Navy employees privatize themselves

With layoffs looming over them, a group of Navy employees have banded together and privatized themselves.

More than 400 employees involved in environmental clean-up activities at two closing Navy shipyards were scheduled to lose their jobs next month as part of the Defense Department's base realignment and closure process.

The shipyards, one in Charleston, S.C. and the other in Vallejo, Calif., were targeted for closure in 1993. The Navy retrained several hundred shipyard and nuclear submarine workers in environmental remediation. Those employees have spent the past several years cleaning up the shipyards as the government makes way for private sector tenants.

The retrained workers did so well in their new line of work that other Defense Department units sought out their expertise. With a growing base of satisfied customers, the environmental clean-up detachments decided to find a way to stay in business. After various options within the government didn't pan out, they decided to privatize.

"There was no requirement to privatize these environmental detachments," said Pat Dolan, spokeswoman for the Naval Sea Systems Command (NAVSEA), which oversees the two units. "But they've done a tremendously great job and they have extremely marketable skills. So rather than each individual employee seeking work on their own, the units basically sold themselves, their services, to other companies."

The roughly 300 employees in California will be acquired next month by Roy F. Weston Inc., a Chester, Pa.-based environmental remediation company. The 100-plus employees in Charleston will join the South Carolina Research Authority, a non-profit organization based in Charleston.

Two consulting firms, Chicago-based Grant Thornton LLP and Washington-based ESOP Advisors Inc., helped move the employees into the private sector. The employees were skeptical of their own worth after the government decided to cut their jobs, said Roger Neece, president of ESOP Advisors. But the employees learned that their skills were highly valued in the private sector.

When the word got out that the Navy employees were looking for a new employer, more than 75 private firms expressed interest in hiring them, Neece said.

The firms were eventually narrowed down to six; three firms bid on the South Carolina employees and three bid on the California employees. The employees then picked the best offers.

"Everybody who wants to go to these firms is being offered a job," Neece said. "People have other opportunities both within federal government and outside. That's part of reason why the firms offered very good packages. They wanted these people. It shows federal employees and managers have a lot of value in the private sector."

The strategy of seeking an outside company to acquire a unit of employees is called strategic partnering. ESOP Advisors facilitated another strategic partnering arrangement two years ago, when the U.S. Army Management Engineering College became the Advanced Management Engineering Center, a division of Fairfax, Va.-based Synectics Corp.

In 1996, the Office of Personnel Management's Office of Federal Investigations was converted into an entirely new company, U.S. Investigations Services, Inc. Neece said the strategic partnering strategy, rather than the creation of a new company, was used for the Navy detachments because the environmental clean-up industry isn't as capable of sustaining a new company as was the investigative services industry when the OPM office was privatized.