I

105TH CONGRESS

1ST SESSION H. R. 716

To require that the Federal Government procure from the private sector

the goods and services necessary for the operations and management

of certain Government agencies, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 12, 1997

Mr. DUNCAN (for himself, Mr. SHAYS, Mr. HAYWORTH, Mr. ROHRABACHER,

Mr. PORTER, Mr. STEARNS, Mr. CANADY of Florida, and Mr. HERGER)

introduced the following bill; which was referred to the Committee on

Government Reform and Oversight, and in addition to the Committee on

the Budget, for a period to be subsequently determined by the Speaker,

in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

A BILL

To require that the Federal Government procure from the

private sector the goods and services necessary for the

operations and management of certain Government agencies, and for other purposes.

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.

4 This Act may be cited as the ‘‘Freedom From Gov5 ernment Competition Act of 1997’’.
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1 SEC. 2. FINDINGS.

2 Congress finds and declares that—

3 (1) private sector business concerns, which are

4 free to respond to the private or public demands of

5 the marketplace, constitute the strength of the

6 American economic system;

7 (2) competitive private sector enterprises are

8 the most productive, efficient, and effective sources

9 of goods and services;

10 (3) government competition with the private

11 sector of the economy is detrimental to all busi12 nesses and the American economic system;

13 (4) government competition with the private

14 sector of the economy is at an unacceptably high

15 level, both in scope and in dollar volume;

16 (5) when a government engages in entre17 preneurial activities that are beyond its core mission

18 and compete with the private sector—

19 (A) the focus and attention of the govern20 ment are diverted from executing the basic mis21 sion and work of that government; and

22 (B) those activities constitute unfair gov23 ernment competition with the private sector;

24 (6) current laws and policies have failed to ad25 dress adequately the problem of government com26 petition with the private sector of the economy;
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1 (7) the level of government competition with the

2 private sector, especially with small businesses, has

3 been a priority issue of each White House Con4 ference on Small Business;

5 (8) reliance on the private sector is consistent

6 with the goals of the Government Performance and

7 Results Act of 1993 (Public Law 103–62);

8 (9) reliance on the private sector is necessary

9 and desirable for proper implementation of the Fed10 eral Workforce Restructuring Act of 1994 (Public

11 Law 103–226);

12 (10) it is in the public interest that the Federal

13 Government establish a consistent policy to rely on

14 the private sector of the economy to provide goods

15 and services that are necessary for or beneficial to

16 the operation and management of Federal Govern17 ment agencies and to avoid Federal Government

18 competition with the private sector of the economy;

19 and

20 (11) it is in the public interest for the private

21 sector to utilize employees who are adversely af22 fected by conversions to use of private sector entities

23 for providing goods and services on behalf of the

24 Federal Government.
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1 SEC. 3. RELIANCE ON THE PRIVATE SECTOR.

2 (a) GENERAL POLICY.—Notwithstanding any other

3 provision of law, except as provided in subsection (c), each

4 agency shall procure from sources in the private sector all

5 goods and services that are necessary for or beneficial to

6 the accomplishment of authorized functions of the agency.

7 (b) PROHIBITIONS REGARDING TRANSACTIONS IN

8 GOODS AND SERVICES.—

9 (1) PROVISION BY GOVERNMENT GEN10 ERALLY.—No agency may begin or carry out any ac11 tivity to provide any products or services that can be

12 provided by the private sector.

13 (2) TRANSACTIONS BETWEEN GOVERNMENTAL

14 ENTITIES.—No agency may obtain any goods or

15 services from or provide any goods or services to any

16 other governmental entity.

17 (c) EXCEPTIONS.—Subsections (a) and (b) do not

18 apply to goods or services necessary for or beneficial to

19 the accomplishment of authorized functions of an agency

20 under the following conditions:

21 (1) Either—

22 (A) the goods or services are inherently

23 governmental in nature within the meaning of

24 section 6(b); or

25 (B) the Director of the Office of Manage26 ment and Budget determines that the provision
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1 of the goods or services is otherwise an inher2 ently governmental function.

3 (2) The head of the agency determines that the

4 goods or services should be produced, provided, or

5 manufactured by the Federal Government for rea6 sons of national security.

7 (3) The Federal Government is determined to

8 be the best value source of the goods or services in

9 accordance with regulations prescribed pursuant to

10 section 4(a)(2)(C).

11 (4) The private sector sources of the goods or

12 services, or the practices of such sources, are not

13 adequate to satisfy the agency’s requirements.

14 SEC. 4. ADMINISTRATIVE PROVISIONS.

15 (a) REGULATIONS.—

16 (1) OMB RESPONSIBILITY.—The Director of

17 the Office of Management and Budget shall pre18 scribe regulations to carry out this Act.

19 (2) CONTENT.—

20 (A) PRIVATE SECTOR PREFERENCE.—Con21 sistent with the policy and prohibitions set forth

22 in section 3, the regulations shall emphasize a

23 preference for the provision of goods and serv24 ices by private sector sources.
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1 (B) FAIRNESS FOR FEDERAL EMPLOY2 EES.—In order to ensure the fair treatment of

3 Federal Government employees, the regula4 tions—

5 (i) shall not contravene any law or

6 regulation regarding Federal Government

7 employees; and

8 (ii) shall provide for the Director of

9 the Office of Management and Budget, in

10 consultation with the Director of the Office

11 of Personnel Management, to furnish in12 formation on relevant available benefits

13 and assistance to Federal Government em14 ployees adversely affected by conversions to

15 use of private sector entities for providing

16 goods and services.

17 (C) BEST VALUE SOURCES.—

18 (i) STANDARDS AND PROCEDURES.—

19 The regulations shall include standards

20 and procedures for determining whether it

21 is a private sector source or an agency that

22 provides certain goods or services for the

23 best value.
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1 (ii) FACTORS CONSIDERED.—The

2 standards and procedures shall include re3 quirements for consideration of analyses of

4 all direct and indirect costs (performed in

5 a manner consistent with generally accept6 ed cost-accounting principles), the quali7 fications of sources, the past performance

8 of sources, and any other technical and

9 noncost factors that are relevant.

10 (iii) CONSULTATION REQUIREMENT.—

11 The Director shall consult with persons

12 from the private sector and persons from

13 the public sector in developing the stand14 ards and procedures.

15 (D) APPROPRIATE GOVERNMENTAL ACTIVI16 TIES.—The regulations shall include a meth17 odology for determining what types of activities

18 performed by an agency should continue to be

19 performed by the agency or any other agency.

20 (b) COMPLIANCE AND IMPLEMENTATION ASSIST21 ANCE.—

22 (1) OMB CENTER FOR COMMERCIAL ACTIVI23 TIES.—The Director of the Office of Management

24 and Budget shall establish a Center for Commercial
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1 Activities and Privatization within the Office of

2 Management and Budget.

3 (2) RESPONSIBILITIES.—The Center—

4 (A) shall be responsible for the implemen5 tation of and compliance with the policies,

6 standards, and procedures that are set forth in

7 this Act or are prescribed to carry out this Act;

8 and

9 (B) shall provide agencies and private sec10 tor entities with guidance, information, and

11 other assistance appropriate for facilitating con12 versions to use of private sector entities for pro13 viding goods and services on behalf of the Fed14 eral Government.

15 SEC. 5. STUDY AND REPORT ON COMMERCIAL ACTIVITIES

16 OF THE GOVERNMENT.

17 (a) ANNUAL PERFORMANCE PLAN.—Section 1115(a)

18 of title 31, United States Code, is amended—

19 (1) by striking ‘‘and’’ at the end of paragraph

20 (5);

21 (2) by striking the period at the end of para22 graph (6) and inserting ‘‘; and’’; and

23 (3) by adding at the end the following:

24 ‘‘(7) include—
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1 ‘‘(A) the identity of each program activity

2 that is performed for the agency by a private

3 sector entity in accordance with the Freedom

4 From Government Competition Act of 1997;

5 and

6 ‘‘(B) the identity of each program activity

7 that is not subject to the Freedom From Gov8 ernment Competition Act of 1997 by reason of

9 an exception set forth in that Act, together with

10 a discussion specifying why the activity is deter11 mined to be covered by the exception.’’.

12 (b) ANNUAL PERFORMANCE REPORT.—Section

13 1116(d)(3) of title 31, United States Code, is amended—

14 (1) by striking ‘‘explain and describe,’’ in the

15 matter preceding subparagraph (A);

16 (2) in subparagraph (A), by inserting ‘‘explain

17 and describe’’ after ‘‘(A)’’;

18 (3) in subparagraph (B)—

19 (A) by inserting ‘‘explain and describe’’

20 after ‘‘(B)’’; and

21 (B) by striking ‘‘and’’ at the end;

22 (4) in subparagraph (C)—

23 (A) by inserting ‘‘explain and describe’’

24 after ‘‘infeasible,’’; and

25 (B) by inserting ‘‘and’’ at the end; and
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1 (5) by adding at the end the following:

2 ‘‘(D) in the case of an activity not performed

3 by a private sector entity—

4 ‘‘(i) explain and describe whether the activ5 ity could be performed for the Federal Govern6 ment by a private sector entity in accordance

7 with the Freedom From Government Competi8 tion Act of 1997; and

9 ‘‘(ii) if the activity could be performed by

10 a private sector entity, set forth a schedule for

11 converting to performance of the activity by a

12 private sector entity;’’.

13 SEC. 6. DEFINITIONS.

14 (a) AGENCY.—As used in this Act, the term ‘‘agency’’

15 means the following:

16 (1) EXECUTIVE DEPARTMENT.—An executive

17 department as defined by section 101 of title 5,

18 United States Code.

19 (2) MILITARY DEPARTMENT.—A military de20 partment as defined by section 102 of such title.

21 (3) INDEPENDENT ESTABLISHMENT.—An inde22 pendent establishment as defined by section 104(1)

23 of such title.

24 (b) INHERENTLY GOVERNMENTAL GOODS AND

25 SERVICES.—
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1 (1) PERFORMANCE OF INHERENTLY GOVERN2 MENTAL FUNCTIONS.—For the purposes of section

3 3(c)(1)(A), goods or services are inherently govern4 mental in nature if the providing of such goods or

5 services is an inherently governmental function.

6 (2) INHERENTLY GOVERNMENTAL FUNCTIONS

7 DESCRIBED.—

8 (A) FUNCTIONS INCLUDED.—For the pur9 poses of paragraph (1), a function shall be con10 sidered an inherently governmental function if

11 the function is so intimately related to the pub12 lic interest as to mandate performance by Fed13 eral Government employees. Such functions in14 clude activities that require either the exercise

15 of discretion in applying Federal Government

16 authority or the making of value judgments in

17 making decisions for the Federal Government,

18 including judgments relating to monetary trans19 actions and entitlements. An inherently govern20 mental function involves, among other things,

21 the interpretation and execution of the laws of

22 the United States so as to—

23 (i) bind the United States to take or

24 not to take some action by contract, policy,
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1 regulation, authorization, order, or other2 wise;

3 (ii) determine, protect, and advance

4 its economic, political, territorial, property,

5 or other interests by military or diplomatic

6 action, civil or criminal judicial proceed7 ings, contract management, or otherwise;

8 (iii) significantly affect the life, lib9 erty, or property of private persons;

10 (iv) commission, appoint, direct, or

11 control officers or employees of the United

12 States; or

13 (v) exert ultimate control over the ac14 quisition, use, or disposition of the prop15 erty, real or personal, tangible or intangi16 ble, of the United States, including the

17 control or disbursement of appropriated

18 and other Federal funds.

19 (B) FUNCTIONS EXCLUDED.—For the pur20 poses of paragraph (1), inherently governmental

21 functions do not normally include—

22 (i) gathering information for or pro23 viding advice, opinions, recommendations,

24 or ideas to Federal Government officials;
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1 (ii) any function that is primarily

2 ministerial or internal in nature (such as

3 building security, mail operations, oper4 ation of cafeterias, laundry and house5 keeping, facilities operations and mainte6 nance, warehouse operations, motor vehicle

7 fleet management and operations, or other

8 routine electrical or mechanical services);

9 or

10 (iii) any good or service which is cur11 rently or could reasonably be produced or

12 performed, respectively, by an entity in the

13 private sector.

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