[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 314 Reported in Senate (RS)]






                                                       Calendar No. 502
105th CONGRESS
  2d Session
                                 S. 314

                          [Report No. 105-269]

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 SENATE OF THE UNITED STATES

                           February 12, 1997

Mr. Thomas (for himself, Mr. Hagel, Mr. Kyl, Mr. Enzi, Mr. Brownback,  
 Mr. Craig, Mr. Hutchinson, Mr. Burns, Mr. Faircloth, Mr. Shelby, Mr. 
Helms, Mr. Grams, Mr. Allard, Mr. Mack, Mr. Wyden, Mr. Cochran, and Mr. 
   Abraham) introduced the following bill; which was read twice and 
           referred to the Committee on Governmental Affairs

                             July 28, 1998

  Reported by Mr. Thompson, with an amendment and an amendment to the 
                                 title
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

_______________________________________________________________________

                                 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.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

<DELETED>SECTION 1. SHORT TITLE.</DELETED>

<DELETED>    This Act may be cited as the ``Freedom From Government 
Competition Act of 1997''.</DELETED>

<DELETED>SEC. 2. FINDINGS.</DELETED>

<DELETED>    Congress finds and declares that--</DELETED>
        <DELETED>    (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;</DELETED>
        <DELETED>    (2) competitive private sector enterprises are the 
        most productive, efficient, and effective sources of goods and 
        services;</DELETED>
        <DELETED>    (3) government competition with the private sector 
        of the economy is detrimental to all businesses and the 
        American economic system;</DELETED>
        <DELETED>    (4) government competition with the private sector 
        of the economy is at an unacceptably high level, both in scope 
        and in dollar volume;</DELETED>
        <DELETED>    (5) when a government engages in entrepreneurial 
        activities that are beyond its core mission and compete with 
        the private sector--</DELETED>
                <DELETED>    (A) the focus and attention of the 
                government are diverted from executing the basic 
                mission and work of that government; and</DELETED>
                <DELETED>    (B) those activities constitute unfair 
                government competition with the private 
                sector;</DELETED>
        <DELETED>    (6) current laws and policies have failed to 
        address adequately the problem of government competition with 
        the private sector of the economy;</DELETED>
        <DELETED>    (7) the level of government competition with the 
        private sector, especially with small businesses, has been a 
        priority issue of each White House Conference on Small 
        Business;</DELETED>
        <DELETED>    (8) reliance on the private sector is consistent 
        with the goals of the Government Performance and Results Act of 
        1993 (Public Law 103-62);</DELETED>
        <DELETED>    (9) reliance on the private sector is necessary 
        and desirable for proper implementation of the Federal 
        Workforce Restructuring Act of 1994 (Public Law 103-
        226);</DELETED>
        <DELETED>    (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 Government agencies and to avoid Federal Government 
        competition with the private sector of the economy; 
        and</DELETED>
        <DELETED>    (11) it is in the public interest for the private 
        sector to utilize employees who are adversely affected by 
        conversions to use of private sector entities for providing 
        goods and services on behalf of the Federal 
        Government.</DELETED>

<DELETED>SEC. 3. RELIANCE ON THE PRIVATE SECTOR.</DELETED>

<DELETED>    (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.</DELETED>
<DELETED>    (b) Prohibitions Regarding Transactions in Goods and 
Services.--</DELETED>
        <DELETED>    (1) Provision by government generally.--No agency 
        may begin or carry out any activity to provide any products or 
        services that can be provided by the private sector.</DELETED>
        <DELETED>    (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.</DELETED>
<DELETED>    (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:</DELETED>
        <DELETED>    (1) Either--</DELETED>
                <DELETED>    (A) the goods or services are inherently 
                governmental in nature within the meaning of section 
                6(b); or</DELETED>
                <DELETED>    (B) the Director of the Office of 
                Management and Budget determines that the provision of 
                the goods or services is otherwise an inherently 
                governmental function.</DELETED>
        <DELETED>    (2) The head of the agency determines that the 
        goods or services should be produced, provided, or manufactured 
        by the Federal Government for reasons of national 
        security.</DELETED>
        <DELETED>    (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).</DELETED>
        <DELETED>    (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.</DELETED>

<DELETED>SEC. 4. ADMINISTRATIVE PROVISIONS.</DELETED>

<DELETED>    (a) Regulations.--</DELETED>
        <DELETED>    (1) OMB responsibility.--The Director of the 
        Office of Management and Budget shall prescribe regulations to 
        carry out this Act.</DELETED>
        <DELETED>    (2) Content.--</DELETED>
                <DELETED>    (A) Private sector preference.--Consistent 
                with the policy and prohibitions set forth in section 
                3, the regulations shall emphasize a preference for the 
                provision of goods and services by private sector 
                sources.</DELETED>
                <DELETED>    (B) Fairness for federal employees..--In 
                order to ensure the fair treatment of Federal 
                Government employees, the regulations--</DELETED>
                        <DELETED>    (i) shall not contravene any law 
                        or regulation regarding Federal Government 
                        employees; and</DELETED>
                        <DELETED>    (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 
                        information on relevant available benefits and 
                        assistance to Federal Government employees 
                        adversely affected by conversions to use of 
                        private sector entities for providing goods and 
                        services.</DELETED>
                <DELETED>    (C) Best value sources.--</DELETED>
                        <DELETED>    (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.</DELETED>
                        <DELETED>    (ii) Factors considered.--The 
                        standards and procedures shall include 
                        requirements for consideration of analyses of 
                        all direct and indirect costs (performed in a 
                        manner consistent with generally accepted cost-
                        accounting principles), the qualifications of 
                        sources, the past performance of sources, and 
                        any other technical and noncost factors that 
                        are relevant.</DELETED>
                        <DELETED>    (iii) Consultation requirement.--
                        The Director shall consult with persons from 
                        the private sector and persons from the public 
                        sector in developing the standards and 
                        procedures.</DELETED>
                <DELETED>    (D) Appropriate governmental activities.--
                The regulations shall include a methodology for 
                determining what types of activities performed by an 
                agency should continue to be performed by the agency or 
                any other agency.</DELETED>
<DELETED>    (b) Compliance and Implementation Assistance.--</DELETED>
        <DELETED>    (1) OMB center for commercial activities.--The 
        Director of the Office of Management and Budget shall establish 
        a Center for Commercial Activities within the Office of 
        Management and Budget.</DELETED>
        <DELETED>    (2) Responsibilities.--The Center--</DELETED>
                <DELETED>    (A) shall be responsible for the 
                implementation 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</DELETED>
                <DELETED>    (B) shall provide agencies and private 
                sector entities with guidance, information, and other 
                assistance appropriate for facilitating conversions to 
                use of private sector entities for providing goods and 
                services on behalf of the Federal Government.</DELETED>

<DELETED>SEC. 5. STUDY AND REPORT ON COMMERCIAL ACTIVITIES OF THE 
              GOVERNMENT.</DELETED>

<DELETED>    (a) Annual Performance Plan.--Section 1115(a) of title 31, 
United States Code, is amended--</DELETED>
        <DELETED>    (1) by striking ``and'' at the end of paragraph 
        (5);</DELETED>
        <DELETED>    (2) by striking the period at the end of paragraph 
        (6) and inserting ``; and''; and</DELETED>
        <DELETED>    (3) by adding at the end the following:</DELETED>
        <DELETED>    ``(7) include--</DELETED>
                <DELETED>    ``(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</DELETED>
                <DELETED>    ``(B) the identity of each program 
                activity that is not subject to the Freedom From 
                Government Competition Act of 1997 by reason of an 
                exception set forth in that Act, together with a 
                discussion specifying why the activity is determined to 
                be covered by the exception.''.</DELETED>
<DELETED>    (b) Annual Performance Report.--Section 1116(d)(3) of 
title 31, United States Code, is amended--</DELETED>
        <DELETED>    (1) by striking ``explain and describe,'' in the 
        matter preceding subparagraph (A);</DELETED>
        <DELETED>    (2) in subparagraph (A), by inserting ``explain 
        and describe'' after ``(A)'';</DELETED>
        <DELETED>    (3) in subparagraph (B)--</DELETED>
                <DELETED>    (A) by inserting ``explain and describe'' 
                after ``(B)''; and</DELETED>
                <DELETED>    (B) by striking ``and'' at the 
                end;</DELETED>
        <DELETED>    (4) in subparagraph (C)--</DELETED>
                <DELETED>    (A) by inserting ``explain and describe'' 
                after ``infeasible,''; and</DELETED>
                <DELETED>    (B) by inserting ``and'' at the end; 
                and</DELETED>
        <DELETED>    (5) by adding at the end the following:</DELETED>
        <DELETED>    ``(D) in the case of an activity not performed by 
        a private sector entity--</DELETED>
                <DELETED>    ``(i) explain and describe whether the 
                activity could be performed for the Federal Government 
                by a private sector entity in accordance with the 
                Freedom From Government Competition Act of 1997; 
                and</DELETED>
                <DELETED>    ``(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;''.</DELETED>

<DELETED>SEC. 6. DEFINITIONS.</DELETED>

<DELETED>    (a) Agency.--As used in this Act, the term ``agency'' 
means the following:</DELETED>
        <DELETED>    (1) Executive department.--An executive department 
        as defined by section 101 of title 5, United States 
        Code.</DELETED>
        <DELETED>    (2) Military department.--A military department as 
        defined by section 102 of such title.</DELETED>
        <DELETED>    (3) Independent establishment.--An independent 
        establishment as defined by section 104(1) of such 
        title.</DELETED>
<DELETED>    (b) Inherently Governmental Goods and Services.--
</DELETED>
        <DELETED>    (1) Performance of inherently governmental 
        functions.--For the purposes of section 3(c)(1)(A), goods or 
        services are inherently governmental in nature if the providing 
        of such goods or services is an inherently governmental 
        function.</DELETED>
        <DELETED>    (2) Inherently governmental functions described.--
        </DELETED>
                <DELETED>    (A) Functions included.--For the purposes 
                of paragraph (1), a function shall be considered an 
                inherently governmental function if the function is so 
                intimately related to the public interest as to mandate 
                performance by Federal Government employees. Such 
                functions include 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 transactions and 
                entitlements. An inherently governmental function 
                involves, among other things, the interpretation and 
                execution of the laws of the United States so as to--
                </DELETED>
                        <DELETED>    (i) bind the United States to take 
                        or not to take some action by contract, policy, 
                        regulation, authorization, order, or 
                        otherwise;</DELETED>
                        <DELETED>    (ii) determine, protect, and 
                        advance its economic, political, territorial, 
                        property, or other interests by military or 
                        diplomatic action, civil or criminal judicial 
                        proceedings, contract management, or 
                        otherwise;</DELETED>
                        <DELETED>    (iii) significantly affect the 
                        life, liberty, or property of private 
                        persons;</DELETED>
                        <DELETED>    (iv) commission, appoint, direct, 
                        or control officers or employees of the United 
                        States; or</DELETED>
                        <DELETED>    (v) exert ultimate control over 
                        the acquisition, use, or disposition of the 
                        property, real or personal, tangible or 
                        intangible, of the United States, including the 
                        control or disbursement of appropriated and 
                        other Federal funds.</DELETED>
                <DELETED>    (B) Functions excluded.--For the purposes 
                of paragraph (1), inherently governmental functions do 
                not normally include--</DELETED>
                        <DELETED>    (i) gathering information for or 
                        providing advice, opinions, recommendations, or 
                        ideas to Federal Government 
                        officials;</DELETED>
                        <DELETED>    (ii) any function that is 
                        primarily ministerial or internal in nature 
                        (such as building security, mail operations, 
                        operation of cafeterias, laundry and 
                        housekeeping, facilities operations and 
                        maintenance, warehouse operations, motor 
                        vehicle fleet management and operations, or 
                        other routine electrical or mechanical 
                        services); or</DELETED>
                        <DELETED>    (iii) any good or service which is 
                        currently or could reasonably be produced or 
                        performed, respectively, by an entity in the 
                        private sector.</DELETED>

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Federal Activities Inventory Reform 
Act of 1998''.

SEC. 2. ANNUAL LISTS OF GOVERNMENT ACTIVITIES NOT INHERENTLY 
              GOVERNMENTAL IN NATURE.

    (a) Lists Required.--Not later than the end of the third quarter of 
each fiscal year, the head of each executive agency shall submit to the 
Director of the Office of Management and Budget a list of activities 
performed by Federal Government sources for the executive agency that, 
in the judgment of the head of the executive agency, are not inherently 
governmental functions. The entry for an activity on the list shall 
include the following:
            (1) The fiscal year for which the activity first appeared 
        on a list prepared under this section.
            (2) The number of full-time employees (or its equivalent) 
        that are necessary for the performance of the activity by a 
        Federal Government source.
            (3) The name of a Federal Government employee responsible 
        for the activity from whom additional information about the 
        activity may be obtained.
    (b) OMB Review and Consultation.--The Director of the Office of 
Management and Budget shall review the executive agency's list for a 
fiscal year and consult with the head of the executive agency regarding 
the content of the final list for that fiscal year.
    (c) Public Availability of Lists.--
            (1) Publication.--Upon the completion of the review and 
        consultation regarding a list of an executive agency--
                    (A) the head of the executive agency shall promptly 
                transmit a copy of the list to Congress and make the 
                list available to the public; and
                    (B) the Director of the Office of Management and 
                Budget shall promptly publish in the Federal Register a 
                notice that the list is available to the public.
            (2) Changes.--If the list changes after the publication of 
        the notice as a result of the resolution of a challenge under 
        section 3, the head of the executive agency shall promptly--
                    (A) make each such change available to the public 
                and transmit a copy of the change to Congress; and
                    (B) publish in the Federal Register a notice that 
                the change is available to the public.
    (d) Competition Required.--Within a reasonable time after the date 
on which a notice of the public availability of a list is published 
under subsection (c), the head of the executive agency concerned shall 
review the activities on the list. Each time that the head of the 
executive agency considers contracting with a private sector source for 
the performance of such an activity, the head of the executive agency 
shall use a competitive process to select the source (except as may 
otherwise be provided in a law other than this Act, an Executive order, 
regulations, or any Executive branch circular setting forth 
requirements or guidance that is issued by competent executive 
authority). The Director of the Office of Management and Budget shall 
issue guidance for the administration of this subsection.
    (e) Realistic and Fair Cost Comparisons.--For the purpose of 
determining whether to contract with a source in the private sector for 
the performance of an executive agency activity on the list on the 
basis of a comparison of the costs of procuring services from such a 
source with the costs of performing that activity by the executive 
agency, the head of the executive agency shall ensure that all costs 
(including the costs of quality assurance, technical monitoring of the 
performance of such function, liability insurance, employee retirement 
and disability benefits, and all other overhead costs) are considered 
and that the costs considered are realistic and fair.

SEC. 3. CHALLENGES TO THE LIST.

    (a) Challenge Authorized.--An interested party may submit to an 
executive agency a challenge of an omission of a particular activity 
from, or an inclusion of a particular activity on, a list for which a 
notice of public availability has been published under section 2.
    (b) Interested Party Defined.--For the purposes of this section, 
the term ``interested party'', with respect to an activity referred to 
in subsection (a), means the following:
            (1) A private sector source that--
                    (A) is an actual or prospective offeror for any 
                contract, or other form of agreement, to perform the 
                activity; and
                    (B) has a direct economic interest in performing 
                the activity that would be adversely affected by a 
                determination not to procure the performance of the 
                activity from a private sector source.
            (2) A representative of any business or professional 
        association that includes within its membership private sector 
        sources referred to in paragraph (1).
            (3) An officer or employee of an organization within an 
        executive agency that is an actual or prospective offeror to 
        perform the activity.
            (4) The head of any labor organization referred to in 
        section 7103(a)(4) of title 5, United States Code, that 
        includes within its membership officers or employees of an 
        organization referred to in paragraph (3).
    (c) Time for Submission.--A challenge to a list shall be submitted 
to the executive agency concerned within 30 days after the publication 
of the notice of the public availability of the list under section 2.
    (d) Initial Decision.--Within 28 days after an executive agency 
receives a challenge, an official designated by the head of the 
executive agency shall--
            (1) decide the challenge; and
            (2) transmit to the party submitting the challenge a 
        written notification of the decision together with a discussion 
        of the rationale for the decision and an explanation of the 
        party's right to appeal under subsection (e).
    (e) Appeal.--
            (1) Authorization of appeal.--An interested party may 
        appeal an adverse decision of the official to the head of the 
        executive agency within 10 days after receiving a notification 
        of the decision under subsection (d).
            (2) Decision on appeal.--Within 10 days after the head of 
        an executive agency receives an appeal of a decision under 
        paragraph (1), the head of the executive agency shall decide 
        the appeal and transmit to the party submitting the appeal a 
        written notification of the decision together with a discussion 
        of the rationale for the decision.

SEC. 4. APPLICABILITY.

    (a) Executive Agencies Covered.--Except as provided in subsection 
(b), this Act applies to the following executive agencies:
            (1) Executive department.--An executive department named in 
        section 101 of title 5, United States Code.
            (2) Military department.--A military department named in 
        section 102 of title 5, United States Code.
            (3) Independent establishment.--An independent 
        establishment, as defined in section 104 of title 5, United 
        States Code.
    (b) Exceptions.--This Act does not apply to or with respect to the 
following:
            (1) General accounting office.--The General Accounting 
        Office.
            (2) Government corporation.--A Government corporation or a 
        Government controlled corporation, as those terms are defined 
        in section 103 of title 5, United States Code.
            (3) Nonappropriated funds instrumentality.--A part of a 
        department or agency if all of the employees of that part of 
        the department or agency are employees referred to in section 
        2105(c) of title 5, United States Code.
            (4) Certain depot-level maintenance and repair.--Depot-
        level maintenance and repair of the Department of Defense (as 
        defined in section 2460 of title 10, United States Code).

SEC. 5. DEFINITIONS.

    In this Act:
            (1) Federal government source.--The term ``Federal 
        Government source'', with respect to performance of an 
        activity, means any organization within an executive agency 
        that uses Federal Government employees to perform the activity.
            (2) Inherently governmental function.--
                    (A) Definition.--The term ``inherently governmental 
                function'' means a function that is so intimately 
                related to the public interest as to require 
                performance by Federal Government employees.
                    (B) Functions included.--The term includes 
                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 transactions and entitlements. An inherently 
                governmental function involves, among other things, the 
                interpretation and execution of the laws of the United 
                States so as--
                            (i) to bind the United States to take or 
                        not to take some action by contract, policy, 
                        regulation, authorization, order, or otherwise;
                            (ii) to determine, protect, and advance 
                        United States economic, political, territorial, 
                        property, or other interests by military or 
                        diplomatic action, civil or criminal judicial 
                        proceedings, contract management, or otherwise;
                            (iii) to significantly affect the life, 
                        liberty, or property of private persons;
                            (iv) to commission, appoint, direct, or 
                        control officers or employees of the United 
                        States; or
                            (v) to exert ultimate control over the 
                        acquisition, use, or disposition of the 
                        property, real or personal, tangible or 
                        intangible, of the United States, including the 
                        collection, control, or disbursement of 
                        appropriated and other Federal funds.
                    (C) Functions excluded.--The term does not normally 
                include--
                            (i) gathering information for or providing 
                        advice, opinions, recommendations, or ideas to 
                        Federal Government officials; or
                            (ii) any function that is primarily 
                        ministerial and internal in nature (such as 
                        building security, mail operations, operation 
                        of cafeterias, housekeeping, facilities 
                        operations and maintenance, warehouse 
                        operations, motor vehicle fleet management 
                        operations, or other routine electrical or 
                        mechanical services).

SEC. 6. EFFECTIVE DATE.

    This Act shall take effect on October 1, 1998.
            Amend the title so as to read: ``A bill to provide a 
        process for identifying the functions of the Federal Government 
        that are not inherently governmental functions, and for other 
        purposes.''.
                                     





                                                       Calendar No. 502

105th CONGRESS

  2d Session

                                 S. 314

                          [Report No. 105-269]

_______________________________________________________________________

                                 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.

_______________________________________________________________________

                             July 28, 1998

        Reported with an amendment and an amendment to the title