H.R. 716, FREEDOM FROM GOVERNMENT
COMPETITION ACT OF 1997
HEARING
BEFORE THE
SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,
INFORMATION, AND TECHNOLOGY
OF THE
COMMITTEE ON GOVERNMENT
REFORM AND OVERSIGHT
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTH CONGRESS
FIRST SESSION
ON
HLR. 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 AGEN-
CIES, AND FOR OTHER PURPOSES
SEPTEMBER 29, 1997
Serial No. 105-105
Printed for the use of the Committee on Government Reform and Oversight
ae
U.S. GOVERNMENT PRINTING OFFICE
45-185, WASHINGTON : 1998
For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
PZCOMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York HENRY A. WAXMAN, California
J. DENNIS HASTERT, Iilinois TOM LANTOS, California
CONSTANCE A. MORELLA, Meryland ROBERT E. WISE, Jn., West Virginia
CHRISTOPHER SHAYS, Connecticut MAJOR R. OWENS, New York
STEVEN SCHIFF, New Mexico EDOLPHUS TOWNS, New York
CHRISTOPHER COX, California PAUL E. KANJORSKI, Pennsylvania
ILEANA ROS-LEHTINEN, Florida GARY A. CONDIT, California
JOHN M. McHUGH, New York CAROLYN B. MALONEY, New York
STEPHEN HORN, California THOMAS M. BARRETT, Wisconsin
JOHN L. MICA, Florida ELEANOR HOLMES NORTON, Washington,
THOMAS M. DAVIS, Virginia DC
DAVID M. McINTOSH, Indiana CHAKA FATTAH, Pennsylvania
MARK E. SOUDER, Indiana ELWAH E. CUMMINGS, Maryland
JOE SCARBOROUGH, Florida DENNIS J. KUCINICH, Ohio
JOHN B. SHADEGG, Arizona ROD R. BLAGOJEVICH, Illinois
STEVEN C. LATOURETTE, Ohio DANNY K. DAVIS, Illinois
MARSHALL “MARK” SANFORD, South JOHN F. TIERNEY, Massachusetts
Carolina JIM TURNER, Texas
JOHN E, SUNUNU, New Hampshire THOMAS H. ALLEN, Maine
PETE SESSIONS, Texas HAROLD E. FORD, Jr., Tennessee
MICHAEL PAPPAS, New Jersey —
VINCE SNOWBARGER, Kansas BERNARD SANDERS, Vermont
BOB BARR, Georgia (Independent)
ROB PORTMAN, Ohio
KevIN BINGER, Staff Director
DantEL R. Mott, Deputy Staff Director
Wittiam MoscHetta, Deputy Counsel and Parliamentarian
duit McCoy, Chief Clerk
Pun. Scuttino, Minority Staff Director
SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, INFORMATION, AND TECHNOLOGY
STEPHEN HORN, California, Chairman
PETE SESSIONS, Texas CAROLYN B. MALONEY, New York
THOMAS M. DAVIS, Virginia PAUL E. KANJORSKI, Pennsylvania
JOE SCARBOROUGH, Florida MAJOR R. OWENS, New York
MARSHALL “MARK” SANFORD, South ROD R. BLAGOJEVICH, Mlinois
Carolina DANNY K. DAVIS, Illinois
JOHN E. SUNUNU, New Hampshire
ROB PORTMAN, Ohio
Ex OFFICIO
DAN BURTON, Indiana HENRY A. WAXMAN, California
J, RUSSELL GEORGE, Staff Director and Chief Counsel
JouN HyNEs, Professional Staff Member
‘ANDREA MILLER, Clerk
MARK STEPHENSON, Minority Professional Staff Member
apCONTENTS
Hearing held on September 29, 1997
1
Text of H.R. 716 2
Statement of
Goldsmith, Steve, mayor, city of Indianapolis; and Shirley J. Ybarra,
deputy secretary for Transportation, State of Virginia 35
Stevens, L. Nye, Director, Federal Management and Workforce, U.S.
General Accounting Office; G. Edward DeSeve, Acting Deputy Director
for Management, Office of Management and’ Budget; and Bobby 1.
Harnage, Sr., national secretary-treasurer, American Federation of
Government Employees, AFL-Cl 63
Thomas, Hon. Craig, a U.S. Senator from the State of Wyoming 20
Letters, statements, ete, submitted for the record by:
DeSeve, G. Edward, Acting Deputy Director for Management, Office of
‘Management and Budget:
Prepared statement of 86
Questions and responses 145, 159
Duncan, Hon. John J., a Representative in Congress from the State
of Tennessee, prepared statement of . 139
Goldsmith, Steve, mayor, city of Indianapolis, prepared statement of... 38
Harnage, Bobby L., r., national serretary-ireasurer, American Federa-
tion of Government Employees, AFL-CIt
Information concerning A-76 129
Prepared statement of 95
Horn, Hon. Stephen, a Representative in Congress from the State of
California, prepared statement of 16
Maloney, Hon. Carolyn B., a Rep! from the State
of New York, prepared statement of . 19
Stevens, L. Nye, Director, Federal M:
General Accounting Office, prepared statement of .. 66
Thomas, Hon. Craig, a U.S. Senator from the State of
statement of .. 25
Ybarra, Shirley
prepared statement of
aDH.R. 716, FREEDOM FROM GOVERNMENT
COMPETITION ACT OF 1997
MONDAY, SEPTEMBER 29, 1997
HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,
INFORMATION, AND TECHNOLOGY,
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:35 a.m., in room.
2154, Rayburn House Office Building, Hon. Stephen Horn (chair-
man of the subcommittee) presiding.
Present: Representatives Horn, Davis of Virginia, and Maloney.
Staff present: J. Russell George, staff director and chief counsel;
Mark Brasher, senior policy director; John Hynes, professional staff
member; Andrea Miller, clerk; Matthew Ebert, staff assistant;
Mark Stephenson, minority professional staff member; and Ellen
Rayner, minority chief clerk.
Mr. Horn. A quorum being present, the Subcommittee on Gov-
Saati Management, Information, and Technology will come to
order.
Tomorrow, the Government Performance and Results Act re-
quires agencies to submit strategic plans. This is one of the steps
on the road to establishing performance-based government. Ulti-
mately, Congress and the taxpayers of this Nation want to be able
to hold agencies accountable for results. Already we have seen im-
provements in agency performance. For example, boating accidents
ave been dramatically reduced as the Coast Guard has begun to
focus on reducing accidents rather than on counting the number of
safety inspections performed.
Today, we are discussing H.R. 716, the Freedom From Govern-
ment Competition Act. This bill and its Senate counterpart would
impact every Federal agency. It holds the promise of changes for
Federal employees, taxpayers, and citizens.
(The text of H.R. 716 follows:]
@105TH CONGRESS
irom AY, 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. Suays, Mr. HaYworTH, Mr. ROHRABACHER,
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.
1 Be it enacted by the Senate and House of Representa-
2 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 Gov-
5 ernment Competition Act of 1997”.2
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;
ie (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
Ml sector of the economy is detrimental to all busi-
12 nesses and the American economic system;
13 (4) government competition with the private
14° seetor of the economy is at an unacceptably high
15 level, both in seope and in dollar volume;
16 (5) when a government engages in entre-
17 preneurial activities that are beyond its core mission
18 and compete with the private sector—
19 (A) the focus and attention of the govern-
20 ment are diverted from executing the basic mis-
21 sion and work of that government; and
22 (B) those activities constitute unfair gov-
23 ernment competition with the private sector;
24 (6) current laws and policies have failed to ad-
2s dress adequately the problem of government com-
26 petition with the private sector of the economy;
“BR 716 TH3
(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.
‘HR 716 1H4
1 SEC. 8. RELIANCE ON THE PRIVATE SECTOR.
2
(a) GENERAL Poxicy.—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
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10
1
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(b). PROHIBITIONS REGARDING TRANSACTIONS IN
Goons AND SERVICES.—
(1) PROVISION BY GOVERNMENT GEN-
ERALLY.—No agency may begin or carry out any ac-
tivity to provide any produets 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.
(ec) ExXcEPTIONsS.—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
“BR 716 1COI A He BNE
BES
13
5
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.
14 SEC. 4. ADMINISTRATIVE PROVISIONS.
15
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(a) REGULATIONS.—
(1) OMB RESPONSIBILITY.—The Director of
the Office of Management and Budget shall pre-
scribe regulations to carry out this Act.
(2) Conrent.—
(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.
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