article: SECTION 1. SHORT TITLE. This Act may be cited as the ``Freedom From Government Competition Act of 1997''. SEC. 2. FINDINGS. Congress finds and declares that-- (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; (2) competitive private sector enterprises are the most productive, efficient, and effective sources of goods and services; (3) government competition with the private sector of the economy is detrimental to all businesses and the American economic system; (4) government competition with the private sector of the economy is at an unacceptably high level, both in scope and in dollar volume; (5) when a government engages in entrepreneurial activities that are beyond its core mission and compete with the private sector-- (A) the focus and attention of the government are diverted from executing the basic mission and work of that government; and (B) those activities constitute unfair government competition with the private sector; (6) current laws and policies have failed to address adequately the problem of government competition with the private sector of the economy; (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; (8) reliance on the private sector is consistent with the goals of the Government Performance and Results Act of 1993 (Public Law 103-62); (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); (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 (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. SEC. 3. RELIANCE ON THE PRIVATE SECTOR. (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. (b) Prohibitions Regarding Transactions in Goods and Services.-- (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. (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. (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: (1) Either-- (A) the goods or services are inherently governmental in nature within the meaning of section 6(b); or (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. (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. (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). (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. SEC. 4. ADMINISTRATIVE PROVISIONS. (a) Regulations.-- (1) OMB responsibility.--The Director of the Office of Management and Budget shall prescribe regulations to carry out this Act. (2) Content.-- (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. (B) Fairness for federal employees.--In order to ensure the fair treatment of Federal Government employees, the regulations-- (i) shall not contravene any law or regulation regarding Federal Government employees; and (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. (C) Best value sources.-- (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. (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. (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. (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. (b) Compliance and Implementation Assistance.-- (1) OMB center for commercial activities.--The Director of the Office of Management and Budget shall establish a Center for Commercial Activities and Privatization within the Office of Management and Budget. (2) Responsibilities.--The Center-- (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 (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. SEC. 5. STUDY AND REPORT ON COMMERCIAL ACTIVITIES OF THE GOVERNMENT. (a) Annual Performance Plan.--Section 1115(a) of title 31, United States Code, is amended-- (1) by striking ``and'' at the end of paragraph (5); (2) by striking the period at the end of paragraph (6) and inserting ``; and''; and (3) by adding at the end the following: ``(7) include-- ``(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 ``(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.''. (b) Annual Performance Report.--Section 1116(d)(3) of title 31, United States Code, is amended-- (1) by striking ``explain and describe,'' in the matter preceding subparagraph (A); (2) in subparagraph (A), by inserting ``explain and describe'' after ``(A)''; (3) in subparagraph (B)-- (A) by inserting ``explain and describe'' after ``(B)''; and (B) by striking ``and'' at the end; (4) in subparagraph (C)-- (A) by inserting ``explain and describe'' after ``infeasible,''; and (B) by inserting ``and'' at the end; and (5) by adding at the end the following: ``(D) in the case of an activity not performed by a private sector entity-- ``(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 ``(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;''. SEC. 6. DEFINITIONS. (a) Agency.--As used in this Act, the term ``agency'' means the following: (1) Executive department.--An executive department as defined by section 101 of title 5, United States Code. (2) Military department.--A military department as defined by section 102 of such title. (3) Independent establishment.--An independent establishment as defined by section 104(1) of such title. (b) Inherently Governmental Goods and Services.-- (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. (2) Inherently governmental functions described.-- (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-- (i) bind the United States to take or not to take some action by contract, policy, regulation, authorization, order, or otherwise; (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; (iii) significantly affect the life, liberty, or property of private persons; (iv) commission, appoint, direct, or control officers or employees of the United States; or (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. (B) Functions excluded.--For the purposes of paragraph (1), inherently governmental functions do not normally include-- (i) gathering information for or providing advice, opinions, recommendations, or ideas to Federal Government officials; (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 (iii) any good or service which is currently or could reasonably be produced or performed, respectively, by an entity in the private sector.
summary: Freedom From Government Competition Act of 1997 - Requires Federal agencies to obtain all goods and services necessary for or beneficial to the accomplishment of their authorized functions by procurement from private sources, unless except as specified. (Sec. 4) Directs the Director of the Office of Management and Budget (OMB) to establish a Center for Commercial Activities and Privatization within OMB to: (1) 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 (2) 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. (Sec. 5) Amends Federal law to require that each agency shall include in its annual performance plan the identity of each program activity that is: (1) performed for the agency by a private sector entity in accordance with this Act; and (2) not subject to this Act by reason of an exception, together with a discussion specifying why the activity is determined to be covered by the exception. Revises requirements regarding program performance reports to require each agency, in its annual program performance report, in the case of an activity not performed by a private sector entity, to: (1) explain and describe whether an activity not performed by a private sector entity could be performed by a private sector entity in accordance with this Act; and (2) 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.