[Congressional Record Volume 143, Number 56 (Monday, May 5, 1997)]
[Senate]
[Pages S3935-S3937]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
FREEDOM FROM GOVERNMENT COMPETITION ACT
Mr. THOMAS. Mr. President, I come to the floor this morning to talk
about one of my top priorities for the 105th Congress. That is the
Freedom From Government Competition Act.
I am struck by the fact that we are considering now the supplemental
appropriations bill and debate on it will last, I am sure, all week.
Then next week we will consider the budget which will take at least
another week of debate. During these deliberations, we will talk about
funding the essentials of Government which, of course, is one of
Congress' most important tasks. But, unfortunately, it seems to me that
we spend an awful lot of time on the budget and on appropriations and
funding the Government in the form it is currently in, and less time
than we should talking about the changes that we ought to make in the
Government.
So, while I am on the floor today, I want to mention a couple of
bills I have sponsored to change the role of the Federal Government.
One is the biennial budget. I think we really ought to consider going
to a biennial budget in this Congress as we do in many States so that
we can deal with the budget once every 2 years. Agencies would do a
better job with 2 years of funding because they would have some
stability in their funding levels. Certainly we can look at least 2
years ahead in terms of budget, so that Congress has a whole year to
talk about some of the reforms that ought to take place; that ought to
change in Government.
I am persuaded that without some overt changes, without fundamental
changes brought about by the Congress, that Government just continues
to go on, just continues to grow, just continues to expand. It is the
nature of government.
Quite frankly, according to one of the studies by GAO regarding one
agency that I just read this weekend, there is no real accountability
in terms of spending. So that accountability in terms of what you do
with the money and the results that you have in the Government agencies
are largely the responsibilities of the Congress.
Congress does not have time to do that. We spend too much of our time
with the budget, too much of our time with appropriations. One of the
other things that we ought to do, in my opinion, is to ensure that the
Government is not competing with the private sector in areas that are
basically commercial in nature that could better be done and could more
cheaply be done through outsourcing.
My legislation, the Freedom From Government Competition Act, has the
potential to open up a $30 billion market for our Nation's businesses,
mostly small businesses, to have an opportunity, by contract, to
fulfill the commercial needs of the Federal Government. It would level
the playing field for thousands of our Nation's businesses that span
the economic spectrum of this whole country, from mundane things to
very high tech things, from janitorial services, hospitality and
recreation services, to engineering services, laboratories and testing
services--those functions that are commercial in nature that are now
done by the Government that could better and likely more inexpensively
be done in the private sector.
The bill is quite simple, as a matter of fact. It simply says that
OMB would take a look at all the activities and functions of
Government, would identify those that are commercial in nature, and
then create a fair and competitive process to outsource those
activities to the private sector. Of course, not only does the bill
answer the call of the American people to limit the size of Government
and encourage the private sector--but it has a great deal of value in
terms of the Federal budget. The taxpayers could save many billions of
dollars. The interesting part of this concept is that it has been
around for a very long time. For over 40 years we have been dealing
with this issue. It has been the Federal Government's policy to
contract out for over 40 years. Unfortunately, it has not worked. The
evidence is that it has not worked. In fact, I recently ran across an
excerpt of a 1954 Congressional Quarterly Almanac that details how the
current policy came into existence.
Mr. President, I ask unanimous consent that this article be printed
in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
[From the Congressional Quarterly Almanac, 1954]
Business Competition From Government
HR 9835--Reported by House Government Operations Committee
(H. Rept. 241) July 21, 1954.
Passed by the House, amended, July 24 by voice vote.
Reported by Senate Government Operations Committee, with
amendment, Aug. 10 (S. Rept. 2382).
Legislation (HR 9835) aimed at putting an end to government
operations which were in competition with private enterprise
cleared the House, and it was subsequently reported by the
Senate Government Operations Committee. No further action was
taken on the measure during the 1954 session.
background
The Intergovernmental Relations Subcommittee of the House
Government Operations Committee held hearings in June, 1953,
on federal activities in commercial and industrial fields.
The hearings, which concentrated on areas where the
government
[[Page S3936]]
might be in competition with private business began June 9
and were concluded June 16.
A list compiled by the Subcommittee noted 86 commercial and
industrial activities in the federal government. Among them
were: 31 manufacturing items (including coffee roasting,
dentures, sleeping bags, aluminum and atomic energy); seven
fields of transportation; 26 service activities (including
commissaries, power plants, insurance and fish hatcheries);
six construction; seven maintenance; and nine miscellaneous
activities (research and development to fur sealing);
Testimony
June 9. First witness was Rep. Clarence J. Brown (R. Ohio)
who said military commissaries presented a ``real threat to
free enterprise'' because of their competition with private
business. Rowland Jones, Jr., representing the American
Retail Foundation, said post exchanges were like big
department stores except their prices were 25 per cent lower.
In a discussion of whether the Boston Navy Yard's ropewalk,
where Navy rope was made, should be retained, the Cordagee
Institute, a trade organization, said the mill was unduly
competitive with private industry, costly to taxpayers, and
private enterprise was capable of filling government needs at
reasonable prices.
Rep. Thomas P. O'Neill, Jr., (D. Mass.) said he believed
the ropewalk operation should continue. David Himmelfarb,
representing employees at the ropewalk, supported retention
of the operation.
June 10, Craig R. Sheaffer, Assistant Secretary of
Commerce, said his Department would work with the
Subcommittee to minimize instances of unfair government
competition.
June 11. Witnesses who testified on instances where they
said the government was offering unfair completion to private
businesses were Robert H. North, International Association of
Ice Cream Manufacturers; Hap Holliday, California Retail
Grocers; and C.E. Herington, Metal Treating Institute.
Liquor sold on Army posts
June 16. The group was told by Benjamin Josephs,
representing the National Retail Liquor Package Stores, Inc.,
that illegal liquor sales on military posts were cutting in
on private businesses, causing big tax losses, misusing
government personnel and disrupting distribution of alcoholic
beverages.
Clem D. Johnston, a vice president of the Chamber of
Commerce of the U.S., called for a complete review and
curtailment of the ``Defense Department's vast empire of
commercial and industrial enterprise.'' He said that
Department was competing with private enterprise ``in nearly
very segment of our economy.''
Thomas B. Crowley of San Francisco, representing West Coast
tugboat and marine salvage operators, urged that the Navy be
removed from the salvage business. He said private business
could do it more efficiently and cheaply.
Wilson takes action
Secretary of Defense Charles E. Wilson Dec. 15, 1953
ordered the military services to discontinue iron and steel
processing and other business activities which could be
performed satisfactorily by private firms.
Rep. Cecil M. Harden (R. Ind.), chairman of the
Intergovernmental Relations Subcommittee, said Dec. 23 the
National Coffee Association had recommended that the
government close its coffee roasting plants and utilize the
services of commercial roasters exclusively. Mrs. Harden said
that this step would ``save millions of dollars to the
government annually.''
Defense Department policy
Quoting the directive from Secretary of Defense Wilson
which stated that it was the policy of the Department of
Defense ``not to engage in the operation of industrial or
commercial type facilities unless it can be demonstrated that
it is necessary for the government itself to perform the
required work.'' Mrs. Harden announced that the first step in
putting the directive into effect might be the closing of
most of the 61 military plants processing scrap iron.
house
Committee, Government Operations.
Reports. On Feb. 9, 1954, it filed a report (H. Rept. 1197)
in which its Subcommittee on Intergovernmental Relations
recommended ``vigorous'' action to curb governmental
operations in commerce and industry.
Eleven Democratic members of the Committee refused to sign
the report, objecting in ``additional views'' to
``generalization'' and ``hazy conclusions'' which could make
the report ``a political document.''
The Committee June 16 approved three intermediate reports
from the Subcommittee on Intergovernmental Relations
regarding its study of the federal government in business
competition with private enterprise. The reports dealt with
government-owned sawmills, plants for processing ferrous
scrap, and the like.
Government steel plant
In the report on iron and steel the Subcommittee said the
armed services and Atomic Energy Commission should reevaluate
the need for retaining government-owned plants for processing
iron and steel scrap, and that no major equipment should be
purchased or installed until this was done.
legislation
Hearings. July 14-19 on three related bills, H.R. 8832,
H.R. 9834, and H.R. 9835, dealing with the matter of
government business competition with private enterprise.
Testimony, July 14. Witnesses included Reps. Harden, Frank
C. Osmers, Jr. (R. N.J.), and Thomas B. Curtis (R. Mo.).
July 15. Witnesses were representatives and officials of
taxpayers' associations, small-business groups, retail
federations and industry organizations.
July 19. Spokesmen for the Departments of Defense and
Commerce and the Budget Bureau testified that federal
agencies were placing government contracts and production
into competitive free enterprise where possible, particularly
activities previously performed by the federal government.
Bill reported
The Committee July 21 reported a bill (H.R. 9835--H. Rept.
2441) designed to get the government out of commercial
activities that were in competition with private enterprise.
As reported, the bill carried the following provisions:
Declare it the policy of Congress that the Federal
government should not engage ``in business-type operations
competitive with private enterprise'' except when there was a
proven necessity for it.
Request the President to make a survey, through the
Commerce Department, of government commercial activities with
a view to ending those not essential. The President, however,
would not be permitted to terminate any activities expressly
authorized by Congress.
Provide that the President make an annual report to
Congress on these operations.
Floor Action
The House passed HR 9835 by voice vote July 24 without
floor amendments. Rep. William L. Springer (R Ill.) said the
nation was ``becoming more aware of the inefficiency and high
costs--all things considered--of government operation of
business-type facilities and services.''
senate
Committee. Subcommittee on Legislative Program, Government
Operations.
Hearing. Aug. 9 on HR 9835.
Testimony. Otis H. Ellis, general counsel of National Oil
Jobbers Council, objected to Armed Services post exchanges
running gasoline service stations. He said the bill lacked
``teeth'' but ``is at least a start in the right direction.''
Other testimony favoring the legislation was received from
American Retail Federation, National Associated Businessmen,
Inc., and the Investors League of America.
Opposition statements came from three AFL groups:
International Association of Machinists, the Metal Trades
Council and the American Federation of Government Employees.
Bill reported
The Committee Aug. 10 reported HR 9835 (S. Rept. 2382) with
an amendment in the nature of a substitute.
Senate Committee recommendations were to:
State clearly the legislative policy that the federal
government ``desires to encourage private competitive
enterprise to the maximum extent compatible with national
security'' and that the government shall not engage in
business-type operations in competition with private
enterprise except where necessary.
Authorize the President to end any commercial competitive
federal activity not specifically provided for by law,
provided the termination would not impair an essential
federal operation, adversely affect the national security, or
result in or contribute to monopolization of trade or
commerce.
Provide for Commerce Department examination of complaints
of federal competition with private enterprise, and action
toward eliminating such activities.
Provide for a Presidential survey of federal commercial
operations, and submission of an annual report to Congress on
the subject.
Group Stands
National Associated Businessmen, Inc., a group seeking to
``get government out of business,'' waged a nationwide
campaign for passage of HR 3832, a bill introduced by Rep.
Frank C. Osmers, Jr. (R. N.J.) to achieve this objective.
The Chamber of Commerce of the United States announced July
30 it had sent a letter to Sen. Joseph R. McCarthy (R Wis.),
chairman of the Senate Government Operations Committee,
urging passage of legislation being considered by his group
which, the Chamber said, would curb government competition
with private business. The letter declared that S. 3794 or a
similar House bill (HR 9835) would ``help identify government
products and services which business and industry can provide
fully as well.''
Mr. THOMAS. In 1954, the House of Representatives passed a bill
numbered H.R. 9835, legislation to require the executive branch to
increase its reliance on the private sector--1954. Among the concerns
addressed by the bill were manufacturing, construction and service
activities of the Federal Government. Final action on the bill was
dropped only upon assurance from the Executive Branch that it would
implement the policy administratively. Bureau of the Budget Bulletin
55-4 was issued in 1955, prohibiting agencies from
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carrying on any commercial activities which could be provided by the
private sector. Unfortunately, today we face exactly the same problems
Congress faced in 1954. The Federal Government continues not only to
compete with the private sector by providing its own goods and services
but it also competes with the private sector to provide those goods and
services for some other unit of Government or to other private sector
entities. Of course, that unfair competition kills private-sector jobs,
stifles the economy, erodes the tax base, and hurts small business.
One of the top issues the last several times the small business
community has held their White House conference--in 1980, 1986, and
1994--was provision for an opportunity to fairly compete. To do that,
of course, you have to have a process which takes into account all of
the costs for the Federal Government and the private sector and
consider other issues like past performance in order to have a fair
comparison. It also means over time an agency, if it were going to do a
lot of contracting, would change its structure. Instead of being
designed to perform these functions and contract out, you would pare
the agency down to where its real expertise would be in oversight and
supervision of functions that were to be done.
The bill that we have introduced, which I would like to encourage my
fellow Senators to consider, codifies the policy that the Government
should rely on the private sector for its commercial needs. There are
exceptions, of course--inherently governmental functions and exemptions
for national security concerns. In addition, the Federal Government, if
it can provide a better value to the taxpayer, should do it. But if the
private sector can provide a better value to American taxpayers, it
should have a chance to do it.
It also provides for OMB to examine these issues and establishes an
office of commercial activities within OMB to implement the bill.
Mr. President, I hope that we do consider some of these kinds of
changes. The climate is right for action. Congressman Duncan, with whom
the Senator from Kansas and I both served in the House, has introduced
a companion bill. The Senate is already on record in support of this
bill. Last year, the Senate voted 59 to 39 in favor of an amendment to
the Treasury, Postal appropriations bill that would have prevented
unfair Government competition. Unfortunately, it was dropped from the
omnibus appropriations bill. It should be a high priority. We ought to
be doing some of these things that create fundamental change in the
Federal Government. We are going to seek to balance the budget. We will
see in the future the benefit of setting those kinds of priorities. If
we could save $30 billion annually through this concept, that is a
sizable amount of savings which could be transferred to something else
or help balance the budget.
In summary, let me say again I think it is a shame we simply go on
year after year talking about the same agenda over time, the same kind
of Government operation, without taking a look at some of the ways it
could be changed. The private sector operates differently, it has to
evolve over time. If it does not change, it bows out; it goes out of
business.
So there is a compelling reason to make the changes. The Government
by its nature--and there is nothing wrong with the people; it is the
nature of the beast--does not change unless there are changes forced
upon it, and, frankly, programs are developed and they have an advocacy
in the country and they just do not change. I think that is our
responsibility. It is our responsibility to evaluate the effectiveness,
to evaluate not only what is done or how many dollars are spent but
results. We are in the process now of implementing a result-oriented
law that was passed a couple of years ago, and by this spring each
agency is to have a fundamental, systemic plan that measures results.
My bill is consistent with that effort.
Mr. President, I urge my fellow Members of the Senate to consider
some fundamental changes in the Federal Government which would allow
for many of our small businesses to meet its commercial needs and
provide a better value to American taxpayers than they are currently
getting.
Mr. President, I yield the floor and suggest the absence of a quorum.
The ACTING PRESIDENT pro tempore. The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. STEVENS. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Thomas). Without objection, it is so
ordered.
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