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 juris-
diction 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 agen-
cies, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Freedom From Gov-
ernment Competition Act of 1997’’.
SEC. 2. FINDINGS.
Congress finds and declares that—
(1) private sector business concerns, which are
free to respond to the private or public demands of
the marketplace, constitute the strength of the
American economic system;
(2) competitive private sector enterprises are
the most productive, efficient, and effective sources
of goods and services;
(3) government competition with the private
sector of the economy is detrimental to all busi-
nesses and the American economic system;
(4) government competition with the private
sector of the economy is at an unacceptably high
level, both in scope and in dollar volume;
(5) when a government engages in entre-
preneurial activities that are beyond its core mission
and compete with the private sector—
(A) the focus and attention of the govern-
ment are diverted from executing the basic mis-
sion and work of that government; and
(B) those activities constitute unfair gov-
ernment competition with the private sector;
(6) current laws and policies have failed to ad-
dress adequately the problem of government com-
petition with the private sector of the economy;
(7) the level of government competition with the
private sector, especially with small businesses, has
been a priority issue of each White House Con-
ference on Small Business;
(8) reliance on the private sector is consistent
with the goals of the Government Performance and
Results Act of 1993 (Public Law 103–62);
(9) reliance on the private sector is necessary
and desirable for proper implementation of the Fed-
eral Workforce Restructuring Act of 1994 (Public
Law 103–226);
(10) it is in the public interest that the Federal
Government establish a consistent policy to rely on
the private sector of the economy to provide goods
and services that are necessary for or beneficial to
the operation and management of Federal Govern-
ment agencies and to avoid Federal Government
competition with the private sector of the economy;
and
(11) it is in the public interest for the private
sector to utilize employees who are adversely af-
fected by conversions to use of private sector entities
for providing goods and services on behalf of the
Federal Government.
SEC. 3. RELIANCE ON THE PRIVATE SECTOR.
(a) GENERAL POLICY.—Notwithstanding any other
provision of law, except as provided in subsection (c), each
agency shall procure from sources in the private sector all
goods and services that are necessary for or beneficial to
the accomplishment of authorized functions of the agency.
(b) PROHIBITIONS REGARDING TRANSACTIONS
IN
GOODS AND SERVICES.—
(1) 
PROVISION
BY
GOVERNMENT
GEN-
ERALLY.—No agency may begin or carry out any ac-
tivity to provide any products or services that can be
provided by the private sector.
(2) TRANSACTIONS BETWEEN GOVERNMENTAL
ENTITIES.—No agency may obtain any goods or
services from or provide any goods or services to any
other governmental entity.
(c) EXCEPTIONS.—Subsections (a) and (b) do not
apply to goods or services necessary for or beneficial to
the accomplishment of authorized functions of an agency
under the following conditions:
(1) Either—
(A) the goods or services are inherently
governmental in nature within the meaning of
section 6(b); or
(B) the Director of the Office of Manage-
ment and Budget determines that the provision
of the goods or services is otherwise an inher-
ently governmental function.
(2) The head of the agency determines that the
goods or services should be produced, provided, or
manufactured by the Federal Government for rea-
sons of national security.
(3) The Federal Government is determined to
be the best value source of the goods or services in
accordance with regulations prescribed pursuant to
section 4(a)(2)(C).
(4) The private sector sources of the goods or
services, or the practices of such sources, are not
adequate to satisfy the agency’s requirements.
SEC. 4. ADMINISTRATIVE PROVISIONS.
(a) REGULATIONS.—
(1) OMB RESPONSIBILITY.—The Director of
the Office of Management and Budget shall pre-
scribe regulations to carry out this Act.
(2) CONTENT.—
(A) PRIVATE SECTOR PREFERENCE.—Con-
sistent with the policy and prohibitions set forth
in section 3, the regulations shall emphasize a
preference for the provision of goods and serv-
ices by private sector sources.
(B) FAIRNESS
FOR
FEDERAL
EMPLOY-
EES.—In order to ensure the fair treatment of
Federal Government employees, the regula-
tions—
(i) shall not contravene any law or
regulation regarding Federal Government
employees; and
(ii) shall provide for the Director of
the Office of Management and Budget, in
consultation with the Director of the Office
of Personnel Management, to furnish in-
formation on relevant available benefits
and assistance to Federal Government em-
ployees adversely affected by conversions to
use of private sector entities for providing
goods and services.
(C) BEST VALUE SOURCES.—
(i) STANDARDS AND PROCEDURES.—
The regulations shall include standards
and procedures for determining whether it
is a private sector source or an agency that
provides certain goods or services for the
best value.
Activities and Privatization within the Office of
Management and Budget.
(2) RESPONSIBILITIES.—The Center—
(A) shall be responsible for the implemen-
tation of and compliance with the policies,
standards, and procedures that are set forth in
this Act or are prescribed to carry out this Act;
and
(B) shall provide agencies and private sec-
tor entities with guidance, information, and
other assistance appropriate for facilitating con-
versions to use of private sector entities for pro-
viding goods and services on behalf of the Fed-
eral Government.
SEC. 5. STUDY AND REPORT ON COMMERCIAL ACTIVITIES
OF THE GOVERNMENT.
(a) ANNUAL PERFORMANCE PLAN.—Section 1115(a)
of title 31, United States Code, is amended—
(1) by striking ‘‘and’’ at the end of paragraph
(5);
(2) by striking the period at the end of para-
graph (6) and inserting ‘‘; and’’; and
(3) by adding at the end the following:
‘‘(7) include—
‘‘(A) the identity of each program activity
that is performed for the agency by a private
sector entity in accordance with the Freedom
From Government Competition Act of 1997;
and
‘‘(B) the identity of each program activity
that is not subject to the Freedom From Gov-
ernment Competition Act of 1997 by reason of
an exception set forth in that Act, together with
a discussion specifying why the activity is deter-
mined to be covered by the exception.’’.
(b) 
ANNUAL
PERFORMANCE
REPORT.—Section
1116(d)(3) of title 31, United States Code, is amended—
(1) by striking ‘‘explain and describe,’’ in the
matter preceding subparagraph (A);
(2) in subparagraph (A), by inserting ‘‘explain
and describe’’ after ‘‘(A)’’;
(3) in subparagraph (B)—
(A) by inserting ‘‘explain and describe’’
after ‘‘(B)’’; and
(B) by striking ‘‘and’’ at the end;
(4) in subparagraph (C)—
(A) by inserting ‘‘explain and describe’’
after ‘‘infeasible,’’; and
(B) by inserting ‘‘and’’ at the end; and
(5) by adding at the end the following:
‘‘(D) in the case of an activity not performed
by a private sector entity—
‘‘(i) explain and describe whether the activ-
ity could be performed for the Federal Govern-
ment by a private sector entity in accordance
with the Freedom From Government Competi-
tion Act of 1997; and
‘‘(ii) if the activity could be performed by
a private sector entity, set forth a schedule for
converting to performance of the activity by a
private sector entity;’’.
SEC. 6. DEFINITIONS.
(a) AGENCY.—As used in this Act, the term ‘‘agency’’
means the following:
(1) EXECUTIVE
DEPARTMENT.—An executive
department as defined by section 101 of title 5,
United States Code.
(2) MILITARY
DEPARTMENT.—A military de-
partment as defined by section 102 of such title.
(3) INDEPENDENT ESTABLISHMENT.—An inde-
pendent establishment as defined by section 104(1)
of such title.
(b) INHERENTLY
GOVERNMENTAL
GOODS
AND
SERVICES.—
(1) PERFORMANCE OF INHERENTLY GOVERN-
MENTAL FUNCTIONS.—For the purposes of section
3(c)(1)(A), goods or services are inherently govern-
mental in nature if the providing of such goods or
services is an inherently governmental function.
(2) INHERENTLY
GOVERNMENTAL
FUNCTIONS
DESCRIBED.—
(A) FUNCTIONS INCLUDED.—For the pur-
poses of paragraph (1), a function shall be con-
sidered an inherently governmental function if
the function is so intimately related to the pub-
lic interest as to mandate performance by Fed-
eral Government employees. Such functions in-
clude activities that require either the exercise
of discretion in applying Federal Government
authority or the making of value judgments in
making decisions for the Federal Government,
including judgments relating to monetary trans-
actions and entitlements. An inherently govern-
mental function involves, among other things,
the interpretation and execution of the laws of
the United States so as to—
(i) bind the United States to take or
not to take some action by contract, policy,
regulation, authorization, order, or other-
wise;
(ii) determine, protect, and advance
its economic, political, territorial, property,
or other interests by military or diplomatic
action, civil or criminal judicial proceed-
ings, contract management, or otherwise;
(iii) significantly affect the life, lib-
erty, or property of private persons;
(iv) commission, appoint, direct, or
control officers or employees of the United
States; or
(v) exert ultimate control over the ac-
quisition, use, or disposition of the prop-
erty, real or personal, tangible or intangi-
ble, of the United States, including the
control or disbursement of appropriated
and other Federal funds.
(B) FUNCTIONS EXCLUDED.—For the pur-
poses of paragraph (1), inherently governmental
functions do not normally include—
(i) gathering information for or pro-
viding advice, opinions, recommendations,
or ideas to Federal Government officials;
(ii) any function that is primarily
ministerial or internal in nature (such as
building security, mail operations, oper-
ation of cafeterias, laundry and house-
keeping, facilities operations and mainte-
nance, warehouse operations, motor vehicle
fleet management and operations, or other
routine electrical or mechanical services);
or
(iii) any good or service which is cur-
rently or could reasonably be produced or
performed, respectively, by an entity in the
private sector.
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