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 account-
ability, efficient delivery of services, reasonable cost savings, and preven-
tion 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. DIN-
GELL, 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 Mis-
sissippi, Mr. TOWNS, Mr. UDALL of Colorado, Ms. WATSON, Mr. WAX-
MAN, 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 pur-
poses.
Be it enacted by the Senate and House of Representa-
tives 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 Con-
tracting 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 na-
tional 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 cur-
rently 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 func-
tion 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), in-
cluding an employee who is paid from non-
appropriated funds; 
(C) in those units of the legislative and ju-
dicial branches of the Federal Government hav-
ing 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 Re-
serve 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 orga-
nization of Federal employees that would most effi-
ciently perform a function after a public-private 
competition, as proposed by a Federal employee.
(8) OFFER.—The term ‘‘offer’’ means the for-
mal response of a bidder or the most efficient orga-
nization to a solicitation. 
(9) 
PATIENT
CARE.—The 
term 
‘‘patient 
care’’—
(A) means direct patient medical and hos-
pital care that the Department of Veterans Af-
fairs or other Federal hospitals or clinics are 
not capable of furnishing because of geo-
graphical inaccessibility, medical emergency, or 
particularly unique type of care or service re-
quired; and 
(B) does not include support and adminis-
trative services for hospital and clinic oper-
ations, 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 deter-
mined 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 func-
tions, whether or not currently performed by Federal
employees or contractors, for public-private competi-
tion.
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 Of-
fice of Management and Budget a certification 
that—
(A) the agency has established a central-
ized reporting system in accordance with sec-
tion 5; 
(B) in the case of each function of the 
agency that is being performed under con-
tracting undertaken after the date of enactment 
of this Act, the contracting function decision 
was based on a public-private competition de-
scribed under section 6 or 7, as applicable;
(C) the agency is not managing Federal 
employees by any arbitrary limitations in ac-
cordance with sections 6 or 7, as applicable, 
and 9; and
(D) the agency is reviewing work per-
formed by contractors, recompeting or con-
tracting in work when appropriate, and sub-
jecting to public-private competition an approxi-
mate number of Federal employee and con-
tractor 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 certifi-
cations to the public, including the names, busi-
ness addresses, and business telephone numbers 
of the officials from whom the certifications can 
be obtained; and 
(B) ensure that, after the removal of pro-
prietary 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 REQUIRE-
MENT.—
(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 review-
ing the certification required under subsection 
(a)(1), determines that the agency is making sub-
stantial 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 con-
tract after a determination is made under paragraph 
(1), that agency head may subsequently request an-
other 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 de-
termination 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 nec-
essary to do so in the interest of the national 
security, homeland security, extraordinary eco-
nomic harm, or patient care; and
(B) the contract is awarded in accordance 
with the public-private competition require-
ments established in sections 6 and 7, as appli-
cable. 
(2) NOTICE.—After granting any waiver under 
this subsection, the Director of the Office of Man-
agement and Budget shall promptly publish a notice 
of that waiver in the Federal Register that—
(A) identifies the facilities, units, or activi-
ties affected; 
(B) explains the justification for the waiv-
er; and 
(C) identifies the duration of the waiver. 
(d) GAO MONITORING.—While an agency is oper-
ating 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 per-
formed 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 de-
fined under section 7(9) of the Rehabilita-
tion Act of 1973 (29 U.S.C. 705(9)). 
(2) TERMINATION OF CONTRACT.—If the Direc-
tor of the Office of Management and Budget deter-
mines that the performance of the function in a con-
tract 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 im-
mediately terminated.
SEC. 5. AGENCY REPORTING SYSTEMS AND REQUIRED RE-
PORTS. 
(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 con-
tracting efforts of the agency. Such centralized reporting 
system shall be designed to enable the agency to generate 
reports on efforts regarding both contracting and con-
tracting 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 Direc-
tor of the Office of Management and Budget a re-
port on the contracting efforts of the agency under-
taken during the fiscal year immediately preceding 
the fiscal year in which this Act is enacted. Such re-
port shall comply with the requirements in para-
graph (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 com-
plete 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 con-
tracting effort undertaken by the agency, the reports 
referred to in this subsection shall include the fol-
lowing 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 perform-
ance at the time the work was contracted out
(if the work had previously been performed by 
Federal employees). 
(E) The cost of Federal employee perform-
ance 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 per-
formance, based on the award. 
(G) The current cost of contractor per-
formance. 
(H) The actual savings and cost increases, 
expressed both as a dollar amount and as a per-
centage 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 con-
tractor 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 fis-
cal 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 infor-
mation: 
(A) A description of the type of work in-
volved. 
(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 applica-
ble fiscal year. 
(2) COMMITTEES.—The reports compiled under 
this subsection shall be submitted to the Committee 
on Government Reform of the House of Representa-
tives 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 descrip-
tion 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 of-
ficials 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 IN-
FORMATION.—Proprietary information or informa-
tion to which section 552(b)(1) of title 5, United 
States Code, applies shall be excised from informa-
tion published or reports made available under this 
subsection. 
(g) REVIEW.—The Director of the Office of Manage-
ment and Budget shall review the reports referred to in 
this section and consult with the head of the agency re-
garding the content of such reports.
SEC. 6. REQUIREMENT FOR PUBLIC-PRIVATE COMPETI-
TION FOR FUNCTIONS PERFORMED BY FED-
ERAL EMPLOYEES. 
After the date of enactment of this Act and in accord-
ance 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 em-
ployee 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 pro-
vided by the contractor; and 
(5) ensures continued performance of the func-
tion 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 con-
tractor. 
SEC. 7. REQUIREMENT FOR PUBLIC-PRIVATE COMPETI-
TION 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 employ-
ees or a contractor shall be based on the results of a pub-
lic-private competition process that—
(1) formally compares the costs of Federal em-
ployee 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 pro-
vided 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 RE-
QUIREMENT.—
(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 Reg-
ister a copy of each waiver under this subsection.
(c) MINIMAL LEVELS OF PUBLIC-PRIVATE COMPETI-
TION 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 func-
tions that are not performed by Federal employees 
or contractors of the agency on the date of enact-
ment of this Act shall be expended for contracts that 
are awarded after completion of public-private com-
petitions in accordance with this section.
(2) EXPIRATION.—The application of para-
graph (1) to an agency expires upon the earlier of 
the following: 
(A) The end of the first full fiscal year be-
ginning 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 be-
ginning 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 require-
ments 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 re-
port completed under section 5 indicates that, for 2 
consecutive years, the actual cost of contractor per-
formance of a particular function exceeds the antici-
pated cost, based on the award (referred to in sec-
tion 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 (re-
ferred 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 deter-
mination that the cost of a contracting effort ex-
ceeds 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 com-
parable public-private competition expires upon the 
earlier of the following: 
(A) The end of the first full fiscal year be-
ginning after the date of enactment of this Act 
during which an agency subjects to public-pri-
vate competition an approximate number of 
Federal employee positions and positions held 
by contractor employees. 
(B) The end of the fifth full fiscal year be-
ginning 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 func-
tion not previously performed by Federal employees, in ac-
cordance with this subsection, shall be based on the results 
of a public-private competition process that—
(1) formally compares the costs of Federal em-
ployee 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 pro-
vided by the contractor; and 
(5) ensures continued performance of the func-
tion 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, sub-
ject 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 require-
ments 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 min-
imum monetary wages and fringe benefits will 
become covered by section 4(c) of the Service 
Contract Act at the beginning of the next con-
tract 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 sec-
tion. 
SEC. 9. COMPTROLLER GENERAL REPORTS. 
The Comptroller General shall report to the Com-
mittee on Government Reform of the House of Represent-
atives 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 struc-
tures or the remodeling of or additions made to ex-
isting structures, facilities, and capital projects, ex-
cept this Act shall apply to contracts for services re-
lated to the repair and maintenance of any struc-
tures. 
(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 As-
sistant Secretary of Defense, in the case of a 
national security waiver for the Department of 
Defense; or 
(B) by the Secretary of Homeland Secu-
rity, or an Assistant Secretary of Homeland Se-
curity, in the case of a homeland security waiv-
er for the Department of Homeland Security; 
(2) the written waiver is accompanied by a de-
tailed determination that national security or home-
land security interests, respectively, are so compel-
ling as to preclude compliance with the require-
ments; 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
REQUIRE-
MENTS.—The Secretary of Defense and the Secretary of 
Homeland Security may each, with respect to their depart-
ment, temporarily suspend either or both of the require-
ments 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 depart-
ment 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 Secu-
rity, in the case of a homeland security suspen-
sion for the Department of Homeland Security; 
(2) the written determination to suspend is ac-
companied 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 sus-
pension 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 tem-
porary suspensions. During the period of such suspen-
sions, 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 REC-
OMMENDATIONS OF COMMERCIAL ACTIVI-
TIES PANEL. 
(a) USE OF ALTERNATIVE PUBLIC-PRIVATE COM-
PETITION 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 ex-
amine and evaluate the feasibility and advisability of using 
public-private competition processes other than the proc-
ess described in Office of Management and Budget Cir-
cular A–76 for functions performed for agencies other 
than the Department of Defense (or any military depart-
ment or agency thereof) by Federal employees or contrac-
tors, 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/tech-
nically 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 perform-
ance 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 employ-
ees to create streamlined and improved work 
plans that, if determined to be viable by an 
independent party, are incorporated into a de-
tailed service agreement awarded to the public 
sector entity for implementation and perform-
ance of the functions. 
(e) REQUIRED ELEMENTS.—The alternatives exam-
ined 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 ac-
count 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 regu-
lation. 
(f) COMPARABILITY.—To the maximum extent prac-
ticable, the Director of the Office of Management and 
Budget shall ensure that comparable amounts of work, as 
measured in dollars, performed by Federal employees, per-
formed by contractors, or new work that is not yet per-
formed 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 pro-
vide 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 pro-
gram 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 em-
ployee of an agency responsible for determining, 
under the alternatives authorized for the pilot pro-
gram by subsection (d), whether to convert a func-
tion from Federal employee performance to con-
tractor performance or from contractor performance 
to Federal employee performance—
(A) shall, at least monthly during the de-
velopment and preparation of the performance 
work statement and the management efficiency 
study used in making that determination, con-
sult with Federal employees or contractor em-
ployees who will be affected by that determina-
tion 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 organiza-
tion 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 appro-
priate labor organizations representing such Federal 
employees) shall satisfy the consultation require-
ments of paragraph (1) with respect to those em-
ployees. 
(j) REPORTING REQUIREMENTS.—
(1) IN GENERAL.—Not later than 90 days after 
the end of each fiscal year in which the pilot pro-
gram is conducted, the Director of the Office of 
Management and Budget and the Comptroller Gen-
eral 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 al-
ternative.
(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 al-
ternative. 
(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.
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