Privatized Investigators' Success

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The first federal agency privatized as an employee-owned firm is showing signs of business success, the Office of Personnel Management reported last week.

U.S. Investigations Services, Inc., formerly the OPM Office of Investigations, conducts background checks of employees for federal agencies. Now that the office has been privatized as USIS, it also performs investigative services for non-federal governments and private businesses.

As part of its contract with USIS to help the fledgling company grow, OPM agreed to pay for investigative services up front rather than after services are rendered. OPM agreed to pay in advance through April 1998. USIS this month told OPM it no longer needs the advance payments. The business partners revised their payment terms, ending up-front payments a year early. The government will gain $1.2 million in interest this year because payment will be delayed, OPM said.

"The company is still very young, but the signs of business expansion are nevertheless evident," OPM Director Jim King said. "USIS, Inc., is establishing a record of success for future privatization endeavors and proving that privatization works, and employee-owned, privatized companies can and will be successful."

The Office of Investigations became USIS and was converted into an Employee Stock Ownership Plan (ESOP) in July 1996. The OPM investigators separated from the government and became employees and owners of the private firm. About 93 percent of investigators and other employees accepted the offer to join the ESOP.

Because USIS's workload is 30 percent higher than original expectations, the firm has hired 130 employees.

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