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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 PZ COMMITTEE 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 ap CONTENTS 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 aD H.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 TH 3 (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 1H 4 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 8 9 10 1 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 (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 1 COI 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 16 17 18 19 20 21 (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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