[Congressional Record Volume 144, Number 102 (Monday, July 27, 1998)]
[Senate]
[Pages S9065-S9066]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             FEDERAL ACTIVITIES INVENTORY REFORM (FAIR) ACT

 Mr. THOMAS. Mr. President, I rise today to express my deep 
appreciation to the members of the Senate Governmental Affairs 
Committee, and the Committee's staff, for the time and effort they have 
dedicated to developing a consensus on my legislation to codify the 40+ 
year Federal policy on reliance on the private sector.
  At the beginning of this Congress, I introduced S. 314, the ``Freedom 
from Government Competition Act.'' This legislation was an attempt to 
establish in statute a workable process by which Federal agencies 
utilize the private sector for commercially available products and 
services. As we have learned from our research and from House and 
Senate hearings, as early as 1932 Congress first became aware of the 
fact that the Federal government was starting and carrying out 
activities that are commercial in nature, and that government 
performance of these activities resulted in unfair competition with the 
private sector. In 1954, a bill to address this issue passed the House 
and was reported by the Committee on Governmental Affairs of the 
Senate. At that time, the Eisenhower Administration indicated that it 
could resolve the issue administratively. Bureau of the Budget Bulletin 
55-4 was issued and the Senate suspended action on the legislation. The 
budget document established a federal policy of reliance on the private 
sector. It noted that the free enterprise system was the strength of 
our economy and that the government should not compete with private 
business. Rather, the Bulletin said, the government should rely on the 
private sector for those good and services that could be obtained 
through ordinary business channels.
  That policy is now found in OMB Circular A-76 and has been endorsed 
by every Administration, of both parties, since 1955. However, the 
degree of enthusiasm for implementation of the Circular has varied from 
one Administration to another. In fact, the issue of government 
competition has become so pervasive that all three sessions of the 
White House Conference on Small Business, held in 1980, 1986, and 1995, 
ranked this as one of the top problems facing America's small 
businesses. According to testimony we received, it is estimated that 
more than half a million Federal employees are engaged in activities 
that are commercial in nature.
  However, the purpose of my legislation is not to bash Federal 
employees. I believe most are motivated by public service and are 
dedicated individuals. However, from a policy standpoint, I believe we 
have gone too far in defining the role of government and the private 
sector in our economy. Because A-76 is non-binding and discretionary on 
the part of agencies, too many commercial activities have been started 
and carried out in Federal agencies. Because A-76 is not statutory, 
Congress has failed to exercise its oversight responsibilities. 
Further, by leaving ``make or buy'' decisions to agency managers, there 
has been no means to assure that agencies ``govern'' or restrict 
themselves to inherently governmental activities, rather than produce 
goods and services that can otherwise be performed in and obtained from 
the private sector.
  Among the problems we have seen with Circular A-76 is (1) agencies do 
not develop accurate inventories of activities (2) they do not conduct 
the reviews outlined in the Circular, (3) when reviews are conducted 
they drag out over extended periods of time and (4) the criteria for 
the reviews are not fair and equitable. These are complaints we heard 
from the private sector, government employees, and in some cases from 
both.
  In the 1980's our former colleague Senator Warren Rudman first 
introduced the ``Freedom from Government Competition Act'' in the 
Senate. Later, Representative John J. Duncan, Jr. (R-TN) introduced 
similar legislation the House. I was a cosponsor of that bill when I 
served in the other body. Upon my election to the Senate in the 104th 
Congress, I introduced the companion to Rep. Duncan's bill in the 
Senate.
  On Wednesday, July 15, 1998 the Senate Governmental Affairs Committee 
unanimously reported a version of S. 314 that is a result of many 
months of discussion among both the majority and minority on the 
committee, OMB, Federal employee unions and private sector 
organizations. The amendment in the nature of a substitute offered by

[[Page S9066]]

Chairman Fred Thompson and approved by the Committee is a consensus and 
a compromise.
  It is important to point out that the bill that I introduced in the 
104th Congress was an attempt to codify the original 1955 policy that 
the government should rely on the private sector. After a hearing on 
that bill was convened by Senator Stevens, during his tenure as 
Chairman of the Committee on Governmental Affairs, it became clear to 
me that it was necessary to add to the bill the concept of competition 
to determine whether government performance or private sector 
performance resulted in the best value to the American taxpayer. While 
S. 314 as introduced, and H.R. 716 introduced in the House, was still 
entitled the ``Freedom from Government Competition Act'', it in fact 
not only did not prevent government competition, but it mandated it. 
This was not a change that private sector organizations came to 
comfortably support. However, inasmuch as OMB Circular A-76 changed 
through the years from its original 1955 philosophical statement to its 
more recent iterations that required public-private competition, I 
revised my bill when introducing it last year to include such 
competitions, provided they in fact are conducted and that when 
conducted, they are fair and equitable comparisons carried out on a 
level playing field.
  I would also hasten to add that the measure reported by the Senate 
Governmental Affairs Committee, which I hope will be promptly approved 
by the full Senate, is significantly different than S. 314 as 
introduced. While S. 314 as introduced was opposed by the 
Administration and by the Federal employee unions, the compromise 
measure reported from the committee is not opposed by these groups.
  Mr. President, this is important legislation that I believe will 
truly result in a government that works better and costs less. 
Certainly government agency officials should have the ability to 
contract with the private sector for goods and services needed for the 
conduct of government activities. This bill will not inhibit ability. 
However, it should not be the practice of the government to carry on 
commercial activities for months, years, even decades without reviewing 
whether such activities can be carried out in a more cost effective or 
efficient manner by the private sector. I believe that the drive to 
reduce the size and scope of the federal government will be successful 
only when we force the government to do less and allow the private 
sector to do more.

  During the course of our hearings, it became abundantly clear that 
there are certain activities that the Federal government has performed 
in-house which can and should be converted to the private sector. Areas 
such as architecture an engineering, surveying and mapping, laboratory 
testing, information technology, and laundry services have no place in 
government. These activities should be promptly transitioned to the 
private sector.
  Thre are other activities in which a public-private competition 
should be conducted to determined which provider can deliver the best 
value to the taxpayer. This includes base and facility operation, 
campgrounds an auctioning.
  There are several key provisions in the bill upon which I would like 
to comment. In particular, section 2(d) requires the head of an agency 
to review the activities on his or her list of commercial activities 
``within a reasonable time''. OMB strongly opposed a legislative 
timetable for conducting these reviews. As a result of the compromise 
language on this matter, it will be incumbent on OMB to make certain 
these reviews are indeed conducted in a reasonable time frame. These 
reviews should be scheduled and completed within moths, not years. I 
will personally monitor progress on this matter, as will the 
Governmental Affairs Committee. I urge OMB to exercise strong oversight 
to assure timely implementation of this requirement by the agencies.
  This provision also requires that agencies use a ``competitive 
process'' to select the source of goods or services. In my view, this 
term has the same meaning as ``competitive procedures'' as defined in 
Federal law (10 U.S.C. 2302(2) and 41 U.S.C. 259 (b)). To the extent 
that a government agency competes for work under this section of the 
bill, the government agency will be treated as any other contractor or 
offeror in order to assure that the competition is conducted on a level 
playing field.
  Another issue that I have been concerned about is the proliferation 
of Interservice Support Agreement's (ISSA's). Under the ``FAIR'' Act, 
consistent with the Economy Act (31 U.S.C. 1535), items on the 
commercial inventory that have not been reviewed may not be performed 
for another federal agency. In addition, any item on the inventory 
cannot be provided to state or local governments unless there is a 
certification, pursuant to the Intergovernmental Cooperation Act (31 
U.S.C. 6505(a)).
  Enactment of the ``FAIR'' Act is a major achievement because it 
codifies a process to assure government reliance on the private sector 
to the maximum extent feasible. Further, it will put some teeth into 
Executive Order 12615 by President Reagan, which is still on the books 
today.
  Again, I thank the members of the Senate Government Affairs Committee 
and the Committee's staff, for all of the hard work necessary to forge 
this compromise. I look forward to working with them on thorough 
Congressional oversight on the implementation of this bill.

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