over Financial Reporting From Management • The Committee On Sponsoring Organizations Framework Can Be Used, But Is Not Required (See www.coso.org For More Information) • This Assessment Must Be Attested To By The Public Accounting Firm That Prepares Or Issues The Audit Report On The Company’s Financial Statements

25. Title VIII: Retention Of Records Relevant To Audits And Reviews • Mandated By Sarbanes-Oxley Act, Section 802 • Requires Retention Of All “Records Relevant To Audit Or Review” Including Documentation Inconsistent With Auditor’s Final Conclusion • Documents Must Be Retained For Seven Years