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[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3426 Introduced in House (IH)]

108th CONGRESS
  1st Session
                                H. R. 3426

 To ensure that the business of the Federal Government is conducted in 
     the public interest and in a manner that provides for public 
    accountability, efficient delivery of services, reasonable cost 
  savings, and prevention of unwarranted Government expenses, and for 
                            other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                            October 30, 2003

 Mr. Wynn (for himself, Mr. Kanjorski, Ms. Baldwin, Mr. Boswell, Mrs. 
Capps, Ms. Carson of Indiana, Mr. Costello, Mr. Crowley, Mr. Cummings, 
    Mr. Davis of Illinois, Ms. DeLauro, Mr. Dicks, Mr. Dingell, Mr. 
    Doggett, Mr. Filner, Mr. Frank of Massachusetts, Mr. Frost, Mr. 
Hoeffel, Mr. Holden, Ms. Jackson-Lee of Texas, Mrs. Jones of Ohio, Ms. 
Kilpatrick, Mr. Kind, Mr. Kucinich, Mr. Lampson, Mr. Leach, Mr. Levin, 
 Mr. Matsui, Mrs. McCarthy of New York, Ms. McCarthy of Missouri, Ms. 
      McCollum, Mr. McIntyre, Mr. Michaud, Mr. Moore, Mr. Neal of 
Massachusetts, Ms. Norton, Mr. Oberstar, Mr. Peterson of Minnesota, Mr. 
  Sanders, Mr. Sandlin, Ms. Schakowsky, Mr. Serrano, Mr. Thompson of 
Mississippi, Mr. Towns, Mr. Udall of Colorado, Ms. Watson, Mr. Waxman, 
    and Ms. Roybal-Allard) introduced the following bill; which was 
             referred to the Committee on Government Reform

_______________________________________________________________________

                                 A BILL

 
 To ensure that the business of the Federal Government is conducted in 
     the public interest and in a manner that provides for public 
    accountability, efficient delivery of services, reasonable cost 
  savings, and prevention of unwarranted Government expenses, and for 
                            other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Truthfulness, 
Responsibility, and Accountability in Contracting Act of 2003''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Statement of purpose.
Sec. 3. Definitions.
Sec. 4. Certification of compliance.
Sec. 5. Agency reporting systems and required reports.
Sec. 6. Requirement for public-private competition for functions 
                            performed by Federal employees.
Sec. 7. Requirement for public-private competition for new functions.
Sec. 8. Review of contractor performance.
Sec. 9. Comptroller General reports.
Sec. 10. Repeal of certain reporting requirements.
Sec. 11. Applicability.
Sec. 12. Waivers from public-private competition requirements for 
                            reason of national security and homeland 
                            security.
Sec. 13. Limited pilot program to implement recommendations of 
                            commercial activities panel.

SEC. 2. STATEMENT OF PURPOSE.

    The purpose of this Act is to promote the interests of the 
taxpayers through the use of a fair public-private competition process, 
and to provide accountability to the taxpayers for Government work 
performed by contractors and Federal employees.

SEC. 3. DEFINITIONS.

    For purposes of this Act:
            (1) Agency.--The term ``agency'' means any department, 
        agency, bureau, commission, activity, or organization of the 
        United States, that employs an employee as defined under 
        paragraph (6).
            (2) Contracting.--The term ``contracting''--
                    (A) means--
                            (i) the transfer of a function from 
                        performance by Federal employees to a 
                        contractor; or
                            (ii) the assignment to a contractor of the 
                        performance of a function not currently 
                        performed by Federal employees or a contractor; 
                        and
                    (B) includes privatization, outsourcing, and 
                contracting out.
            (3) Contracting in.--The term ``contracting in'' means the 
        transfer of the performance of a function from a contractor to 
        Federal employees.
            (4) Contractor.--The term ``contractor'' means an 
        individual or other person that performs a function for an 
        agency under a contract with a contractor.
            (5) Federal employee.--The term ``Federal employee'' means 
        any individual employed--
                    (A) as a civilian in a military department (as 
                defined in section 102 of title 5, United States Code);
                    (B) in an Executive agency (as defined in section 
                105 of title 5, United States Code), including an 
                employee who is paid from nonappropriated funds;
                    (C) in those units of the legislative and judicial 
                branches of the Federal Government having positions in 
                the competitive service;
                    (D) in the Library of Congress;
                    (E) in the Government Printing Office; or
                    (F) by the Governors of the Federal Reserve System.
            (6) Function.--The term ``function'' means a service 
        activity, not procurement of goods.
            (7) Most efficient organization.--The term ``most efficient 
        organization'' means the organization of Federal employees that 
        would most efficiently perform a function after a public-
        private competition, as proposed by a Federal employee.
            (8) Offer.--The term ``offer'' means the formal response of 
        a bidder or the most efficient organization to a solicitation.
            (9) Patient care.--The term ``patient care''--
                    (A) means direct patient medical and hospital care 
                that the Department of Veterans Affairs or other 
                Federal hospitals or clinics are not capable of 
                furnishing because of geographical inaccessibility, 
                medical emergency, or particularly unique type of care 
                or service required; and
                    (B) does not include support and administrative 
                services for hospital and clinic operations, including 
                food service, laundry services, grounds maintenance, 
                transportation services, office operations, and supply 
                processing and distribution services.
            (10) Public-private competition.--The term ``public-private 
        competition''--
                    (A) means the process by which it is determined 
                whether a function is to be performed by Federal 
                employees or contractors, that is cost based and that 
                takes into account items other than cost, including 
                quality and reliability; and
                    (B) includes, but does not require, the public-
                private competition process described in Office of 
                Management and Budget Circular A-76.
            (11) Solicitation.--The term ``solicitation'' means the 
        formal offer of an agency to review functions, whether or not 
        currently performed by Federal employees or contractors, for 
        public-private competition.

SEC. 4. CERTIFICATION OF COMPLIANCE.

    (a) Requirements for Heads of Agencies.--
            (1) Certifications.--Not later than 1 year after the date 
        of enactment of this Act, the head of each agency shall submit 
        to the Director of the Office of Management and Budget a 
        certification that--
                    (A) the agency has established a centralized 
                reporting system in accordance with section 5;
                    (B) in the case of each function of the agency that 
                is being performed under contracting undertaken after 
                the date of enactment of this Act, the contracting 
                function decision was based on a public-private 
                competition described under section 6 or 7, as 
                applicable;
                    (C) the agency is not managing Federal employees by 
                any arbitrary limitations in accordance with sections 6 
                or 7, as applicable, and 9; and
                    (D) the agency is reviewing work performed by 
                contractors, recompeting or contracting in work when 
                appropriate, and subjecting to public-private 
                competition an approximate number of Federal employee 
                and contractor positions in accordance with section 9.
            (2) Public availability.--The Director of the Office of 
        Management and Budget shall--
                    (A) promptly, after receiving certifications under 
                paragraph (1)(B), publish in the Federal Register 
                notices of the availability of the certifications to 
                the public, including the names, business addresses, 
                and business telephone numbers of the officials from 
                whom the certifications can be obtained; and
                    (B) ensure that, after the removal of proprietary 
                information, the head of each agency makes the 
                certifications of that agency available to the public--
                            (i) upon request; and
                            (ii) on the World Wide Web.
    (b) Suspension of Contracting for Services Pending Satisfaction of 
Certification Requirement.--
            (1) Initial determinations.--Beginning 1 year after the 
        date of enactment of this Act, the head of an agency may not 
        enter into any contract for the performance of services until 
        the Director of the Office of Management and Budget, after 
        reviewing the certification required under subsection (a)(1), 
        determines that the agency is making substantial progress 
        toward meeting the requirements under subsection (a)(1) (A), 
        (B), (C), and (D).
            (2) Inapplicability.--This subsection does not apply to 
        work performed by a contractor before the date of enactment of 
        this Act.
            (3) Subsequent determinations.--If an agency head is 
        prohibited from entering into a contract after a determination 
        is made under paragraph (1), that agency head may subsequently 
        request another determination from the Director of the Office 
        of Management and Budget under that paragraph.
            (4) Public availability.--The Director of the Office of 
        Management and Budget shall--
                    (A) promptly after making a determination as to 
                whether an agency is making substantial progress under 
                paragraph (1), publish that determination in the 
                Federal Register; and
                    (B) make that determination available to the 
                public--
                            (i) upon request; and
                            (ii) on the World Wide Web.
    (c) Waiver of Suspension.--
            (1) In general.--The Director of the Office of Management 
        and Budget may waive the applicability of this section with 
        respect to a contract for services if--
                    (A) the Director determines that it is necessary to 
                do so in the interest of the national security, 
                homeland security, extraordinary economic harm, or 
                patient care; and
                    (B) the contract is awarded in accordance with the 
                public-private competition requirements established in 
                sections 6 and 7, as applicable.
            (2) Notice.--After granting any waiver under this 
        subsection, the Director of the Office of Management and Budget 
        shall promptly publish a notice of that waiver in the Federal 
        Register that--
                    (A) identifies the facilities, units, or activities 
                affected;
                    (B) explains the justification for the waiver; and
                    (C) identifies the duration of the waiver.
    (d) GAO Monitoring.--While an agency is operating under a 
suspension of contracting authority under subsection (b), the 
Comptroller General shall--
            (1) monitor the agency's compliance with the requirements 
        of this Act; and
            (2) submit to Congress, every 60 days, a report on the 
        extent of the agency's compliance with such requirements.
    (e) Exception.--
            (1) In general.--Notwithstanding subsection (b), an agency 
        may undertake a contracting effort of a function if the 
        function--
                    (A) is not performed by Federal employees at the 
                time of the undertaking; and
                    (B) under the contracting would be performed by--
                            (i) the blind, as defined under section 
                        5(1) of the Javits-Wagner-O'Day Act (41 U.S.C. 
                        48b(1)); or
                            (ii) individuals with a disability as 
                        defined under section 7(9) of the 
                        Rehabilitation Act of 1973 (29 U.S.C. 705(9)).
            (2) Termination of contract.--If the Director of the Office 
        of Management and Budget determines that the performance of the 
        function in a contract entered into under paragraph (1) is not 
        being performed by individuals described under clause (i) or 
        (ii) of paragraph (1)(B), the contract shall be immediately 
        terminated.

SEC. 5. AGENCY REPORTING SYSTEMS AND REQUIRED REPORTS.

    (a) Centralized Reporting System.--Not later than 1 year after the 
date of enactment of this Act, the head of each agency shall establish 
a centralized reporting system in accordance with guidance promulgated 
by the Director of the Office of Management and Budget that allows the 
agency to generate periodic reports on the contracting efforts of the 
agency. Such centralized reporting system shall be designed to enable 
the agency to generate reports on efforts regarding both contracting 
and contracting in.
    (b) Reports on Contracting Efforts.--
            (1) Initial reports.--Not later than 1 year after the date 
        of enactment of this Act, the head of each agency shall prepare 
        and submit to the Director of the Office of Management and 
        Budget a report on the contracting efforts of the agency 
        undertaken during the fiscal year immediately preceding the 
        fiscal year in which this Act is enacted. Such report shall 
        comply with the requirements in paragraph (3).
            (2) Subsequent reports.--For the fiscal year in which this 
        Act is enacted and every fiscal year thereafter, the head of 
        each agency shall complete and submit to the Director of the 
        Office of Management and Budget a report on the contracting 
        efforts undertaken by the agency during that fiscal year. The 
        report for a fiscal year shall comply with the requirements in 
        paragraph (3), and shall be completed and submitted not later 
        than the end of the first fiscal quarter of the subsequent 
        fiscal year.
            (3) Contents.--With regard to each contracting effort 
        undertaken by the agency, the reports referred to in this 
        subsection shall include the following information:
                    (A) The contract number and the Federal supply 
                class or service code.
                    (B) The names, business addresses, and business 
                telephone numbers of the officials who supervised the 
                contracting effort.
                    (C) The competitive process used or the statutory 
                or regulatory authority relied on to enter into the 
                contract without public-private competition.
                    (D) The cost of Federal employee performance at the 
                time the work was contracted out (if the work had 
                previously been performed by Federal employees).
                    (E) The cost of Federal employee performance under 
                the most efficient organization plan identified for 
                that performance (if the work was contracted out 
                through Office of Management and Budget Circular A-76).
                    (F) The anticipated cost of contractor performance, 
                based on the award.
                    (G) The current cost of contractor performance.
                    (H) The actual savings and cost increases, 
                expressed both as a dollar amount and as a percentage 
                of the cost of performance by Federal employees, based 
                on the current cost, and an explanation of the 
                difference, if any.
                    (I) A description of the quality control process 
                used by the agency in connection with monitoring the 
                contracting effort, identification of the applicable 
                quality control standards, the frequency of the 
                preparation of quality control reports, and an 
                assessment of whether the contractor met, exceeded, or 
                failed to achieve the quality control standards.
                    (J) The number of contractor employees performing 
                the contracting effort under the contract and any 
                related subcontracts.
    (c) Report on Contracting in Efforts.--
            (1) In general.--For the current fiscal year and every 
        fiscal year thereafter, every agency shall complete and submit 
        to the Director of the Office of Management and Budget a report 
        on the contracting in efforts undertaken by the agency during 
        that fiscal year. The report for a fiscal year shall comply 
        with the requirements in paragraph (2), and shall be completed 
        and submitted not later than the end of the first fiscal 
        quarter of the subsequent fiscal year.
            (2) Contents.--The reports referred to in paragraph (1) 
        shall include for each contracting in effort undertaken by the 
        agency the following information:
                    (A) A description of the type of work involved.
                    (B) The names, business addresses, and business 
                telephone numbers of the officials who supervised the 
                contracting in effort.
                    (C) The cost of performance at the time the work 
                was contracted in.
                    (D) The current cost of performance by Federal 
                employees or military personnel.
    (d) Report on Federal Employee Positions.--Not later than 30 days 
after the end of each fiscal year, every agency shall submit to the 
Office of Management and Budget a report on the number of Federal 
employee positions and contractor employee positions that have been 
subject to public-private competition during that fiscal year.
    (e) Submission of Reports to Congress.--
            (1) In general.--The Director of the Office of Management 
        and Budget shall compile all reports submitted under this 
        section and submit the reports to the committees referred to 
        under paragraph (2), not later than 120 days after the end of 
        the applicable fiscal year.
            (2) Committees.--The reports compiled under this subsection 
        shall be submitted to the Committee on Government Reform of the 
        House of Representatives and to the Committee on Governmental 
        Affairs of the Senate.
    (f) Public Availability of Reports.--
            (1) Publications.--The Director of the Office of Management 
        and Budget shall promptly publish in the Federal Register 
        notices including a description of when the reports referred to 
        in this section are available to the public and the names, 
        business addresses, and business telephone numbers of the 
        officials from whom the reports may be obtained.
            (2) Availability on internet.--The reports referred to in 
        this section shall be made available through the Internet.
            (3) Proprietary and national security information.--
        Proprietary information or information to which section 
        552(b)(1) of title 5, United States Code, applies shall be 
        excised from information published or reports made available 
        under this subsection.
    (g) Review.--The Director of the Office of Management and Budget 
shall review the reports referred to in this section and consult with 
the head of the agency regarding the content of such reports.

SEC. 6. REQUIREMENT FOR PUBLIC-PRIVATE COMPETITION FOR FUNCTIONS 
              PERFORMED BY FEDERAL EMPLOYEES.

    After the date of enactment of this Act and in accordance with 
section 3, any decision by an agency to transfer the performance of a 
function, in whole or in part, from Federal employees to a contractor 
shall be based on the results of a public-private competition process 
that--
            (1) formally compares the costs of Federal employee 
        performance of the new function with the costs of the 
        performance by a contractor;
            (2) employs the most efficient organization process;
            (3) determines whether the offers submitted meet the needs 
        of the agency with respect to items other than cost, including 
        quality and reliability;
            (4) does not include in the cost comparison any savings to 
        the agency attributable to lower pay, health insurance 
        benefits, or retirement benefits provided by the contractor; 
        and
            (5) ensures continued performance of the function by 
        Federal employees if the agency determines that at least a 10-
        percent cost savings would not be achieved by performance of 
        the function by a contractor.

SEC. 7. REQUIREMENT FOR PUBLIC-PRIVATE COMPETITION FOR NEW FUNCTIONS.

    (a) In General.--After the date of enactment of this Act and in 
accordance with section 3, any decision by an agency to assign to a 
contractor the performance of a function not currently performed by 
Federal employees or a contractor shall be based on the results of a 
public-private competition process that--
            (1) formally compares the costs of Federal employee 
        performance of the new function with the costs of the 
        performance by a contractor;
            (2) employs the most efficient organization process;
            (3) determines whether the offers submitted meet the needs 
        of the agency with respect to items other than cost, including 
        quality and reliability;
            (4) does not include in the cost comparison any savings to 
        the agency attributable to lower pay, health insurance 
        benefits, or retirement benefits provided by the contractor; 
        and
            (5) includes a determination that performance of the 
        function by a contractor would be less costly over the term of 
        the contract than performance by Federal employees during the 
        same period.
    (b) Waiver of Public-Private Competition Requirement.--
            (1) In general.--The head of an Agency may waive the 
        application of subsection (a) to a function if--
                    (A) there is no reasonable expectation that Federal 
                employees would win a public-private competition for 
                the function; and
                    (B) issuance of a waiver would not serve to reduce 
                significantly the level of or quality of public-private 
                competition in the future award or performance of work 
                associated with the function.
            (2) Publication of waiver.--The head of an agency shall 
        promptly publish in the Federal Register a copy of each waiver 
        under this subsection.
    (c) Minimal Levels of Public-Private Competition for New 
Functions.--
            (1) In general.--No later than 5 years after the date of 
        enactment of this Act, not less than one-half of the funds 
        expended each fiscal year by an agency for the performance by 
        contractors of functions that are not performed by Federal 
        employees or contractors of the agency on the date of enactment 
        of this Act shall be expended for contracts that are awarded 
        after completion of public-private competitions in accordance 
        with this section.
            (2) Expiration.--The application of paragraph (1) to an 
        agency expires upon the earlier of the following:
                    (A) The end of the first full fiscal year beginning 
                after the date of enactment of this Act during which 
                not less than one-half of the funds expended by the 
                agency for the performance of new functions are 
                expended after completion of public-private 
                competitions.
                    (B) The end of the fifth full fiscal year beginning 
                after enactment of this Act.
    (d) Inapplicability To Subject New Functions to Public-Private 
Competition.--This section does not apply to--
            (1) functions performed by contractors before the date of 
        enactment of this Act; or
            (2) any contract with a value less than $1,000,000, if--
                    (A) the functions to be performed under the 
                contract are not divided, modified, or in any way 
                changed in a manner that results in this section not 
                applying to the contracting for those functions; and
                    (B) the contract is awarded to one or more small 
                business concerns that meet the requirements under 
                section 3(a) of the Small Business Act (15 U.S.C. 
                632(a)) and regulations under that section.

SEC. 8. REVIEW OF CONTRACTOR PERFORMANCE.

    (a) In General.--
            (1) Agency action after review.--If a report completed 
        under section 5 indicates that, for 2 consecutive years, the 
        actual cost of contractor performance of a particular function 
        exceeds the anticipated cost, based on the award (referred to 
        in section 5(b)(3)(G)), after adjustment for changes in the 
        scope of work, inflation, and wage rates, or fails to 
        substantially meet quality control standards (referred to in 
        section 5(b)(3)(J)), the agency shall conduct a new public-
        private competition not later than the earlier of the date of 
        the expiration of the contract or the beginning of the first 
        fiscal year that is not more than 12 months after the initial 
        determination that the cost of a contracting effort exceeds the 
        anticipated cost of contractor performance or that quality 
        standards have not been substantially met. Any resulting 
        terminations for convenience may be undertaken without cost to 
        the United States Government.
            (2) Inapplicability.--This subsection does not apply to 
        work performed by contractors before the date of enactment of 
        this Act.
    (b) Comparable Public-Private Competition.--
            (1) In general.--No later than in the fifth year after the 
        date of enactment of this Act, an agency shall subject to 
        public-private competition annually approximately the same 
        number of Federal employee positions and positions held by 
        contractor employees.
            (2) Expiration.--The requirement for comparable public-
        private competition expires upon the earlier of the following:
                    (A) The end of the first full fiscal year beginning 
                after the date of enactment of this Act during which an 
                agency subjects to public-private competition an 
                approximate number of Federal employee positions and 
                positions held by contractor employees.
                    (B) The end of the fifth full fiscal year beginning 
                after enactment of this Act.
    (c) Public-Private Competition Process for Functions Performed by 
Contractors.--After the date of enactment of this Act, any decision by 
an agency to initiate a contracting in for the performance of a 
function not previously performed by Federal employees, in accordance 
with this subsection, shall be based on the results of a public-private 
competition process that--
            (1) formally compares the costs of Federal employee 
        performance of the new function with the costs of the 
        performance by a contractor;
            (2) determines whether the offers submitted meet the needs 
        of the agency with respect to items other than costs, including 
        quality and reliability;
            (3) employs the most efficient organization process;
            (4) does not include in the cost comparison any savings to 
        the agency attributable to lower pay, health insurance 
        benefits, or retirement benefits provided by the contractor; 
        and
            (5) ensures continued performance of the function by a 
        contractor if an agency determines that at least a 10-percent 
        cost savings would not be achieved by performance of the 
        function by Federal employees.
    (d) Particular Functions.--In complying with this subsection--
            (1) agencies shall, to the extent possible, subject to 
        public-private competition those positions held by contractor 
        employees that are associated with functions that are or have 
        been performed at least in part by Federal employees at any 
        time on or after October 1, 1980; and
            (2) agencies shall not receive credit towards compliance 
        with the requirement for comparable public-private competition 
        for subjecting to public-private competition any contractor 
        employees--
                    (A) associated with functions performed by small 
                business concerns that meet the requirements under 
                section 3(a) of the Small Business Act (15 U.S.C. 
                632(a)) and regulations under that section; or
                    (B) whose minimum monetary wages and fringe 
                benefits are based on 4(c) of the Service Contract Act 
                (41 U.S.C. 353(c)), or whose minimum monetary wages and 
                fringe benefits will become covered by section 4(c) of 
                the Service Contract Act at the beginning of the next 
                contract year.
    (e) Inapplicability of Certain Limitation.--Notwithstanding any 
limitation on the number of Federal employees established by law, 
regulation, or policy, an agency may continue to employ or may hire 
such Federal employees as are necessary to perform work acquired 
through public-private competition required by this section.

SEC. 9. COMPTROLLER GENERAL REPORTS.

    The Comptroller General shall report to the Committee on Government 
Reform of the House of Representatives and the Committee on 
Governmental Affairs of the Senate annually on the compliance by 
agencies with the requirements of this Act.

SEC. 10. REPEAL OF CERTAIN REPORTING REQUIREMENTS.

    (a) In General.--Sections 2461, 2461a, 2463, and 2467(c) of title 
10, United States Code, are repealed.
    (b) Technical and Conforming Amendments.--The table of sections for 
chapter 141 of title 10, United States Code, is amended by striking the 
items relating to sections 2461, 2461a, and 2463.

SEC. 11. APPLICABILITY.

    This Act does not apply with respect to the following:
            (1) The General Accounting Office.
            (2) Depot-level maintenance and repair of the Department of 
        Defense (as defined in section 2460 of title 10, United States 
        Code).
            (3) Contracts for the construction of new structures or the 
        remodeling of or additions made to existing structures, 
        facilities, and capital projects, except this Act shall apply 
        to contracts for services related to the repair and maintenance 
        of any structures.
            (4) Financial assistance awards (including grants and 
        cooperative agreements).

SEC. 12. WAIVERS FROM PUBLIC-PRIVATE COMPETITION REQUIREMENTS FOR 
              REASON OF NATIONAL SECURITY AND HOMELAND SECURITY.

    (a) In General.--The Secretary of Defense and the Secretary of 
Homeland Security may each, with respect to their department, waive the 
application of the public-private competition requirements of sections 
6, 7, and 8 of this Act, on a case-by-case basis, for specific 
functions if--
            (1) the waiver is prepared in writing--
                    (A) by the Secretary of Defense, or an Assistant 
                Secretary of Defense, in the case of a national 
                security waiver for the Department of Defense; or
                    (B) by the Secretary of Homeland Security, or an 
                Assistant Secretary of Homeland Security, in the case 
                of a homeland security waiver for the Department of 
                Homeland Security;
            (2) the written waiver is accompanied by a detailed 
        determination that national security or homeland security 
        interests, respectively, are so compelling as to preclude 
        compliance with the requirements; and
            (3) a copy of the waiver is published in the Federal 
        Register, although use of the waiver need not be delayed until 
        its publication.
    (b) Suspension of Incremental Requirements.--The Secretary of 
Defense and the Secretary of Homeland Security may each, with respect 
to their department, temporarily suspend either or both of the 
requirements for incremental public-private competition for new work 
(as established in section 7) and incremental public-private 
competition for contractor work (as established in section 8) with 
respect to the functions of their department if--
            (1) the determination to suspend is prepared in writing--
                    (A) by the Secretary of Defense, in the case of a 
                national security suspension for the Department of 
                Defense; or
                    (B) by the Secretary of Homeland Security, in the 
                case of a homeland security suspension for the 
                Department of Homeland Security;
            (2) the written determination to suspend is accompanied by 
        a detailed determination that national security or homeland 
        security interests, respectively, are so compelling as to 
        preclude compliance with the requirements; and
            (3) a copy of the determination to suspend is published in 
        the Federal Register, although use of the waiver need not be 
        delayed until its publication.
    (c) Duration.--The duration of a temporary suspension under 
subsection (b) shall be no longer than the 1-year period beginning on 
the date it is first invoked (without regard to the date it is first 
published).
    (d) Subsequent Suspensions.--The Secretaries of Defense and 
Homeland Security may issue additional temporary suspensions. During 
the period of such suspensions, the expiration dates under sections 
7(c)(2) and 8(b)(2), as applicable, are tolled, and the effective 
period of such suspensions shall not be counted toward the fifth fiscal 
year milestones under sections 7(c)(2)(B) and 8(b)(2)(B), as 
applicable.

SEC. 13. LIMITED PILOT PROGRAM TO IMPLEMENT RECOMMENDATIONS OF 
              COMMERCIAL ACTIVITIES PANEL.

    (a) Use of Alternative Public-Private Competition Processes.--The 
Director of the Office of Management and Budget, in coordination with 
the heads of agencies, may carry out a limited pilot program to examine 
and evaluate the feasibility and advisability of using public-private 
competition processes other than the process described in Office of 
Management and Budget Circular A-76 for functions performed for 
agencies other than the Department of Defense (or any military 
department or agency thereof) by Federal employees or contractors, or 
proposed for performance for such agencies by Federal employees or 
contractors.
    (b) Duration of Pilot Program.--The Director of the Office of 
Management and Budget may carry out the pilot program during fiscal 
years 2003 through 2005.
    (c) Extent of Pilot Program.--The total value of the functions 
reviewed under the pilot program may not exceed $300,000,000.
    (d) Possible Alternatives.--
            (1) In general.--The alternatives to Office of Management 
        Budget Circular A-76 that could be tested and evaluated by the 
        pilot program include only the following:
                    (A) The process known as low-price/technically 
                acceptable (under the framework of the Federal 
                Acquisition Regulation).
                    (B) The process known as cost/technical trade off 
                (under the framework of the Federal Acquisition 
                Regulation).
                    (C) The process known as bid-to-goal.
            (2) Bid-to-goal defined.--In paragraph (1)(C), the term 
        ``bid-to-goal'' means a process that--
                    (A) uses a series of competitive performance 
                targets, included in a performance work statement, to 
                compare for specific functions the cost of public 
                sector performance with the cost of performance by 
private sector contractors and other public sector entities at the 
Federal, State, and local levels; and
                    (B) allows managers and affected employees to 
                create streamlined and improved work plans that, if 
                determined to be viable by an independent party, are 
                incorporated into a detailed service agreement awarded 
                to the public sector entity for implementation and 
                performance of the functions.
    (e) Required Elements.--The alternatives examined and evaluated 
under the framework of the Federal Acquisition Regulation shall 
include--
            (1) the most efficient organization process;
            (2) the framework for calculating the public sector price 
        cost estimate;
            (3) the framework for calculating the evaluated price for 
        private sector proposals to take into account costs such as 
        contract administration costs; and
            (4) the 10-percent cost differential in favor of whichever 
        sector is currently performing the work, as described in Office 
        of Management and Budget Circular A-76 or any successor 
        administrative regulation.
    (f) Comparability.--To the maximum extent practicable, the Director 
of the Office of Management and Budget shall ensure that comparable 
amounts of work, as measured in dollars, performed by Federal 
employees, performed by contractors, or new work that is not yet 
performed by Federal employees or contractors should be tested and 
evaluated under the alternatives authorized for the pilot program.
    (g) Relation to A-76 Process.--In order to provide proper test and 
evaluation conditions for the pilot program, functions designated for 
study under the pilot program shall be exempt for the duration of the 
pilot program from review initiated under Office of Management and 
Budget Circular A-76 or any successor administrative regulation, and no 
function that has been announced for or is undergoing such a review 
shall be selected for the pilot program.
    (h) Limitation.--With respect to the Department of Defense and 
agencies in such department, no alternatives may be used under the 
pilot project established by this Act that would be contrary to 
sections 129a and 2462 of title 10, United States Code.
    (i) Consultation.--
            (1) In general.--The officer or Federal employee of an 
        agency responsible for determining, under the alternatives 
        authorized for the pilot program by subsection (d), whether to 
        convert a function from Federal employee performance to 
        contractor performance or from contractor performance to 
        Federal employee performance--
                    (A) shall, at least monthly during the development 
                and preparation of the performance work statement and 
                the management efficiency study used in making that 
                determination, consult with Federal employees or 
                contractor employees who will be affected by that 
                determination and consider the views of such employees 
                on the development and preparation of that statement 
                and that study; and
                    (B) may consult with such employees or contractors 
                on other matters relating to that determination.
            (2) Federal employees represented by recognized labor 
        organization.--In the case of Federal employees represented by 
        a labor organization accorded exclusive recognition under 
        section 7111 of title 5, United States Code, consultation with 
        representatives of that labor organization shall satisfy the 
        consultation requirements of paragraph (1).
            (3) Contractor employees.--In the case of contractor 
        employees, consultation with appropriate representatives of 
        those employees (including appropriate labor organizations 
        representing such Federal employees) shall satisfy the 
        consultation requirements of paragraph (1) with respect to 
        those employees.
    (j) Reporting Requirements.--
            (1) In general.--Not later than 90 days after the end of 
        each fiscal year in which the pilot program is conducted, the 
        Director of the Office of Management and Budget and the 
        Comptroller General of the United States shall each submit to 
        the Congress a report of the results of the pilot program and 
        lessons learned. For each function covered by the program, the 
        report shall address the following factors:
                    (A) The cost of conducting each alternative tested 
                under the pilot program with respect to that function.
                    (B) The time necessary to conduct the alternative.
                    (C) The savings, if any, expected to be achieved 
                from conducting the alternative.
                    (D) The savings, if any, actually achieved from 
                conducting the alternative.
                    (E) The gains in efficiency or effectiveness, if 
                any, expected to be achieved from conducting the 
                alternative.
                    (F) The gains in efficiency or effectiveness, if 
                any, actually achieved from conducting the alternative.
                    (G) The impact on Federal employees and contractors 
                (and contractor employees) from conducting the 
                alternative.
            (2) Comparison.--To the maximum extent possible, the report 
        shall compare each alternative undertaking, with respect to the 
        factors specified in paragraph (1), with an undertaking of 
        Office of Management and Budget Circular A-76 that has been 
        completed within at least 2 years prior to the date of the 
        enactment of this Act for work that is comparable in nature and 
        scope.
            (3) Recommendations.--The final report shall include 
        recommended changes with respect to implementation of policies 
        and proposed legislation.
    (k) Regulations.--The Director of the Office of Management and 
Budget shall prescribe such regulations as the Director considers 
necessary to carry out the pilot program.
                                 <all>
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