[Congressional Record Volume 143, Number 23 (Thursday, February 27, 1997)]
[Extensions of Remarks]
[Page E343]
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

                      Thursday, February 27, 1997

  Ms. NORTON.  Mr. Speaker, in a season that will be dominated by 
deficit reduction, all Federal spending must be scrutinized and made 
accountable. Today I am introducing four bills to bring accountability 
for the first time to the shadow government. While the Federal agency 
work force is being cut each year, we are continuing to support a 
growing and largely unmonitored private contract service sector and 
work force from which the Federal Government procures services. The 
huge $114 billion service contracting portion of the Federal budget has 
avoided reductions while deficit reduction has spared few others. 
Members who favor contracting out and privatization and those who 
prefer that the work be done by Federal agencies can all agree that 
both must be held accountable, because both are funded by taxpayer 
dollars.
  Service contracting constitutes the fastest growing area of Federal 
procurement, accounting for over $114 billion of the $200 billion spent 
each year on outside contracts. In only 3 years, between fiscal year 
1989 and fiscal year 1992, the number of contractors doing business 
with the Government rose from 62,819 to 82,472.
  Just a few years ago, the OMB itself indicated that contracting is 
out of control. Yet this large Federal expenditure has remained hidden 
in the shadows, unlike Federal agencies and employees. There is no way 
to know whether this sector has contributed a single dollar to deficit 
reduction. It is remarkable that despite a governmentwide effort to 
promote efficiency, we have not considered the inefficiency of 
guaranteeing contractors an invulnerable chunk 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. However, 
the budget that Congress is now considering proposes no cuts in funds 
allocated specifically to service contracts--thus leaving untouched a 
huge source of potential savings--while demanding continuing sacrifices 
from the career work force that makes up the visible government.
  The time is long past due for overhauling the contracting practices 
of the Federal Government. With the four bills I am introducing today, 
I hope to help begin the process of re- inventing Federal contracting 
just as the rest of the Federal Government is being re-invented.


                         full federal pay raise

  My first bill would cut $5.7 billion in Federal agency funds for 
service contracts and make this money available for pay raises that are 
due Federal employees in 1998. Federal employees are again being 
required to give up part of their statutory pay increases while 
contract employees paid from the same Federal budget again remain 
untouched. The intent of this bill is to eliminate the discrimination 
that allows the Government to extract sacrifices from civil servants 
without considering ways to seek some savings from contractors. The 
process of competitive bidding does not insure savings and efficiency, 
but only that the Government may get the best deal among those who are 
competing. The 5 percent cut would compel contractors to scrutinize 
themselves for efficiency in the same way as we are now requiring of 
Federal agencies. Especially when compared with the sizable reductions 
agencies have experienced, this cut is so small that it should be 
beyond debate.


                             buyout reform

  My second bill would plug a hole in the buyout legislation 
reauthorized last year. When enacting the initial legislation in 1994, 
Congress went to extraordinary lengths to ensure that civil servants 
who were bought out with cash, could not be replaced with new hires and 
that the resulting 272,900 planned 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 replace bought-out 
Federal employees. Congress did not intend for buyouts to result in a 
simple substitution of contract employees for career employees. Rather, 
Congress made the judgment that the Government should be smaller and 
that considerable saving should result. The anticipated savings will 
not be made if one set of FTE's--Full-time equivalent employees--are 
substituted for another.


                            cost comparisons

  The reason most often advanced for contracting out work is that it is 
cheaper. However, a 1994 GAO study contradicts this assumption, and a 
1994 OMB study revealed that cost-savings comparisons often are not 
always done. Federal agencies routinely do not compare the cost of 
contracting with the cost of doing work in-house. Thus, my third bill 
would require agencies to make these cost comparisons and would 
prohibit them from entering into an outside service contract if the 
services could be performed at a lower cost by agency employees.
  Beyond the discrimination against career employees who are denied 
work regardless of efficiency and costs, current contracting practices 
are fundamentally bad business. According to the GAO report, issuing 
service contracts and hiring consultants can very often actually cost 
Federal agencies more than using Federal employees. In several of the 
cases analyzed by GAO, agencies could have saved more than 50 percent 
by keeping the work in-house.


                     Size of Contracting Work Force

  The absence of basic information, beginning with the size of the 
contracting work force, makes it impossible to make intelligent 
decisions about contracting out. To its credit, Congress in 1988 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. Therefore, my 
fourth bill requires the OMB to develop a governmentwide system for 
determining and reporting the number of non-Federal 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 re-
inventing government may be shared by all employees and by every area 
of Government.

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