S. 314 (105th): Federal Activities Inventory Reform Act of 1998

105th Congress, 1997–1998. Text as of Jul 28, 1998 (Reported by Senate Committee).

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S 314 RS

Calendar No. 502

105th CONGRESS

2d Session

S. 314

[Report No. 105-269]

To require that the Federal Government procure from the private sector the goods and services necessary for the operations and management of certain Government agencies, and for other purposes.

IN THE SENATE OF THE UNITED STATES

February 12, 1997

Mr. THOMAS (for himself, Mr. HAGEL, Mr. KYL, Mr. ENZI, Mr. BROWNBACK, Mr. CRAIG, Mr. HUTCHINSON, Mr. BURNS, Mr. FAIRCLOTH, Mr. SHELBY, Mr. HELMS, Mr. GRAMS, Mr. ALLARD, Mr. MACK, Mr. WYDEN, Mr. COCHRAN, and Mr. ABRAHAM) introduced the following bill; which was read twice and referred to the Committee on Governmental Affairs

July 28, 1998

Reported by Mr. THOMPSON, with an amendment and an amendment to the title

[Strike out all after the enacting clause and insert the part printed in italic]


A BILL

To require that the Federal Government procure from the private sector the goods and services necessary for the operations and management of certain Government agencies, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

[Struck out->] SECTION 1. SHORT TITLE. [<-Struck out]

    [Struck out->] This Act may be cited as the ‘Freedom From Government Competition Act of 1997’. [<-Struck out]

[Struck out->] SEC. 2. FINDINGS. [<-Struck out]

    [Struck out->] Congress finds and declares that-- [<-Struck out]

      [Struck out->] (1) private sector business concerns, which are free to respond to the private or public demands of the marketplace, constitute the strength of the American economic system; [<-Struck out]

      [Struck out->] (2) competitive private sector enterprises are the most productive, efficient, and effective sources of goods and services; [<-Struck out]

      [Struck out->] (3) government competition with the private sector of the economy is detrimental to all businesses and the American economic system; [<-Struck out]

      [Struck out->] (4) government competition with the private sector of the economy is at an unacceptably high level, both in scope and in dollar volume; [<-Struck out]

      [Struck out->] (5) when a government engages in entrepreneurial activities that are beyond its core mission and compete with the private sector-- [<-Struck out]

        [Struck out->] (A) the focus and attention of the government are diverted from executing the basic mission and work of that government; and [<-Struck out]

        [Struck out->] (B) those activities constitute unfair government competition with the private sector; [<-Struck out]

      [Struck out->] (6) current laws and policies have failed to address adequately the problem of government competition with the private sector of the economy; [<-Struck out]

      [Struck out->] (7) the level of government competition with the private sector, especially with small businesses, has been a priority issue of each White House Conference on Small Business; [<-Struck out]

      [Struck out->] (8) reliance on the private sector is consistent with the goals of the Government Performance and Results Act of 1993 (Public Law 103-62); [<-Struck out]

      [Struck out->] (9) reliance on the private sector is necessary and desirable for proper implementation of the Federal Workforce Restructuring Act of 1994 (Public Law 103-226); [<-Struck out]

      [Struck out->] (10) it is in the public interest that the Federal Government establish a consistent policy to rely on the private sector of the economy to provide goods and services that are necessary for or beneficial to the operation and management of Federal Government agencies and to avoid Federal Government competition with the private sector of the economy; and [<-Struck out]

      [Struck out->] (11) it is in the public interest for the private sector to utilize employees who are adversely affected by conversions to use of private sector entities for providing goods and services on behalf of the Federal Government. [<-Struck out]

[Struck out->] SEC. 3. RELIANCE ON THE PRIVATE SECTOR. [<-Struck out]

    [Struck out->] (a) GENERAL POLICY- Notwithstanding any other provision of law, except as provided in subsection (c), each agency shall procure from sources in the private sector all goods and services that are necessary for or beneficial to the accomplishment of authorized functions of the agency. [<-Struck out]

    [Struck out->] (b) PROHIBITIONS REGARDING TRANSACTIONS IN GOODS AND SERVICES- [<-Struck out]

      [Struck out->] (1) PROVISION BY GOVERNMENT GENERALLY- No agency may begin or carry out any activity to provide any products or services that can be provided by the private sector. [<-Struck out]

      [Struck out->] (2) TRANSACTIONS BETWEEN GOVERNMENTAL ENTITIES- No agency may obtain any goods or services from or provide any goods or services to any other governmental entity. [<-Struck out]

    [Struck out->] (c) EXCEPTIONS- Subsections (a) and (b) do not apply to goods or services necessary for or beneficial to the accomplishment of authorized functions of an agency under the following conditions: [<-Struck out]

      [Struck out->] (1) Either-- [<-Struck out]

        [Struck out->] (A) the goods or services are inherently governmental in nature within the meaning of section 6(b); or [<-Struck out]

        [Struck out->] (B) the Director of the Office of Management and Budget determines that the provision of the goods or services is otherwise an inherently governmental function. [<-Struck out]

      [Struck out->] (2) The head of the agency determines that the goods or services should be produced, provided, or manufactured by the Federal Government for reasons of national security. [<-Struck out]

      [Struck out->] (3) The Federal Government is determined to be the best value source of the goods or services in accordance with regulations prescribed pursuant to section 4(a)(2)(C). [<-Struck out]

      [Struck out->] (4) The private sector sources of the goods or services, or the practices of such sources, are not adequate to satisfy the agency’s requirements. [<-Struck out]

[Struck out->] SEC. 4. ADMINISTRATIVE PROVISIONS. [<-Struck out]

    [Struck out->] (a) REGULATIONS- [<-Struck out]

      [Struck out->] (1) OMB RESPONSIBILITY- The Director of the Office of Management and Budget shall prescribe regulations to carry out this Act. [<-Struck out]

      [Struck out->] (2) CONTENT- [<-Struck out]

        [Struck out->] (A) PRIVATE SECTOR PREFERENCE- Consistent with the policy and prohibitions set forth in section 3, the regulations shall emphasize a preference for the provision of goods and services by private sector sources. [<-Struck out]

        [Struck out->] (B) FAIRNESS FOR FEDERAL EMPLOYEES.- In order to ensure the fair treatment of Federal Government employees, the regulations-- [<-Struck out]

          [Struck out->] (i) shall not contravene any law or regulation regarding Federal Government employees; and [<-Struck out]

          [Struck out->] (ii) shall provide for the Director of the Office of Management and Budget, in consultation with the Director of the Office of Personnel Management, to furnish information on relevant available benefits and assistance to Federal Government employees adversely affected by conversions to use of private sector entities for providing goods and services. [<-Struck out]

        [Struck out->] (C) BEST VALUE SOURCES- [<-Struck out]

          [Struck out->] (i) STANDARDS AND PROCEDURES- The regulations shall include standards and procedures for determining whether it is a private sector source or an agency that provides certain goods or services for the best value. [<-Struck out]

          [Struck out->] (ii) FACTORS CONSIDERED- The standards and procedures shall include requirements for consideration of analyses of all direct and indirect costs (performed in a manner consistent with generally accepted cost-accounting principles), the qualifications of sources, the past performance of sources, and any other technical and noncost factors that are relevant. [<-Struck out]

          [Struck out->] (iii) CONSULTATION REQUIREMENT- The Director shall consult with persons from the private sector and persons from the public sector in developing the standards and procedures. [<-Struck out]

        [Struck out->] (D) APPROPRIATE GOVERNMENTAL ACTIVITIES- The regulations shall include a methodology for determining what types of activities performed by an agency should continue to be performed by the agency or any other agency. [<-Struck out]

    [Struck out->] (b) COMPLIANCE AND IMPLEMENTATION ASSISTANCE- [<-Struck out]

      [Struck out->] (1) OMB CENTER FOR COMMERCIAL ACTIVITIES- The Director of the Office of Management and Budget shall establish a Center for Commercial Activities within the Office of Management and Budget. [<-Struck out]

      [Struck out->] (2) RESPONSIBILITIES- The Center-- [<-Struck out]

        [Struck out->] (A) shall be responsible for the implementation of and compliance with the policies, standards, and procedures that are set forth in this Act or are prescribed to carry out this Act; and [<-Struck out]

        [Struck out->] (B) shall provide agencies and private sector entities with guidance, information, and other assistance appropriate for facilitating conversions to use of private sector entities for providing goods and services on behalf of the Federal Government. [<-Struck out]

[Struck out->] SEC. 5. STUDY AND REPORT ON COMMERCIAL ACTIVITIES OF THE GOVERNMENT. [<-Struck out]

    [Struck out->] (a) ANNUAL PERFORMANCE PLAN- Section 1115(a) of title 31, United States Code, is amended-- [<-Struck out]

      [Struck out->] (1) by striking ‘and’ at the end of paragraph (5); [<-Struck out]

      [Struck out->] (2) by striking the period at the end of paragraph (6) and inserting ‘; and’; and [<-Struck out]

      [Struck out->] (3) by adding at the end the following: [<-Struck out]

      [Struck out->]

      ‘(7) include-- [<-Struck out]

        [Struck out->]

        ‘(A) the identity of each program activity that is performed for the agency by a private sector entity in accordance with the Freedom From Government Competition Act of 1997; and [<-Struck out]

        [Struck out->]

        ‘(B) the identity of each program activity that is not subject to the Freedom From Government Competition Act of 1997 by reason of an exception set forth in that Act, together with a discussion specifying why the activity is determined to be covered by the exception.’. [<-Struck out]

    [Struck out->] (b) ANNUAL PERFORMANCE REPORT- Section 1116(d)(3) of title 31, United States Code, is amended-- [<-Struck out]

      [Struck out->] (1) by striking ‘explain and describe,’ in the matter preceding subparagraph (A); [<-Struck out]

      [Struck out->] (2) in subparagraph (A), by inserting ‘explain and describe’ after ‘(A)’; [<-Struck out]

      [Struck out->] (3) in subparagraph (B)-- [<-Struck out]

        [Struck out->] (A) by inserting ‘explain and describe’ after ‘(B)’; and [<-Struck out]

        [Struck out->] (B) by striking ‘and’ at the end; [<-Struck out]

      [Struck out->] (4) in subparagraph (C)-- [<-Struck out]

        [Struck out->] (A) by inserting ‘explain and describe’ after ‘infeasible,’; and [<-Struck out]

        [Struck out->] (B) by inserting ‘and’ at the end; and [<-Struck out]

      [Struck out->] (5) by adding at the end the following: [<-Struck out]

      [Struck out->]

      ‘(D) in the case of an activity not performed by a private sector entity-- [<-Struck out]

        [Struck out->]

        ‘(i) explain and describe whether the activity could be performed for the Federal Government by a private sector entity in accordance with the Freedom From Government Competition Act of 1997; and [<-Struck out]

        [Struck out->]

        ‘(ii) if the activity could be performed by a private sector entity, set forth a schedule for converting to performance of the activity by a private sector entity;’. [<-Struck out]

[Struck out->] SEC. 6. DEFINITIONS. [<-Struck out]

    [Struck out->] (a) AGENCY- As used in this Act, the term ‘agency’ means the following: [<-Struck out]

      [Struck out->] (1) EXECUTIVE DEPARTMENT- An executive department as defined by section 101 of title 5, United States Code. [<-Struck out]

      [Struck out->] (2) MILITARY DEPARTMENT- A military department as defined by section 102 of such title. [<-Struck out]

      [Struck out->] (3) INDEPENDENT ESTABLISHMENT- An independent establishment as defined by section 104(1) of such title. [<-Struck out]

    [Struck out->] (b) INHERENTLY GOVERNMENTAL GOODS AND SERVICES- [<-Struck out]

      [Struck out->] (1) PERFORMANCE OF INHERENTLY GOVERNMENTAL FUNCTIONS- For the purposes of section 3(c)(1)(A), goods or services are inherently governmental in nature if the providing of such goods or services is an inherently governmental function. [<-Struck out]

      [Struck out->] (2) INHERENTLY GOVERNMENTAL FUNCTIONS DESCRIBED- [<-Struck out]

        [Struck out->] (A) FUNCTIONS INCLUDED- For the purposes of paragraph (1), a function shall be considered an inherently governmental function if the function is so intimately related to the public interest as to mandate performance by Federal Government employees. Such functions include activities that require either the exercise of discretion in applying Federal Government authority or the making of value judgments in making decisions for the Federal Government, including judgments relating to monetary transactions and entitlements. An inherently governmental function involves, among other things, the interpretation and execution of the laws of the United States so as to-- [<-Struck out]

          [Struck out->] (i) bind the United States to take or not to take some action by contract, policy, regulation, authorization, order, or otherwise; [<-Struck out]

          [Struck out->] (ii) determine, protect, and advance its economic, political, territorial, property, or other interests by military or diplomatic action, civil or criminal judicial proceedings, contract management, or otherwise; [<-Struck out]

          [Struck out->] (iii) significantly affect the life, liberty, or property of private persons; [<-Struck out]

          [Struck out->] (iv) commission, appoint, direct, or control officers or employees of the United States; or [<-Struck out]

          [Struck out->] (v) exert ultimate control over the acquisition, use, or disposition of the property, real or personal, tangible or intangible, of the United States, including the control or disbursement of appropriated and other Federal funds. [<-Struck out]

        [Struck out->] (B) FUNCTIONS EXCLUDED- For the purposes of paragraph (1), inherently governmental functions do not normally include-- [<-Struck out]

          [Struck out->] (i) gathering information for or providing advice, opinions, recommendations, or ideas to Federal Government officials; [<-Struck out]

          [Struck out->] (ii) any function that is primarily ministerial or internal in nature (such as building security, mail operations, operation of cafeterias, laundry and housekeeping, facilities operations and maintenance, warehouse operations, motor vehicle fleet management and operations, or other routine electrical or mechanical services); or [<-Struck out]

          [Struck out->] (iii) any good or service which is currently or could reasonably be produced or performed, respectively, by an entity in the private sector. [<-Struck out]

SECTION 1. SHORT TITLE.

    This Act may be cited as the ‘Federal Activities Inventory Reform Act of 1998’.

SEC. 2. ANNUAL LISTS OF GOVERNMENT ACTIVITIES NOT INHERENTLY GOVERNMENTAL IN NATURE.

    (a) LISTS REQUIRED- Not later than the end of the third quarter of each fiscal year, the head of each executive agency shall submit to the Director of the Office of Management and Budget a list of activities performed by Federal Government sources for the executive agency that, in the judgment of the head of the executive agency, are not inherently governmental functions. The entry for an activity on the list shall include the following:

      (1) The fiscal year for which the activity first appeared on a list prepared under this section.

      (2) The number of full-time employees (or its equivalent) that are necessary for the performance of the activity by a Federal Government source.

      (3) The name of a Federal Government employee responsible for the activity from whom additional information about the activity may be obtained.

    (b) OMB REVIEW AND CONSULTATION- The Director of the Office of Management and Budget shall review the executive agency’s list for a fiscal year and consult with the head of the executive agency regarding the content of the final list for that fiscal year.

    (c) PUBLIC AVAILABILITY OF LISTS-

      (1) PUBLICATION- Upon the completion of the review and consultation regarding a list of an executive agency--

        (A) the head of the executive agency shall promptly transmit a copy of the list to Congress and make the list available to the public; and

        (B) the Director of the Office of Management and Budget shall promptly publish in the Federal Register a notice that the list is available to the public.

      (2) CHANGES- If the list changes after the publication of the notice as a result of the resolution of a challenge under section 3, the head of the executive agency shall promptly--

        (A) make each such change available to the public and transmit a copy of the change to Congress; and

        (B) publish in the Federal Register a notice that the change is available to the public.

    (d) COMPETITION REQUIRED- Within a reasonable time after the date on which a notice of the public availability of a list is published under subsection (c), the head of the executive agency concerned shall review the activities on the list. Each time that the head of the executive agency considers contracting with a private sector source for the

performance of such an activity, the head of the executive agency shall use a competitive process to select the source (except as may otherwise be provided in a law other than this Act, an Executive order, regulations, or any Executive branch circular setting forth requirements or guidance that is issued by competent executive authority). The Director of the Office of Management and Budget shall issue guidance for the administration of this subsection.

    (e) REALISTIC AND FAIR COST COMPARISONS- For the purpose of determining whether to contract with a source in the private sector for the performance of an executive agency activity on the list on the basis of a comparison of the costs of procuring services from such a source with the costs of performing that activity by the executive agency, the head of the executive agency shall ensure that all costs (including the costs of quality assurance, technical monitoring of the performance of such function, liability insurance, employee retirement and disability benefits, and all other overhead costs) are considered and that the costs considered are realistic and fair.

SEC. 3. CHALLENGES TO THE LIST.

    (a) CHALLENGE AUTHORIZED- An interested party may submit to an executive agency a challenge of an omission of a particular activity from, or an inclusion of a particular activity on, a list for which a notice of public availability has been published under section 2.

    (b) INTERESTED PARTY DEFINED- For the purposes of this section, the term ‘interested party’, with respect to an activity referred to in subsection (a), means the following:

      (1) A private sector source that--

        (A) is an actual or prospective offeror for any contract, or other form of agreement, to perform the activity; and

        (B) has a direct economic interest in performing the activity that would be adversely affected by a determination not to procure the performance of the activity from a private sector source.

      (2) A representative of any business or professional association that includes within its membership private sector sources referred to in paragraph (1).

      (3) An officer or employee of an organization within an executive agency that is an actual or prospective offeror to perform the activity.

      (4) The head of any labor organization referred to in section 7103(a)(4) of title 5, United States Code, that includes within its membership officers or employees of an organization referred to in paragraph (3).

    (c) TIME FOR SUBMISSION- A challenge to a list shall be submitted to the executive agency concerned within 30 days after the publication of the notice of the public availability of the list under section 2.

    (d) INITIAL DECISION- Within 28 days after an executive agency receives a challenge, an official designated by the head of the executive agency shall--

      (1) decide the challenge; and

      (2) transmit to the party submitting the challenge a written notification of the decision together with a discussion of the rationale for the decision and an explanation of the party’s right to appeal under subsection (e).

    (e) APPEAL-

      (1) AUTHORIZATION OF APPEAL- An interested party may appeal an adverse decision of the official to the head of the executive agency within 10 days after receiving a notification of the decision under subsection (d).

      (2) DECISION ON APPEAL- Within 10 days after the head of an executive agency receives an appeal of a decision under paragraph (1), the head of the executive agency shall decide the appeal and transmit to the party submitting the appeal a written notification of the decision together with a discussion of the rationale for the decision.

SEC. 4. APPLICABILITY.

    (a) EXECUTIVE AGENCIES COVERED- Except as provided in subsection (b), this Act applies to the following executive agencies:

      (1) EXECUTIVE DEPARTMENT- An executive department named in section 101 of title 5, United States Code.

      (2) MILITARY DEPARTMENT- A military department named in section 102 of title 5, United States Code.

      (3) INDEPENDENT ESTABLISHMENT- An independent establishment, as defined in section 104 of title 5, United States Code.

    (b) EXCEPTIONS- This Act does not apply to or with respect to the following:

      (1) GENERAL ACCOUNTING OFFICE- The General Accounting Office.

      (2) GOVERNMENT CORPORATION- A Government corporation or a Government controlled corporation, as those terms are defined in section 103 of title 5, United States Code.

      (3) NONAPPROPRIATED FUNDS INSTRUMENTALITY- A part of a department or agency if all of the employees of that part of the department or agency are employees referred to in section 2105(c) of title 5, United States Code.

      (4) CERTAIN DEPOT-LEVEL MAINTENANCE AND REPAIR- Depot-level maintenance and repair of the Department of Defense (as defined in section 2460 of title 10, United States Code).

SEC. 5. DEFINITIONS.

    In this Act:

      (1) FEDERAL GOVERNMENT SOURCE- The term ‘Federal Government source’, with respect to performance of an activity, means any organization within an executive agency that uses Federal Government employees to perform the activity.

      (2) INHERENTLY GOVERNMENTAL FUNCTION-

        (A) DEFINITION- The term ‘inherently governmental function’ means a function that is so intimately related to the public interest as to require performance by Federal Government employees.

        (B) FUNCTIONS INCLUDED- The term includes activities that require either the exercise of discretion in applying Federal Government authority or the making of value judgments in making decisions for the Federal Government, including judgments relating to monetary transactions and entitlements. An inherently governmental function involves, among other things, the interpretation and execution of the laws of the United States so as--

          (i) to bind the United States to take or not to take some action by contract, policy, regulation, authorization, order, or otherwise;

          (ii) to determine, protect, and advance United States economic, political, territorial, property, or other interests by military or diplomatic action, civil or criminal judicial proceedings, contract management, or otherwise;

          (iii) to significantly affect the life, liberty, or property of private persons;

          (iv) to commission, appoint, direct, or control officers or employees of the United States; or

          (v) to exert ultimate control over the acquisition, use, or disposition of the property, real or personal, tangible or intangible, of the United States, including the collection, control, or disbursement of appropriated and other Federal funds.

        (C) FUNCTIONS EXCLUDED- The term does not normally include--

          (i) gathering information for or providing advice, opinions, recommendations, or ideas to Federal Government officials; or

          (ii) any function that is primarily ministerial and internal in nature (such as building security, mail operations, operation of cafeterias, housekeeping, facilities operations and maintenance, warehouse operations, motor vehicle fleet management operations, or other routine electrical or mechanical services).

SEC. 6. EFFECTIVE DATE.

    This Act shall take effect on October 1, 1998.

Amend the title so as to read: ‘A bill to provide a process for identifying the functions of the Federal Government that are not inherently governmental functions, and for other purposes.’.

Calendar No. 502

105th CONGRESS

2d Session

S. 314

[Report No. 105-269]

A BILL

To require that the Federal Government procure from the private sector the goods and services necessary for the operations and management of certain Government agencies, and for other purposes.


July 28, 1998

Reported with an amendment and an amendment to the title