I 

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.
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1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Truthfulness, Responsibility, and Accountability in Con6 tracting Act of 2003’’. 

7 (b) TABLE OF CONTENTS.—The table of contents of 

8 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.

9 SEC. 2. STATEMENT OF PURPOSE. 

10 The purpose of this Act is to promote the interests 

11 of the taxpayers through the use of a fair public-private 

12 competition process, and to provide accountability to the 

13 taxpayers for Government work performed by contractors 

14 and Federal employees.

15 SEC. 3. DEFINITIONS. 

16 For purposes of this Act: 

17 (1) AGENCY.—The term ‘‘agency’’ means any 

18 department, agency, bureau, commission, activity, or 
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1 organization of the United States, that employs an 

2 employee as defined under paragraph (6). 

3 (2) CONTRACTING.—The term ‘‘contracting’’—

4 (A) means—

5 (i) the transfer of a function from 

6 performance by Federal employees to a 

7 contractor; or 

8 (ii) the assignment to a contractor of 

9 the performance of a function not cur10 rently performed by Federal employees or 

11 a contractor; and 

12 (B) includes privatization, outsourcing, 

13 and contracting out. 

14 (3) CONTRACTING IN.—The term ‘‘contracting 

15 in’’ means the transfer of the performance of a func16 tion from a contractor to Federal employees. 

17 (4) CONTRACTOR.—The term ‘‘contractor’’ 

18 means an individual or other person that performs 

19 a function for an agency under a contract with a 

20 contractor. 

21 (5) FEDERAL EMPLOYEE.—The term ‘‘Federal 

22 employee’’ means any individual employed—

23 (A) as a civilian in a military department 

24 (as defined in section 102 of title 5, United 

25 States Code); 
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1 (B) in an Executive agency (as defined in 

2 section 105 of title 5, United States Code), in3 cluding an employee who is paid from non4 appropriated funds; 

5 (C) in those units of the legislative and ju6 dicial branches of the Federal Government hav7 ing positions in the competitive service; 

8 (D) in the Library of Congress; 

9 (E) in the Government Printing Office; or 

10 (F) by the Governors of the Federal Re11 serve System. 

12 (6) FUNCTION.—The term ‘‘function’’ means a 

13 service activity, not procurement of goods.

14 (7) MOST EFFICIENT ORGANIZATION.—The 

15 term ‘‘most efficient organization’’ means the orga16 nization of Federal employees that would most effi17 ciently perform a function after a public-private 

18 competition, as proposed by a Federal employee.

19 (8) OFFER.—The term ‘‘offer’’ means the for20 mal response of a bidder or the most efficient orga21 nization to a solicitation. 

22 (9) PATIENT CARE.—The term ‘‘patient 

23 care’’—

24 (A) means direct patient medical and hos25 pital care that the Department of Veterans Af-
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1 fairs or other Federal hospitals or clinics are 

2 not capable of furnishing because of geo3 graphical inaccessibility, medical emergency, or 

4 particularly unique type of care or service re5 quired; and 

6 (B) does not include support and adminis7 trative services for hospital and clinic oper8 ations, including food service, laundry services, 

9 grounds maintenance, transportation services, 

10 office operations, and supply processing and 

11 distribution services.

12 (10) PUBLIC-PRIVATE COMPETITION.—The 

13 term ‘‘public-private competition’’—

14 (A) means the process by which it is deter15 mined whether a function is to be performed by 

16 Federal employees or contractors, that is cost 

17 based and that takes into account items other 

18 than cost, including quality and reliability; and 

19 (B) includes, but does not require, the 

20 public-private competition process described in 

21 Office of Management and Budget Circular A–

22 76. 

23 (11) SOLICITATION.—The term ‘‘solicitation’’ 

24 means the formal offer of an agency to review func25 tions, whether or not currently performed by Federal 
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1 employees or contractors, for public-private competi2 tion.

3 SEC. 4. CERTIFICATION OF COMPLIANCE. 

4 (a) REQUIREMENTS FOR HEADS OF AGENCIES.—

5 (1) CERTIFICATIONS.—Not later than 1 year 

6 after the date of enactment of this Act, the head of 

7 each agency shall submit to the Director of the Of8 fice of Management and Budget a certification 

9 that—

10 (A) the agency has established a central11 ized reporting system in accordance with sec12 tion 5; 

13 (B) in the case of each function of the 

14 agency that is being performed under con15 tracting undertaken after the date of enactment 

16 of this Act, the contracting function decision 

17 was based on a public-private competition de18 scribed under section 6 or 7, as applicable;

19 (C) the agency is not managing Federal 

20 employees by any arbitrary limitations in ac21 cordance with sections 6 or 7, as applicable, 

22 and 9; and

23 (D) the agency is reviewing work per24 formed by contractors, recompeting or con25 tracting in work when appropriate, and sub-
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1 jecting to public-private competition an approxi2 mate number of Federal employee and con3 tractor positions in accordance with section 9. 

4 (2) PUBLIC AVAILABILITY.—The Director of 

5 the Office of Management and Budget shall—

6 (A) promptly, after receiving certifications 

7 under paragraph (1)(B), publish in the Federal 

8 Register notices of the availability of the certifi9 cations to the public, including the names, busi10 ness addresses, and business telephone numbers 

11 of the officials from whom the certifications can 

12 be obtained; and 

13 (B) ensure that, after the removal of pro14 prietary information, the head of each agency 

15 makes the certifications of that agency available 

16 to the public—

17 (i) upon request; and 

18 (ii) on the World Wide Web. 

19 (b) SUSPENSION OF CONTRACTING FOR SERVICES

20 PENDING SATISFACTION OF CERTIFICATION REQUIRE21 MENT.—

22 (1) INITIAL DETERMINATIONS.—Beginning 1 

23 year after the date of enactment of this Act, the 

24 head of an agency may not enter into any contract 

25 for the performance of services until the Director of 
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1 the Office of Management and Budget, after review2 ing the certification required under subsection 

3 (a)(1), determines that the agency is making sub4 stantial progress toward meeting the requirements 

5 under subsection (a)(1) (A), (B), (C), and (D). 

6 (2) INAPPLICABILITY.—This subsection does 

7 not apply to work performed by a contractor before 

8 the date of enactment of this Act. 

9 (3) SUBSEQUENT DETERMINATIONS.—If an 

10 agency head is prohibited from entering into a con11 tract after a determination is made under paragraph 

12 (1), that agency head may subsequently request an13 other determination from the Director of the Office 

14 of Management and Budget under that paragraph. 

15 (4) PUBLIC AVAILABILITY.—The Director of 

16 the Office of Management and Budget shall—

17 (A) promptly after making a determination 

18 as to whether an agency is making substantial 

19 progress under paragraph (1), publish that de20 termination in the Federal Register; and 

21 (B) make that determination available to 

22 the public—

23 (i) upon request; and 

24 (ii) on the World Wide Web. 

25 (c) WAIVER OF SUSPENSION.—
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1 (1) IN GENERAL.—The Director of the Office of 

2 Management and Budget may waive the applicability 

3 of this section with respect to a contract for services 

4 if—

5 (A) the Director determines that it is nec6 essary to do so in the interest of the national 

7 security, homeland security, extraordinary eco8 nomic harm, or patient care; and

9 (B) the contract is awarded in accordance 

10 with the public-private competition require11 ments established in sections 6 and 7, as appli12 cable. 

13 (2) NOTICE.—After granting any waiver under 

14 this subsection, the Director of the Office of Man15 agement and Budget shall promptly publish a notice 

16 of that waiver in the Federal Register that—

17 (A) identifies the facilities, units, or activi18 ties affected; 

19 (B) explains the justification for the waiv20 er; and 

21 (C) identifies the duration of the waiver. 

22 (d) GAO MONITORING.—While an agency is oper23 ating under a suspension of contracting authority under 

24 subsection (b), the Comptroller General shall—
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1 (1) monitor the agency’s compliance with the 

2 requirements of this Act; and 

3 (2) submit to Congress, every 60 days, a report 

4 on the extent of the agency’s compliance with such 

5 requirements. 

6 (e) EXCEPTION.—

7 (1) IN GENERAL.—Notwithstanding subsection 

8 (b), an agency may undertake a contracting effort of 

9 a function if the function—

10 (A) is not performed by Federal employees 

11 at the time of the undertaking; and 

12 (B) under the contracting would be per13 formed by—

14 (i) the blind, as defined under section 

15 5(1) of the Javits-Wagner-O’Day Act (41 

16 U.S.C. 48b(1)); or 

17 (ii) individuals with a disability as de18 fined under section 7(9) of the Rehabilita19 tion Act of 1973 (29 U.S.C. 705(9)). 

20 (2) TERMINATION OF CONTRACT.—If the Direc21 tor of the Office of Management and Budget deter22 mines that the performance of the function in a con23 tract entered into under paragraph (1) is not being 

24 performed by individuals described under clause (i) 
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1 or (ii) of paragraph (1)(B), the contract shall be im2 mediately terminated.

3 SEC. 5. AGENCY REPORTING SYSTEMS AND REQUIRED RE4 PORTS. 

5 (a) CENTRALIZED REPORTING SYSTEM.—Not later 

6 than 1 year after the date of enactment of this Act, the 

7 head of each agency shall establish a centralized reporting 

8 system in accordance with guidance promulgated by the 

9 Director of the Office of Management and Budget that 

10 allows the agency to generate periodic reports on the con11 tracting efforts of the agency. Such centralized reporting 

12 system shall be designed to enable the agency to generate 

13 reports on efforts regarding both contracting and con14 tracting in. 

15 (b) REPORTS ON CONTRACTING EFFORTS.—

16 (1) INITIAL REPORTS.—Not later than 1 year 

17 after the date of enactment of this Act, the head of 

18 each agency shall prepare and submit to the Direc19 tor of the Office of Management and Budget a re20 port on the contracting efforts of the agency under21 taken during the fiscal year immediately preceding 

22 the fiscal year in which this Act is enacted. Such re23 port shall comply with the requirements in para24 graph (3).
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1 (2) SUBSEQUENT REPORTS.—For the fiscal 

2 year in which this Act is enacted and every fiscal 

3 year thereafter, the head of each agency shall com4 plete and submit to the Director of the Office of 

5 Management and Budget a report on the contracting 

6 efforts undertaken by the agency during that fiscal 

7 year. The report for a fiscal year shall comply with 

8 the requirements in paragraph (3), and shall be 

9 completed and submitted not later than the end of 

10 the first fiscal quarter of the subsequent fiscal year. 

11 (3) CONTENTS.—With regard to each con12 tracting effort undertaken by the agency, the reports 

13 referred to in this subsection shall include the fol14 lowing information:

15 (A) The contract number and the Federal 

16 supply class or service code. 

17 (B) The names, business addresses, and 

18 business telephone numbers of the officials who 

19 supervised the contracting effort. 

20 (C) The competitive process used or the 

21 statutory or regulatory authority relied on to 

22 enter into the contract without public-private 

23 competition. 

24 (D) The cost of Federal employee perform25 ance at the time the work was contracted out 
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1 (if the work had previously been performed by 

2 Federal employees). 

3 (E) The cost of Federal employee perform4 ance under the most efficient organization plan 

5 identified for that performance (if the work was 

6 contracted out through Office of Management 

7 and Budget Circular A–76). 

8 (F) The anticipated cost of contractor per9 formance, based on the award. 

10 (G) The current cost of contractor per11 formance. 

12 (H) The actual savings and cost increases, 

13 expressed both as a dollar amount and as a per14 centage of the cost of performance by Federal 

15 employees, based on the current cost, and an 

16 explanation of the difference, if any. 

17 (I) A description of the quality control 

18 process used by the agency in connection with 

19 monitoring the contracting effort, identification 

20 of the applicable quality control standards, the 

21 frequency of the preparation of quality control 

22 reports, and an assessment of whether the con23 tractor met, exceeded, or failed to achieve the 

24 quality control standards. 
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1 (J) The number of contractor employees 

2 performing the contracting effort under the 

3 contract and any related subcontracts. 

4 (c) REPORT ON CONTRACTING IN EFFORTS.—

5 (1) IN GENERAL.—For the current fiscal year 

6 and every fiscal year thereafter, every agency shall 

7 complete and submit to the Director of the Office of 

8 Management and Budget a report on the contracting 

9 in efforts undertaken by the agency during that fis10 cal year. The report for a fiscal year shall comply 

11 with the requirements in paragraph (2), and shall be 

12 completed and submitted not later than the end of 

13 the first fiscal quarter of the subsequent fiscal year. 

14 (2) CONTENTS.—The reports referred to in 

15 paragraph (1) shall include for each contracting in 

16 effort undertaken by the agency the following infor17 mation: 

18 (A) A description of the type of work in19 volved. 

20 (B) The names, business addresses, and 

21 business telephone numbers of the officials who 

22 supervised the contracting in effort. 

23 (C) The cost of performance at the time 

24 the work was contracted in. 
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1 (D) The current cost of performance by 

2 Federal employees or military personnel. 

3 (d) REPORT ON FEDERAL EMPLOYEE POSITIONS.—

4 Not later than 30 days after the end of each fiscal year, 

5 every agency shall submit to the Office of Management 

6 and Budget a report on the number of Federal employee 

7 positions and contractor employee positions that have been 

8 subject to public-private competition during that fiscal 

9 year. 

10 (e) SUBMISSION OF REPORTS TO CONGRESS.—

11 (1) IN GENERAL.—The Director of the Office of 

12 Management and Budget shall compile all reports 

13 submitted under this section and submit the reports 

14 to the committees referred to under paragraph (2), 

15 not later than 120 days after the end of the applica16 ble fiscal year. 

17 (2) COMMITTEES.—The reports compiled under 

18 this subsection shall be submitted to the Committee 

19 on Government Reform of the House of Representa20 tives and to the Committee on Governmental Affairs 

21 of the Senate. 

22 (f) PUBLIC AVAILABILITY OF REPORTS.—

23 (1) PUBLICATIONS.—The Director of the Office 

24 of Management and Budget shall promptly publish 

25 in the Federal Register notices including a descrip-
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1 tion of when the reports referred to in this section 

2 are available to the public and the names, business 

3 addresses, and business telephone numbers of the of4 ficials from whom the reports may be obtained.

5 (2) AVAILABILITY ON INTERNET.—The reports 

6 referred to in this section shall be made available 

7 through the Internet. 

8 (3) PROPRIETARY AND NATIONAL SECURITY IN9 FORMATION.—Proprietary information or informa10 tion to which section 552(b)(1) of title 5, United 

11 States Code, applies shall be excised from informa12 tion published or reports made available under this 

13 subsection. 

14 (g) REVIEW.—The Director of the Office of Manage15 ment and Budget shall review the reports referred to in 

16 this section and consult with the head of the agency re17 garding the content of such reports.

18 SEC. 6. REQUIREMENT FOR PUBLIC-PRIVATE COMPETI19 TION FOR FUNCTIONS PERFORMED BY FED20 ERAL EMPLOYEES. 

21 After the date of enactment of this Act and in accord22 ance with section 3, any decision by an agency to transfer 

23 the performance of a function, in whole or in part, from 

24 Federal employees to a contractor shall be based on the 

25 results of a public-private competition process that—
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1 (1) formally compares the costs of Federal em2 ployee performance of the new function with the 

3 costs of the performance by a contractor; 

4 (2) employs the most efficient organization 

5 process; 

6 (3) determines whether the offers submitted 

7 meet the needs of the agency with respect to items 

8 other than cost, including quality and reliability; 

9 (4) does not include in the cost comparison any 

10 savings to the agency attributable to lower pay, 

11 health insurance benefits, or retirement benefits pro12 vided by the contractor; and 

13 (5) ensures continued performance of the func14 tion by Federal employees if the agency determines 

15 that at least a 10-percent cost savings would not be 

16 achieved by performance of the function by a con17 tractor. 

18 SEC. 7. REQUIREMENT FOR PUBLIC-PRIVATE COMPETI19 TION FOR NEW FUNCTIONS. 

20 (a) IN GENERAL.—After the date of enactment of 

21 this Act and in accordance with section 3, any decision 

22 by an agency to assign to a contractor the performance 

23 of a function not currently performed by Federal employ24 ees or a contractor shall be based on the results of a pub25 lic-private competition process that—
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1 (1) formally compares the costs of Federal em2 ployee performance of the new function with the 

3 costs of the performance by a contractor; 

4 (2) employs the most efficient organization 

5 process; 

6 (3) determines whether the offers submitted 

7 meet the needs of the agency with respect to items 

8 other than cost, including quality and reliability; 

9 (4) does not include in the cost comparison any 

10 savings to the agency attributable to lower pay, 

11 health insurance benefits, or retirement benefits pro12 vided by the contractor; and 

13 (5) includes a determination that performance 

14 of the function by a contractor would be less costly 

15 over the term of the contract than performance by 

16 Federal employees during the same period. 

17 (b) WAIVER OF PUBLIC-PRIVATE COMPETITION RE18 QUIREMENT.—

19 (1) IN GENERAL.—The head of an Agency may 

20 waive the application of subsection (a) to a function 

21 if—

22 (A) there is no reasonable expectation that 

23 Federal employees would win a public-private 

24 competition for the function; and 
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1 (B) issuance of a waiver would not serve to 

2 reduce significantly the level of or quality of 

3 public-private competition in the future award 

4 or performance of work associated with the 

5 function. 

6 (2) PUBLICATION OF WAIVER.—The head of an 

7 agency shall promptly publish in the Federal Reg8 ister a copy of each waiver under this subsection.

9 (c) MINIMAL LEVELS OF PUBLIC-PRIVATE COMPETI10 TION FOR NEW FUNCTIONS.—

11 (1) IN GENERAL.—No later than 5 years after 

12 the date of enactment of this Act, not less than one13 half of the funds expended each fiscal year by an 

14 agency for the performance by contractors of func15 tions that are not performed by Federal employees 

16 or contractors of the agency on the date of enact17 ment of this Act shall be expended for contracts that 

18 are awarded after completion of public-private com19 petitions in accordance with this section.

20 (2) EXPIRATION.—The application of para21 graph (1) to an agency expires upon the earlier of 

22 the following: 

23 (A) The end of the first full fiscal year be24 ginning after the date of enactment of this Act 

25 during which not less than one-half of the funds 
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1 expended by the agency for the performance of 

2 new functions are expended after completion of 

3 public-private competitions.

4 (B) The end of the fifth full fiscal year be5 ginning after enactment of this Act.

6 (d) INAPPLICABILITY TO SUBJECT NEW FUNCTIONS

7 TO PUBLIC-PRIVATE COMPETITION.—This section does 

8 not apply to—

9 (1) functions performed by contractors before 

10 the date of enactment of this Act; or 

11 (2) any contract with a value less than 

12 $1,000,000, if—

13 (A) the functions to be performed under 

14 the contract are not divided, modified, or in any 

15 way changed in a manner that results in this 

16 section not applying to the contracting for those 

17 functions; and 

18 (B) the contract is awarded to one or more 

19 small business concerns that meet the require20 ments under section 3(a) of the Small Business 

21 Act (15 U.S.C. 632(a)) and regulations under 

22 that section. 

23 SEC. 8. REVIEW OF CONTRACTOR PERFORMANCE. 

24 (a) IN GENERAL.—
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1 (1) AGENCY ACTION AFTER REVIEW.—If a re2 port completed under section 5 indicates that, for 2 

3 consecutive years, the actual cost of contractor per4 formance of a particular function exceeds the antici5 pated cost, based on the award (referred to in sec6 tion 5(b)(3)(G)), after adjustment for changes in the 

7 scope of work, inflation, and wage rates, or fails to 

8 substantially meet quality control standards (re9 ferred to in section 5(b)(3)(J)), the agency shall 

10 conduct a new public-private competition not later 

11 than the earlier of the date of the expiration of the 

12 contract or the beginning of the first fiscal year that 

13 is not more than 12 months after the initial deter14 mination that the cost of a contracting effort ex15 ceeds the anticipated cost of contractor performance 

16 or that quality standards have not been substantially 

17 met. Any resulting terminations for convenience may 

18 be undertaken without cost to the United States 

19 Government. 

20 (2) INAPPLICABILITY.—This subsection does 

21 not apply to work performed by contractors before 

22 the date of enactment of this Act.

23 (b) COMPARABLE PUBLIC-PRIVATE COMPETITION.—

24 (1) IN GENERAL.—No later than in the fifth 

25 year after the date of enactment of this Act, an 
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1 agency shall subject to public-private competition 

2 annually approximately the same number of Federal 

3 employee positions and positions held by contractor 

4 employees.

5 (2) EXPIRATION.—The requirement for com6 parable public-private competition expires upon the 

7 earlier of the following: 

8 (A) The end of the first full fiscal year be9 ginning after the date of enactment of this Act 

10 during which an agency subjects to public-pri11 vate competition an approximate number of 

12 Federal employee positions and positions held 

13 by contractor employees. 

14 (B) The end of the fifth full fiscal year be15 ginning after enactment of this Act.

16 (c) PUBLIC-PRIVATE COMPETITION PROCESS FOR

17 FUNCTIONS PERFORMED BY CONTRACTORS.—After the 

18 date of enactment of this Act, any decision by an agency 

19 to initiate a contracting in for the performance of a func20 tion not previously performed by Federal employees, in ac21 cordance with this subsection, shall be based on the results 

22 of a public-private competition process that—

23 (1) formally compares the costs of Federal em24 ployee performance of the new function with the 

25 costs of the performance by a contractor; 
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1 (2) determines whether the offers submitted 

2 meet the needs of the agency with respect to items 

3 other than costs, including quality and reliability; 

4 (3) employs the most efficient organization 

5 process; 

6 (4) does not include in the cost comparison any 

7 savings to the agency attributable to lower pay, 

8 health insurance benefits, or retirement benefits pro9 vided by the contractor; and 

10 (5) ensures continued performance of the func11 tion by a contractor if an agency determines that at 

12 least a 10-percent cost savings would not be 

13 achieved by performance of the function by Federal 

14 employees. 

15 (d) PARTICULAR FUNCTIONS.—In complying with 

16 this subsection—

17 (1) agencies shall, to the extent possible, sub18 ject to public-private competition those positions 

19 held by contractor employees that are associated 

20 with functions that are or have been performed at 

21 least in part by Federal employees at any time on 

22 or after October 1, 1980; and 

23 (2) agencies shall not receive credit towards 

24 compliance with the requirement for comparable 
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1 public-private competition for subjecting to public2 private competition any contractor employees—

3 (A) associated with functions performed by 

4 small business concerns that meet the require5 ments under section 3(a) of the Small Business 

6 Act (15 U.S.C. 632(a)) and regulations under 

7 that section; or 

8 (B) whose minimum monetary wages and 

9 fringe benefits are based on 4(c) of the Service 

10 Contract Act (41 U.S.C. 353(c)), or whose min11 imum monetary wages and fringe benefits will 

12 become covered by section 4(c) of the Service 

13 Contract Act at the beginning of the next con14 tract year. 

15 (e) INAPPLICABILITY OF CERTAIN LIMITATION.—

16 Notwithstanding any limitation on the number of Federal 

17 employees established by law, regulation, or policy, an 

18 agency may continue to employ or may hire such Federal 

19 employees as are necessary to perform work acquired 

20 through public-private competition required by this sec21 tion. 

22 SEC. 9. COMPTROLLER GENERAL REPORTS. 

23 The Comptroller General shall report to the Com24 mittee on Government Reform of the House of Represent25 atives and the Committee on Governmental Affairs of the 
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1 Senate annually on the compliance by agencies with the 

2 requirements of this Act.

3 SEC. 10. REPEAL OF CERTAIN REPORTING REQUIREMENTS. 

4 (a) IN GENERAL.—Sections 2461, 2461a, 2463, and 

5 2467(c) of title 10, United States Code, are repealed. 

6 (b) TECHNICAL AND CONFORMING AMENDMENTS.—

7 The table of sections for chapter 141 of title 10, United 

8 States Code, is amended by striking the items relating to 

9 sections 2461, 2461a, and 2463.

10 SEC. 11. APPLICABILITY. 

11 This Act does not apply with respect to the following: 

12 (1) The General Accounting Office. 

13 (2) Depot-level maintenance and repair of the 

14 Department of Defense (as defined in section 2460 

15 of title 10, United States Code). 

16 (3) Contracts for the construction of new struc17 tures or the remodeling of or additions made to ex18 isting structures, facilities, and capital projects, ex19 cept this Act shall apply to contracts for services re20 lated to the repair and maintenance of any struc21 tures. 

22 (4) Financial assistance awards (including 

23 grants and cooperative agreements).
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1 SEC. 12. WAIVERS FROM PUBLIC-PRIVATE COMPETITION 

2 REQUIREMENTS FOR REASON OF NATIONAL 

3 SECURITY AND HOMELAND SECURITY. 

4 (a) IN GENERAL.—The Secretary of Defense and the 

5 Secretary of Homeland Security may each, with respect 

6 to their department, waive the application of the public7 private competition requirements of sections 6, 7, and 8 

8 of this Act, on a case-by-case basis, for specific functions 

9 if—

10 (1) the waiver is prepared in writing—

11 (A) by the Secretary of Defense, or an As12 sistant Secretary of Defense, in the case of a 

13 national security waiver for the Department of 

14 Defense; or 

15 (B) by the Secretary of Homeland Secu16 rity, or an Assistant Secretary of Homeland Se17 curity, in the case of a homeland security waiv18 er for the Department of Homeland Security; 

19 (2) the written waiver is accompanied by a de20 tailed determination that national security or home21 land security interests, respectively, are so compel22 ling as to preclude compliance with the require23 ments; and 

24 (3) a copy of the waiver is published in the 

25 Federal Register, although use of the waiver need 

26 not be delayed until its publication. 
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1 (b) SUSPENSION OF INCREMENTAL REQUIRE2 MENTS.—The Secretary of Defense and the Secretary of 

3 Homeland Security may each, with respect to their depart4 ment, temporarily suspend either or both of the require5 ments for incremental public-private competition for new 

6 work (as established in section 7) and incremental public7 private competition for contractor work (as established in 

8 section 8) with respect to the functions of their depart9 ment if—

10 (1) the determination to suspend is prepared in 

11 writing—

12 (A) by the Secretary of Defense, in the 

13 case of a national security suspension for the 

14 Department of Defense; or 

15 (B) by the Secretary of Homeland Secu16 rity, in the case of a homeland security suspen17 sion for the Department of Homeland Security; 

18 (2) the written determination to suspend is ac19 companied by a detailed determination that national 

20 security or homeland security interests, respectively, 

21 are so compelling as to preclude compliance with the 

22 requirements; and 

23 (3) a copy of the determination to suspend is 

24 published in the Federal Register, although use of 

25 the waiver need not be delayed until its publication.
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1 (c) DURATION.—The duration of a temporary sus2 pension under subsection (b) shall be no longer than the 

3 1-year period beginning on the date it is first invoked 

4 (without regard to the date it is first published). 

5 (d) SUBSEQUENT SUSPENSIONS.—The Secretaries of 

6 Defense and Homeland Security may issue additional tem7 porary suspensions. During the period of such suspen8 sions, the expiration dates under sections 7(c)(2) and 

9 8(b)(2), as applicable, are tolled, and the effective period 

10 of such suspensions shall not be counted toward the fifth 

11 fiscal year milestones under sections 7(c)(2)(B) and 

12 8(b)(2)(B), as applicable. 

13 SEC. 13. LIMITED PILOT PROGRAM TO IMPLEMENT REC14 OMMENDATIONS OF COMMERCIAL ACTIVI15 TIES PANEL. 

16 (a) USE OF ALTERNATIVE PUBLIC-PRIVATE COM17 PETITION PROCESSES.—The Director of the Office of 

18 Management and Budget, in coordination with the heads 

19 of agencies, may carry out a limited pilot program to ex20 amine and evaluate the feasibility and advisability of using 

21 public-private competition processes other than the proc22 ess described in Office of Management and Budget Cir23 cular A–76 for functions performed for agencies other 

24 than the Department of Defense (or any military depart25 ment or agency thereof) by Federal employees or contrac-
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•HR 3426 IH 

1 tors, or proposed for performance for such agencies by 

2 Federal employees or contractors.

3 (b) DURATION OF PILOT PROGRAM.—The Director 

4 of the Office of Management and Budget may carry out 

5 the pilot program during fiscal years 2003 through 2005. 

6 (c) EXTENT OF PILOT PROGRAM.—The total value 

7 of the functions reviewed under the pilot program may not 

8 exceed $300,000,000. 

9 (d) POSSIBLE ALTERNATIVES.—

10 (1) IN GENERAL.—The alternatives to Office of 

11 Management Budget Circular A–76 that could be 

12 tested and evaluated by the pilot program include 

13 only the following: 

14 (A) The process known as low-price/tech15 nically acceptable (under the framework of the 

16 Federal Acquisition Regulation). 

17 (B) The process known as cost/technical 

18 trade off (under the framework of the Federal 

19 Acquisition Regulation). 

20 (C) The process known as bid-to-goal. 

21 (2) BID-TO-GOAL DEFINED.—In paragraph 

22 (1)(C), the term ‘‘bid-to-goal’’ means a process 

23 that—

24 (A) uses a series of competitive perform25 ance targets, included in a performance work 
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•HR 3426 IH 

1 statement, to compare for specific functions the 

2 cost of public sector performance with the cost

3 of performance by private sector contractors 

4 and other public sector entities at the Federal, 

5 State, and local levels; and 

6 (B) allows managers and affected employ7 ees to create streamlined and improved work 

8 plans that, if determined to be viable by an 

9 independent party, are incorporated into a de10 tailed service agreement awarded to the public 

11 sector entity for implementation and perform12 ance of the functions. 

13 (e) REQUIRED ELEMENTS.—The alternatives exam14 ined and evaluated under the framework of the Federal 

15 Acquisition Regulation shall include—

16 (1) the most efficient organization process; 

17 (2) the framework for calculating the public 

18 sector price cost estimate; 

19 (3) the framework for calculating the evaluated 

20 price for private sector proposals to take into ac21 count costs such as contract administration costs; 

22 and 

23 (4) the 10-percent cost differential in favor of 

24 whichever sector is currently performing the work, 

25 as described in Office of Management and Budget 
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•HR 3426 IH 

1 Circular A–76 or any successor administrative regu2 lation. 

3 (f) COMPARABILITY.—To the maximum extent prac4 ticable, the Director of the Office of Management and 

5 Budget shall ensure that comparable amounts of work, as 

6 measured in dollars, performed by Federal employees, per7 formed by contractors, or new work that is not yet per8 formed by Federal employees or contractors should be 

9 tested and evaluated under the alternatives authorized for 

10 the pilot program. 

11 (g) RELATION TO A–76 PROCESS.—In order to pro12 vide proper test and evaluation conditions for the pilot 

13 program, functions designated for study under the pilot 

14 program shall be exempt for the duration of the pilot pro15 gram from review initiated under Office of Management 

16 and Budget Circular A–76 or any successor administrative 

17 regulation, and no function that has been announced for 

18 or is undergoing such a review shall be selected for the 

19 pilot program. 

20 (h) LIMITATION.—With respect to the Department of 

21 Defense and agencies in such department, no alternatives 

22 may be used under the pilot project established by this 

23 Act that would be contrary to sections 129a and 2462 of 

24 title 10, United States Code. 

25 (i) CONSULTATION.—
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•HR 3426 IH 

1 (1) IN GENERAL.—The officer or Federal em2 ployee of an agency responsible for determining, 

3 under the alternatives authorized for the pilot pro4 gram by subsection (d), whether to convert a func5 tion from Federal employee performance to con6 tractor performance or from contractor performance 

7 to Federal employee performance—

8 (A) shall, at least monthly during the de9 velopment and preparation of the performance 

10 work statement and the management efficiency 

11 study used in making that determination, con12 sult with Federal employees or contractor em13 ployees who will be affected by that determina14 tion and consider the views of such employees 

15 on the development and preparation of that 

16 statement and that study; and 

17 (B) may consult with such employees or 

18 contractors on other matters relating to that 

19 determination. 

20 (2) FEDERAL EMPLOYEES REPRESENTED BY

21 RECOGNIZED LABOR ORGANIZATION.—In the case of 

22 Federal employees represented by a labor organiza23 tion accorded exclusive recognition under section 

24 7111 of title 5, United States Code, consultation 

25 with representatives of that labor organization shall 
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•HR 3426 IH 

1 satisfy the consultation requirements of paragraph 

2 (1). 

3 (3) CONTRACTOR EMPLOYEES.—In the case of 

4 contractor employees, consultation with appropriate 

5 representatives of those employees (including appro6 priate labor organizations representing such Federal 

7 employees) shall satisfy the consultation require8 ments of paragraph (1) with respect to those em9 ployees. 

10 (j) REPORTING REQUIREMENTS.—

11 (1) IN GENERAL.—Not later than 90 days after 

12 the end of each fiscal year in which the pilot pro13 gram is conducted, the Director of the Office of 

14 Management and Budget and the Comptroller Gen15 eral of the United States shall each submit to the 

16 Congress a report of the results of the pilot program 

17 and lessons learned. For each function covered by 

18 the program, the report shall address the following 

19 factors: 

20 (A) The cost of conducting each alternative 

21 tested under the pilot program with respect to 

22 that function.

23 (B) The time necessary to conduct the al24 ternative. 
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•HR 3426 IH 

1 (C) The savings, if any, expected to be 

2 achieved from conducting the alternative. 

3 (D) The savings, if any, actually achieved 

4 from conducting the alternative. 

5 (E) The gains in efficiency or effectiveness, 

6 if any, expected to be achieved from conducting 

7 the alternative. 

8 (F) The gains in efficiency or effectiveness, 

9 if any, actually achieved from conducting the al10 ternative. 

11 (G) The impact on Federal employees and 

12 contractors (and contractor employees) from 

13 conducting the alternative. 

14 (2) COMPARISON.—To the maximum extent 

15 possible, the report shall compare each alternative 

16 undertaking, with respect to the factors specified in 

17 paragraph (1), with an undertaking of Office of 

18 Management and Budget Circular A–76 that has 

19 been completed within at least 2 years prior to the 

20 date of the enactment of this Act for work that is 

21 comparable in nature and scope. 

22 (3) RECOMMENDATIONS.—The final report 

23 shall include recommended changes with respect to 

24 implementation of policies and proposed legislation. 
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•HR 3426 IH 

1 (k) REGULATIONS.—The Director of the Office of 

2 Management and Budget shall prescribe such regulations 

3 as the Director considers necessary to carry out the pilot 

4 program.

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