Since 1996, Policy Studies has won four similar contracts from four states, said Debbie Olson, marketing director at PSI, while Lockheed Martin's Integrated Management Systems unit in Teaneck, N.Y., has won three contracts from three states worth $14.2 million over the next five years, said company spokesman Terry Lynam.
These contracts were sparked by the 1996 welfare-reform act, titled the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. It demands that states have in place by Oct. 1 computer systems able to spotlight employers' hiring of parents that owe child-support payments.
Dubbed "New Hire" systems, they allow state agencies to garnish the employees' wages until the child-support debt is paid.
These New Hire contracts are among the first wave of contact awards caused by the welfare reform act, said Grissen.
Other opportunities from the act include the modernization of states' welfare-management computer systems and outsourcing of "welfare-to-work" job-training and placement programs, he said.
The federal government is expected to distribute roughly $1 billion to the states over the next few years to help them hire contractors capable of modernizing their computer systems to cope with the reform act's changes to nationwide welfare rules, Grissen said.
The welfare-to-work effort "is a huge growing area [that] is emerging right now," Grissen said. Several states have adopted "a pay-for-performance mode where the private company is compensated for each welfare recipient they place in a job," he said. Mississippi and Delaware have already asked contractors to bid for outsourced welfare-to-work programs, he said.
In Ohio, BDM's New Hire contract was used to reduce the welfare rolls because BDM hired unemployed women to track down the deadbeat parents, said Grissen.
So far, BDM has won New Hire contracts from Ohio, Montana, Wisconsin, North Carolina, Tennessee, Mississippi, Texas, Michigan and Delaware. Lockheed won its contracts from New York, Maryland and Colorado.
Policy Studies has won New Hire contracts from Virginia and Minnesota, said Olson. The company has just won contracts from two more states, which she declined to identify until the states announce the contract awards.
In addition to its New Hire contracts, Policy Studies also is running programs that enforce child-support rules in several states. To run those programs, Policy Studies has established seven offices in Tennessee, one office in Omaha, Neb., three offices in Arizona and three offices in Atlanta, said Olson.
"That's the bulk of our business," she said. Policy Studies also operates a program in New York where company employees help record the parents of new infants, she said. Policy Studies is a medium-sized consulting and systems integration firm with 470 employees. The company's revenue reached $20.5 million in 1996, up from $12.5 million in 1995.