Public-Private Ventures Could Ease the Pains of Privatization.

• Author: Tiron, Rokana

Competitions between government workers and contractors for Defense Department jobs can bring more efficiency to the public sector, but critics also have complained that the practice may unfairly risk government workers' jobs.

The difficulties associated with outsourcing, base closures and public-private competitions could be alleviated under an initiative called Transition Benefit Corporation (TBC)--a non-profit umbrella organization that would facilitate the transition of workers and buildings from the public to the private sector. The goal of TBC is to find a "soft landing" for government workers and to create a business environment for "new growth," said Roger Feldman, an attorney with Bingham Dana, in Washington, D.C.

Working with Feldman on this project is Stephen Sorett, an attorney at ReedSmith, also in Washington. They described the TBC as a vehicle to promote the transfer of under-used government assets, such as real estate, equipment and intellectual property, as well as the transition of government personnel to the private sector.

"The TBCs are merely facilitating entities to move assets/personnel into private-sector situations where they will contribute to economic development and personnel soft landing," said Feldman. The umbrella organization would include the federal workers whose jobs are in jeopardy, a private firm that would be selected competitively, as well as an "incubator" organization that would receive local grants and pursue new ventures.

Employment Contract

The employees in transition can be part of the non-profit, the for-profit or new start-up companies. They negotiate an employment contract with their new employer that will typically last about one year. "After that, there are no guarantees, said Sorett. The premise of the TBC model, he noted, is to grow new businesses and create a climate for economic development. The one-year guarantee is based on the fact that, on average, the terminating federal agency has outlays amounting to about one year's salary for an employee who loses his or her job.

The most attractive benefit of the TBC, according to Sorett, is that the government workers would retain their public employment benefits. "In this sense, the deal looks very much like a merger or acquisition in the classical sense," he said. A successful example of the TBC concept was the arrangement in Charleston, S.C., where Navy employees were re-trained at public expense and teamed with private companies to provide services to the government.

It is unclear what the future holds for the TBC initiative, since it is only in the early stages of development. Feldman and Sorett unveiled the TBC plan during a recent conference on public-private partnerships sponsored by SMI Ltd.

As with any concept that challenges the status quo, TBC may face significant cultural obstacles.

"Cultural issues are the biggest barriers of all," said Stan Soloway, president of the Professional Services Council, an industry group in Arlington, Va. "The senior work force is trained to do business in a very traditional model...