2. ESOP Advisors, Inc. -- Employee Ownership and Government Privatization © ESOP Privatization of Government Operations ESOP Advisors, Inc. April, 2002

3. ESOP Advisors, Inc. -- Employee Ownership and Government Privatization © The Private Sector ESOP Track Record 14,000 ESOP Companies in U.S. economy 18 Million employees participate in ESOPs Highly successful companies which are employee owned include: SAIC United Airlines DynCorp ESOP Companies more profitable, more productive ESOPs work well in transitioning Federal workforce

4. ESOP Advisors, Inc. -- Employee Ownership and Government Privatization © ESOP Advisors, Inc. Recognized Leader in ESOP Privatization Performed groundbreaking feasibility analysis of OPM Office of Federal Investigations Performed over 30 ESOP Privatization assignments for Federal, State & Local Governments Recently supported Navy in ESOP Privatization of Environmental Detachment Over 430 employees were successfully outplaced, moved in September, 1999 as a unit to new private sector jobs with comparable salaries and benefits.

5. ESOP Advisors, Inc. -- Employee Ownership and Government Privatization © ESOP Privatization Process Result

6. ESOP Advisors, Inc. -- Employee Ownership and Government Privatization © ESOP Privatization Responds To: Management restructuring and Commercial Activities objectives Acceptable alternative to A-76 Ethics/Conflict of Interest Concerns Concerns of Federal Employees Participation Protection of Compensation Protection of Retirement Benefits

7. ESOP Advisors, Inc. -- Employee Ownership and Government Privatization © ESOP Privatization Advantages Innovative alternative approach to Commercial Activities Process Compares favorably with A-76 process in terms of cost and timeliness Achieves seamless operational transition which satisfies concerns of using “outside” contractors Retains institutional knowledge Maintains secure structure and integrity Minimizes adverse impacts on current Federal employees Provides maximum cost savings while retaining “surge capacity” and quality

8. ESOP Advisors, Inc. -- Employee Ownership and Government Privatization © Federal Privatization through ESOPs NPR/OPM Guidance: May 12, 1995 ESOPs may be considered as a part of outsourcing strategy The government may award a service contract to an ESOP and may limit offers to ESOPs ESOP service related contracts may be awarded competitively or sole source Existing equipment and facilities can be furnished as GFE

9. ESOP Advisors, Inc. -- Employee Ownership and Government Privatization © ESOP Privatization Successful Strategies

10. ESOP Advisors, Inc. -- Employee Ownership and Government Privatization © Announce Study Data Collection Performance Work Statement Development: Initial ESOP Involvement Issue Solicitation (RFP ) Receive Offers Evaluation and Negotiation Select “Challenger ” “True-Up” MEO Preparation Certification of Management Plan Perform Cost Comparison Transition Business Case Analysis MEO with Partner SwapsFranchiseESOP with Partners ESOP Stand Alone Total Privatization Sale Sale/Leaseback Lease/Purchase Operating Contract ESOPs & A-76

11. ESOP Advisors, Inc. -- Employee Ownership and Government Privatization ©

12. ESOP Privatization Process Education Employee Briefings Civilian/Military Management Briefing Pre-Feasibility Assessment Feasibility Analysis Legal Analysis Business Case Analysis Implementation Phase I: Business Plan Development Phase II: ESOP Implementation by “Employee Representative”

13. ESOP Advisors, Inc. -- Employee Ownership and Government Privatization © ESOP Privatization Timeline Education 30 Days Pre-Feasibility Assessment 30 Days Feasibility Analysis 60 Days Implementation Business Plan 60 Days Contract Negotiation & ESOP Start Up 120 -180 Days

14. ESOP Advisors, Inc. -- Employee Ownership and Government Privatization © Contact ESOP Advisors, Inc. Phone:703-758-8773 Fax:703-860-9144 Email:esop@pipeline.comesop@pipeline.com Mail: Reston International Center 11800 Sunrise Valley Drive, Suite 322 Reston, VA 20191-5302 Web Page:http://www.esopadvisors.comhttp://www.esopadvisors.com ESOP Advisors, Inc. is on the GSA MOBIS Schedule

15. ESOP Advisors, Inc. -- Employee Ownership and Government Privatization © Informational Web Sites: Copy of OMB Circular on ESOP Privatization; policy guidance http://www.financenet.gov/financenet/fed/cfo/franchiz/esop1.htm Web Site for ESOP Advisors, Inc. http://www.esopadvisors.com Information on USIS, OPM’s successful ESOP Privatization http://www.govexec.com/archdoc/brg97/0497brg3.htm National Performance Review’s summary of NAVSEA ESOP Privatization http://www.npr.gov/library/announc/navsea.html Army Small & Disadvantaged Business (SADBU) Site http://www.hqda.army.mil/sadbu/news/ESOP%20Privatization%20Briefing%20color/sl d001.htm General Accounting Office Commercial Activities Panel http://www.gao.gov/a76panel/powerpoint/neece/index.htm Article on Application of 501{c}3 and ESOPs to Privatization http://www.public-private.org/sys-tmpl/nss-http://www.public-private.org/sys-tmpl/nss- older/newsletterfolder/JulAug00abbrevolder/newsletterfolder/JulAug00abbrev