[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

[[Page S3937]]

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.

                          ____________________