Freedom From Government Competition Act of 1997

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Freedom From Government Competition 
Act of 1997''.

SEC. 2. FINDINGS.

    Congress finds and declares that--
            (1) private sector business concerns, which are free to 
        respond to the private or public demands of the marketplace, 
        constitute the strength of the American economic system;
            (2) competitive private sector enterprises are the most 
        productive, efficient, and effective sources of goods and 
        services;
            (3) government competition with the private sector of the 
        economy is detrimental to all businesses and the American 
        economic system;
            (4) government competition with the private sector of the 
        economy is at an unacceptably high level, both in scope and in 
        dollar volume;
            (5) when a government engages in entrepreneurial activities 
        that are beyond its core mission and compete with the private 
        sector--
                    (A) the focus and attention of the government are 
                diverted from executing the basic mission and work of 
                that government; and
                    (B) those activities constitute unfair government 
                competition with the private sector;
            (6) current laws and policies have failed to address 
        adequately the problem of government competition with the 
        private sector of the economy;
            (7) the level of government competition with the private 
        sector, especially with small businesses, has been a priority 
        issue of each White House Conference on Small Business;
            (8) reliance on the private sector is consistent with the 
        goals of the Government Performance and Results Act of 1993 
        (Public Law 103-62);
            (9) reliance on the private sector is necessary and 
        desirable for proper implementation of the Federal Workforce 
        Restructuring Act of 1994 (Public Law 103-226);
            (10) it is in the public interest that the Federal 
        Government establish a consistent policy to rely on the private 
        sector of the economy to provide goods and services that are 
        necessary for or beneficial to the operation and management of 
        Federal Government agencies and to avoid Federal Government 
        competition with the private sector of the economy; and
            (11) it is in the public interest for the private sector to 
        utilize employees who are adversely affected by conversions to 
        use of private sector entities for providing goods and services 
        on behalf of the Federal Government.

SEC. 3. RELIANCE ON THE PRIVATE SECTOR.

    (a) General Policy.--Notwithstanding any other provision of law, 
except as provided in subsection (c), each agency shall procure from 
sources in the private sector all goods and services that are necessary 
for or beneficial to the accomplishment of authorized functions of the 
agency.
    (b) Prohibitions Regarding Transactions in Goods and Services.--
            (1) Provision by government generally.--No agency may begin 
        or carry out any activity to provide any products or services 
        that can be provided by the private sector.
            (2) Transactions between governmental entities.--No agency 
        may obtain any goods or services from or provide any goods or 
        services to any other governmental entity.
    (c) Exceptions.--Subsections (a) and (b) do not apply to goods or 
services necessary for or beneficial to the accomplishment of 
authorized functions of an agency under the following conditions:
            (1) Either--
                    (A) the goods or services are inherently 
                governmental in nature within the meaning of section 
                6(b); or
                    (B) the Director of the Office of Management and 
                Budget determines that the provision of the goods or 
                services is otherwise an inherently governmental 
                function.
            (2) The head of the agency determines that the goods or 
        services should be produced, provided, or manufactured by the 
        Federal Government for reasons of national security.
            (3) The Federal Government is determined to be the best 
        value source of the goods or services in accordance with 
        regulations prescribed pursuant to section 4(a)(2)(C).
            (4) The private sector sources of the goods or services, or 
        the practices of such sources, are not adequate to satisfy the 
        agency's requirements.

SEC. 4. ADMINISTRATIVE PROVISIONS.

    (a) Regulations.--
            (1) OMB responsibility.--The Director of the Office of 
        Management and Budget shall prescribe regulations to carry out 
        this Act.
            (2) Content.--
                    (A) Private sector preference.--Consistent with the 
                policy and prohibitions set forth in section 3, the 
                regulations shall emphasize a preference for the 
                provision of goods and services by private sector 
                sources.
                    (B) Fairness for federal employees.--In order to 
                ensure the fair treatment of Federal Government 
                employees, the regulations--
                            (i) shall not contravene any law or 
                        regulation regarding Federal Government 
                        employees; and
                            (ii) shall provide for the Director of the 
                        Office of Management and Budget, in 
                        consultation with the Director of the Office of 
                        Personnel Management, to furnish information on 
                        relevant available benefits and assistance to 
                        Federal Government employees adversely affected 
                        by conversions to use of private sector 
                        entities for providing goods and services.
                    (C) Best value sources.--
                            (i) Standards and procedures.--The 
                        regulations shall include standards and 
                        procedures for determining whether it is a 
                        private sector source or an agency that 
                        provides certain goods or services for the best 
                        value.
                            (ii) Factors considered.--The standards and 
                        procedures shall include requirements for 
                        consideration of analyses of all direct and 
                        indirect costs (performed in a manner 
                        consistent with generally accepted cost-
                        accounting principles), the qualifications of 
                        sources, the past performance of sources, and 
                        any other technical and noncost factors that 
                        are relevant.
                            (iii) Consultation requirement.--The 
                        Director shall consult with persons from the 
                        private sector and persons from the public 
                        sector in developing the standards and 
                        procedures.
                    (D) Appropriate governmental activities.--The 
                regulations shall include a methodology for determining 
                what types of activities performed by an agency should 
                continue to be performed by the agency or any other 
                agency.
    (b) Compliance and Implementation Assistance.--
            (1) OMB center for commercial activities.--The Director of 
        the Office of Management and Budget shall establish a Center 
        for Commercial Activities and Privatization within the Office 
        of Management and Budget.
            (2) Responsibilities.--The Center--
                    (A) shall be responsible for the implementation of 
                and compliance with the policies, standards, and 
                procedures that are set forth in this Act or are 
                prescribed to carry out this Act; and
                    (B) shall provide agencies and private sector 
                entities with guidance, information, and other 
                assistance appropriate for facilitating conversions to 
                use of private sector entities for providing goods and 
                services on behalf of the Federal Government.

SEC. 5. STUDY AND REPORT ON COMMERCIAL ACTIVITIES OF THE GOVERNMENT.

    (a) Annual Performance Plan.--Section 1115(a) of title 31, United 
States Code, is amended--
            (1) by striking ``and'' at the end of paragraph (5);
            (2) by striking the period at the end of paragraph (6) and 
        inserting ``; and''; and
            (3) by adding at the end the following:
            ``(7) include--
                    ``(A) the identity of each program activity that is 
                performed for the agency by a private sector entity in 
                accordance with the Freedom From Government Competition 
                Act of 1997; and
                    ``(B) the identity of each program activity that is 
                not subject to the Freedom From Government Competition 
                Act of 1997 by reason of an exception set forth in that 
                Act, together with a discussion specifying why the 
                activity is determined to be covered by the 
                exception.''.
    (b) Annual Performance Report.--Section 1116(d)(3) of title 31, 
United States Code, is amended--
            (1) by striking ``explain and describe,'' in the matter 
        preceding subparagraph (A);
            (2) in subparagraph (A), by inserting ``explain and 
        describe'' after ``(A)'';
            (3) in subparagraph (B)--
                    (A) by inserting ``explain and describe'' after 
                ``(B)''; and
                    (B) by striking ``and'' at the end;
            (4) in subparagraph (C)--
                    (A) by inserting ``explain and describe'' after 
                ``infeasible,''; and
                    (B) by inserting ``and'' at the end; and
            (5) by adding at the end the following:
            ``(D) in the case of an activity not performed by a private 
        sector entity--
                    ``(i) explain and describe whether the activity 
                could be performed for the Federal Government by a 
                private sector entity in accordance with the Freedom 
                From Government Competition Act of 1997; and
                    ``(ii) if the activity could be performed by a 
                private sector entity, set forth a schedule for 
                converting to performance of the activity by a private 
                sector entity;''.

SEC. 6. DEFINITIONS.

    (a) Agency.--As used in this Act, the term ``agency'' means the 
following:
            (1) Executive department.--An executive department as 
        defined by section 101 of title 5, United States Code.
            (2) Military department.--A military department as defined 
        by section 102 of such title.
            (3) Independent establishment.--An independent 
        establishment as defined by section 104(1) of such title.
    (b) Inherently Governmental Goods and Services.--
            (1) Performance of inherently governmental functions.--For 
        the purposes of section 3(c)(1)(A), goods or services are 
        inherently governmental in nature if the providing of such 
        goods or services is an inherently governmental function.
            (2) Inherently governmental functions described.--
                    (A) Functions included.--For the purposes of 
                paragraph (1), a function shall be considered an 
                inherently governmental function if the function is so 
                intimately related to the public interest as to mandate 
                performance by Federal Government employees. Such 
                functions include activities that require either the 
                exercise of discretion in applying Federal Government 
                authority or the making of value judgments in making 
                decisions for the Federal Government, including 
                judgments relating to monetary transactions and 
                entitlements. An inherently governmental function 
                involves, among other things, the interpretation and 
                execution of the laws of the United States so as to--
                            (i) bind the United States to take or not 
                        to take some action by contract, policy, 
                        regulation, authorization, order, or otherwise;
                            (ii) determine, protect, and advance its 
                        economic, political, territorial, property, or 
                        other interests by military or diplomatic 
                        action, civil or criminal judicial proceedings, 
                        contract management, or otherwise;
                            (iii) significantly affect the life, 
                        liberty, or property of private persons;
                            (iv) commission, appoint, direct, or 
                        control officers or employees of the United 
                        States; or
                            (v) exert ultimate control over the 
                        acquisition, use, or disposition of the 
                        property, real or personal, tangible or 
                        intangible, of the United States, including the 
                        control or disbursement of appropriated and 
                        other Federal funds.
                    (B) Functions excluded.--For the purposes of 
                paragraph (1), inherently governmental functions do not 
                normally include--
                            (i) gathering information for or providing 
                        advice, opinions, recommendations, or ideas to 
                        Federal Government officials;
                            (ii) any function that is primarily 
                        ministerial or internal in nature (such as 
                        building security, mail operations, operation 
                        of cafeterias, laundry and housekeeping, 
                        facilities operations and maintenance, 
                        warehouse operations, motor vehicle fleet 
                        management and operations, or other routine 
                        electrical or mechanical services); or
                            (iii) any good or service which is 
                        currently or could reasonably be produced or 
                        performed, respectively, by an entity in the 
                        private sector.

Summary: Freedom From Government Competition Act of 1997 - Requires Federal agencies to obtain all goods and services necessary for or beneficial to the accomplishment of their authorized functions by procurement from private sources, unless except as specified. Directs the Director of the Office of Management and Budget (OMB) to establish a Center for Commercial Activities and Privatization within OMB to: (1) be responsible for the implementation of and compliance with the policies, standards, and procedures that are set forth in this Act or are prescribed to carry out this Act. And (2) provide agencies and private sector entities with guidance, information, and other assistance appropriate for facilitating conversions to use of private sector entities for providing goods and services on behalf of the Federal Government. Amends Federal law to require that each agency shall include in its annual performance plan the identity of each program activity that is: (1) performed for the agency by a private sector entity in accordance with this Act. And (2) not subject to this Act by reason of an exception, together with a discussion specifying why the activity is determined to be covered by the exception. Revises requirements regarding program performance reports to require each agency, in its annual program performance report, in the case of an activity not performed by a private sector entity, to: (1) explain and describe whether an activity not performed by a private sector entity could be performed by a private sector entity in accordance with this Act. And (2) if the activity could be performed by a private sector entity, set forth a schedule for converting to performance of the activity by a private sector entity.