[Congressional Record Volume 141, Number 64 (Thursday, April 6, 1995)]
[Extensions of Remarks]
[Pages E795-E796]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


  INTRODUCTION OF FOUR BILLS TO IMPROVE FEDERAL CONTRACTING PRACTICES

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                       HON. ELEANOR HOLMES NORTON

                      of the district of columbia

                    in the house of representatives

                        Wednesday, April 5, 1995
  Ms. NORTON. Mr. Speaker, today I am introducing four bills to bring 
some accountability and cast a search light on the elusive, stealth 
``shadow government.'' This government we cannot see is the 
proliferating and largely unmonitored private contract service sector 
and work force from which the Federal Government procures services. 
Although a huge $105 billion Goliath, this sector has emerged unscathed 
and uncut at a time when deficit reduction has spared few others.
  In fact, service contracting constitutes the fastest growing area of 
Federal Procurement. In the 1980's, Federal officials acted as if they 
wanted to contract out the entire Government. From fiscal year 1989 to 
fiscal year 1992 alone, before the Clinton administration came into 
office, the number of contractors doing business with the Government 
rose from 62,819 to 82,472. Over that same period, the amount of money 
shelled out to contractors of all kinds mushroomed from $184 billion to 
almost $200 billion. Service contracts alone account for $105 billion 
of the $200 billion spent each year on outside contracts.
  This is a Government-created and financed monster that the OMB itself 
concedes is out of control. How extraordinary, then, that in a budget 
which has left no visible stone unturned, this large Federal 
expenditure has remained hidden in the shadows and has not contributed 
a single dollar of mandated cuts to deficit reduction, as Federal 
agencies and employees have. How remarkable that, despite a Government-
wide effort to promote efficiency, we have not considered the 
inefficiency of guaranteeing contractors an invulnerable chuck of tax 
dollars.
  The Clinton administration, to its credit, has worked hard to make 
service contractors more responsive--for example, by proposing new 
performance-based standards for existing service contracts. how 
surprising, then, that the budget the Congress is now considering 
proposes no cuts in funds allocated for service contracts--thus leaving 
untouched a huge source of potential savings--while demanding continued 
sacrifices from the career work force that makes up the ``visible 
government.'' Thus far, the shadow government has not registered 
beneath the green eyeshades of budget cutters, including the Congress.
  [[Page E796]] The time is long past due for overhauling contracting 
practices. With the four bills I am introducing today, I hope to help 
begin the process of reinventing Federal contracting just as the rest 
of our Government is being reinvented.


                         full federal pay raise

  My first bill would cut $2 billion in Federal agency funds for 
service contracts and make this money available for pay raises that are 
due Federal employees next year. Federal employees
 are again being required to give up part of their statutory pay 
increased while, again, contract employees paid for the same Federal 
budget remain untouched. The intent of my first bill is to eliminate 
the raw discrimination that allows the Government to seek sacrifices 
for civil servants because they are where we can see them but to give 
immunity to contract employees because they are out of sight.

  Beyond the discrimination against career employees who are denied 
modest increases promised by statute, current contracting practices are 
fundamentally bad business. According to a March 1994 GAO report, 
issuing service contracts and hiring consultants actually costs Federal 
agencies more than using Federal employees. In 3 of the 9 cased 
analyzed by GAO, agencies could have saved over 50 percent by keeping 
the work in-house.


                                buyouts

  My second bill would plug a gaping hole in the landmark buyout 
legislation we have only just passed. Congress went to extraordinary 
lengths to ensure that civil servants who were bought out with cash 
could not be replaced and that the resulting 272,000 reductions in the 
Federal work force would be permanent. However, as it stands now, the 
buyout law would allow untold numbers of contract employees to take the 
places of bought-out Federal employees--substituting shadow government 
employees for career employees. My bill would amend the Federal 
Workforce Restructuring Act to prohibit agencies from contracting out 
work previously done by buyout recipients.


                            cost comparisons

  The reason most often touted for contracting out work is that it is 
cheaper. The March 1994 GAO study contradicts this assumption, and an 
OMB study released in January 1994 shows that the cost-saving 
assumption is often not even tested. Federal agencies do not compare 
the costs for contracting with the costs of doing work in-house. My 
third bill would require agencies to make these cost comparisons and 
would prohibit any agency from entering into an outside service 
contract if the services could be performed at a lower cost by agency 
employees.


                     size of contracting workforce

  One of the chief obstacles to regulating the contracting workforce 
has been the absence of information on the extent of the workforce. In 
1988, for example, Congress passed legislation requiring agencies to 
significantly cut service contracts. However, a subsequent GAO report 
found that there was no way to know if the agencies had actually 
complied with the legislation. My fourth bill requires OMB to develop a 
Government-wide system for determining and reporting the number of 
nonfederal employees engaged in service contracts.
  All four of these bills would provide more systematic ways for 
monitoring and constraining the expenses associated with contracting 
out of services--just as we have insisted for Federal agencies and 
employees. Efficiency and deficit reduction must not stop at the door 
of the Federal agency. We need to bring the shadow government into the 
full light of day so that the sacrifices demanded in the name of 
reinventing Government may be shared by all employees and by every area 
of Government.
  Summaries of Service Contracting Bills Introduced By Congresswoman 
                         Eleanor Holmes Norton

       1. The first bill cuts $2 billion in Federal agency funds 
     for service contracts and makes this money available for pay 
     raises that are due Federal employees next year. Federal 
     employees are again being required to give up part of their 
     statutory pay increases while, again, contract employees paid 
     from the same Federal budget remain untouched. The intent of 
     this bill is to eliminate this inexplicable discrimination.
       2. The second bill amends section 5(g) of the Federal 
     Workforce Restructuring Act of 1994, (Public Law 103-226) to 
     prohibit an agency authorized to offer voluntary separation 
     incentive payments under that Act from contracting out, in 
     whole or in part, the duties previously performed by an 
     employee who separated upon receiving such a payment. This is 
     to ensure that no substitution of shadow government employees 
     for career employees occurs.
       3. The third bill prohibits any Executive Branch agency 
     from entering into a service contract if the services to be 
     procured under the contract can be performed at a lower cost 
     by employees of the agency. It requires agencies to perform 
     cost comparisons (contractor cost v. in-house cost) when 
     deciding whether to contract for a service. The requirement 
     applies to contracts entered into after the date of 
     enactment.
       4. The fourth bill requires the Director of the Office of 
     Management and Budget (OMB) to develop a government-wide 
     system for determining the number of persons employed by non-
     Federal Government entities providing services under service 
     contracts awarded by agencies in the Executive Branch of the 
     Federal Government. It also requires OMB to submit an annual 
     report to the Congress indicating the number of such persons 
     providing services and the number with jobs comparable to 
     those of career Federal employees providing services to 
     agencies.
     

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