Growth & Profitability Prompts Small Government Business' Move from Generic Accounting Solution to Costpoint

Last updated on March 03, 2022.

Adaptic LLC’s mission-focused end-to-end systems engineering and analytic expertise enhances operationally deployed systems, guides the acquisitions of complex systems under development and architects systems and technologies for the future. Adaptic has a wide variety of capabilities, including software engineering, data science, systems engineering and program management, to support work within the intelligence community, Department of Defense and civilian agencies of the federal government.

When Aaron Solar, president and founder of Adaptic, first hung the shingle for his growing business in 2016, his plan wasn’t initially to become a government contractor. However, after his firm was enlisted to support a contract with Fort Meade in Maryland, two things changed for the company: 1.) Adaptic’s overall focus transitioned from commercial work to pursuing more opportunities with government agencies and 2.) Solar was going to need more software and system engineers to meet these new demands.

With wife Sarah Dabney coming on board as Vice President, Adaptic re-classified their company as a women-owned small business (WOSB). They also expanded into various mission areas, helping to advance some of the cybersecurity tools to support agencies and develop new capabilities and strengthened its presence in signals intelligence (SIGINT). The couple soon realized that using a network of systems that included QuickBooks® and a third-party timekeeping, payroll and retirement solution, was not going to be effective for the company’s growth strategy. Instead, they needed to make an investment in a trusted, project-based enterprise resource planning (ERP) solution to become more tactical and scale their business.

As a result, Solar and Dabney went through an evaluation process for ERP solutions for Adaptic, and ultimately selected Deltek Costpoint to support the evolution and expansion of the business.

Q: How has becoming a WOSB/WBE made Adaptic more employee-centric?

A: We’ve definitely grown our team – doubling in size over the last year to 20 employees – in the midst of a global pandemic. We are realizing the talent shortages throughout the industry and we’re seeing first-hand the struggles others are facing to retain top employees, including government agencies. We are focused on organic growth and building a strong pipeline of talented candidates – while being intentional about matching the right people to the right job based on their personality and skillsets, rather than hiring to check a box.

Additionally, we want to keep our team happy and engaged – to avoid the 2-year itch. We’re constantly thinking about what’s next, how can we help each employee grow and do our best to provide them with frequent opportunities to move around and try new things. So we’re adjusting, adapting.

Finally, we’ve committed Adaptic to remaining flat, rather than a hierarchical organization. Our approach is that we’re all in this together. It’s a continued priority for us to be transparent and share information with our employees that most organizations might not share. We try our best to communicate openly and candidly on all topics and decisions we might be making to foster engagement. Our hope is that our employees are happy and enjoy their work, so they refer their friends.

By building a strong foundation, we’ll improve diversification along the way, which will be critical this year. There is a big push for socio-economic set-aside acquisitions, whether it’s small disadvantaged business (SDB), service-disabled veteran-owned business (SDVOB) or women-owned small business (WOSB), which we are. And, being a small business with a socio-economic designator like WOSB will hopefully improve our eligibility for new types of contracts.

Q: What business challenges were you facing with your previous solution?

A: Our biggest challenge was a job costing or, people being married to labor categories and projects. Specifically, we needed to know is this individual actually profitable, or are we losing money on the placement of this person? Many companies use wrap rates as a guide to program profitability, getting a rate up to a bill rate. However, we approached it differently by building real-time profitability indicators based on our budget wrap rate, lowest wrap rate that we can actually operate at, and our actual wrap, to compare that number to a person’s cost and bill rates. It helped us better understand when a person and program are working well together, or whether we need to find another placement for them. It also indicates when and where we need to invest and bring on strategic people for the mission or for future programs with that individual’s capabilities.

Q: What type of accounting system did Adaptic previously use?

A: When we first started the company, we used QuickBooks. Then we added TSheets for timekeeping, Gusto for payroll and Guideline for retirement management. That worked, more or less, until Adaptic grew to five people. Then, a need for accrual-based accounting and an understanding of indirect rates structures became important, as well as more efficiently processing payroll. It was at that point we knew that we had outgrown QuickBooks.

Q: What were your requirements for a new project-based system?

A: Our main goal was to invest in an accounting system that worked seamlessly with the DCAA (Defense Contract Audit Agency). We also wanted to expand to other agencies and have the ability for unlimited cost pools. Knowing Deltek’s indirect architecture, you really can’t get better – no matter what size or scale or design you want your company to be – you have the flexibility to design that kind of indirect cost structure, no matter what your requirements are. Based on our knowledge of other systems such as Unanet and PROCAS, we already knew that we were not interested in going with those platforms. We sole-sourced Deltek Costpoint, knowing what the capabilities are and knowing it was the solution our business needed long term.

Q: Did compliance or audit requirements play a role in your decision-making process?

A: We designed Adaptic to be audit-ready, and so we’re in a holding pattern until we have a contract requirement that signals the DCAA flag for an audit. Design was a big focus when building the infrastructure of the company, so no matter what is thrown at us, we are equipped to handle any type of requirement as they evolve and come to fruition.

That said, it was important to us to invest in a solution that was known and trusted across the government contracting industry. Running our business on Costpoint provides a level of credibility as a subcontractor operating on a more mature platform – showing we are serious about our growth and success – prepared for whatever comes our way.

Q: How quickly were you able to implement Costpoint?

A: The timing lined up in an unexpected way. Because we were all sitting on the bench for a number of months due to the pandemic, it actually turned out to be the ideal time to implement. We realized there would be fewer moving parts, and we could actually dedicate more internal time to the migration. The team started to deploy in April of 2020, and we were live by June 1. A lot of time was spent on the design, because that’s something you want to get right the first time. Once everything was decided, we used a QuickStart database to populate most of the required tables like accounts and orgs.

Q: What major differences have you experienced since moving from QuickBooks® to Costpoint?

A: The biggest difference we noticed was having an audit trail. For example, if you go into a particular account, and that account number seems off, you have an auditable trail of that account’s activities. With QuickBooks you can bill easily, but you could have historical activity lost without knowing it. So, being able to look back and review each step is extremely helpful, especially if you’re growing or running operations yourself.

With QuickBooks there are also issues with recording time and hours per pay period, despite the third-party payroll system. Or, if you needed to make adjustments it was extremely difficult and did not have a cascading effect, especially when you’re talking about accounting periods, which QuickBooks does not support. Everything is based on what date something is entered. This doubled, if not tripled the amount of work we had to do by creating/adjusting journal entries in order to have accrual-based accounting in QuickBooks.

Q: What are some of the measurable benefits you’ve experienced since implementing Costpoint?

A: When using QuickBooks it would take us on average 8 to 10 hours per month to accurately complete billing, and not have invoices rejected. Now with Costpoint, that time is down to approximately 20 or 30 minutes. In addition, we were previously tracking teaming opportunities, where we have non-disclosure agreements in place and have agreements to talk about future work – all within Microsoft Excel®, which led to syncing issues. Having Costpoint be that single source of truth is absolutely crucial for us to more efficiently manage our contracts.

Q: How do you feel about being in the cloud?

A: One thing we did not want to deal with is patches. We fully trust Deltek’s team, so we can just sit back, relax and receive an email saying “Hey, we patched your system. This is what’s new.” So, it’s definitely a “sleep-easy-at-night” solution.

Q: What’s on the horizon for Adaptic?

A: In addition to focusing on talent and retention, we expect our organic growth to continue – slow and steady. We’re also looking at some strategic partnerships with other businesses through programs like Mentor Protégé or Joint Ventures for new opportunities.

Also, by improving our diversification, we hope by this time next year to put our sights on prime contract bids, which will be a real game changer for us – increasing our competitive edge.

Q: What advice would you give to a small government contracting business who is looking to grow and considering a project-based ERP solution?

A: When you’re an emerging business, it’s hard to anticipate how much growth you are going to have. We didn’t envision that over the course of two years Adaptic would go from 2 people to 10 to more than 20 people.  But, powering our business through Costpoint and knowing it can scale with rapid growth, it becomes very important to keep in mind when planning for the future and considering the systems we’ll need to get there.

Another thing to keep in mind, don’t focus on just the cost per license. A lot of smaller businesses turn to QuickBooks when they’re starting out because it’s less expensive. However, the amount of time and effort you’re going to spend keeping it useful, especially as you grow, adds up a lot faster than you realize. Yes, cost is always a factor, but once you compare cost against the labor required for QuickBooks and the other third-party applications, which you need to support your business operations, Costpoint becomes the clear choice.