House, Senate to begin hearings on public/private competition

Two congressional subcommittees are scheduled to meet tomorrow to begin hearings on legislation that would open up government functions, such as data processing, to competition between agencies and businesses.

The legislation, the Senate's Fair Competition Act of 1998 and the House's Competition in Commercial Activities Act of 1998, would require federal agencies to cull through the various activities they perform, from map-making to data warehousing, and determine which activities are not "inherently governmental." Agencies then would have to allow private companies the opportunity to compete with one another and with the federal government to provide those services. Federal proposals to perform the services would be evaluated under the same terms used to evaluate proposals from industry.

"We feel that this will improve government efficiency and will allow us to refocus the nation's resources toward more high-priority spending," said Mark Brasher, a staff member on the House Subcommittee on Government Management, Information and Technology, which will review the bills tomorrow with the Senate Subcommittee on Oversight of Government Management, Restructuring and the District of Columbia. "We believe that we will pick up Democratic support, and we are working to that end."

The proposed legislation has its roots in a $250 million award the Federal Aviation Administration granted to the Agriculture Department last May for data processing services. The award for the Integrated Computing Environment-Mainframe and Networking contract upset the information technology industry, which claimed that it could not compete against the government because agencies were not held to the same contractual obligations as companies and that agencies did not have to factor overhead costs into their bids.

A similar bill introduced last year, called the Freedom From Government Competition Act, failed to garner enough support because it was not specific enough and was too philosophical, sources said. The proposed bills mandate that agencies determine which functions are inherently nongovernmental.

Numerous IT companies have risen in support of the legislation, but officials at the Office of Management and Budget said they are not ready to lend their support to the bills, S. 314 and H.R. 716. OMB has not changed its position on the legislation since it first surfaced in the fall, an OMB spokesman said. In September, Edward DeSeve, then OMB acting deputy director for management, testified before a House subcommittee that the legislation would not "inject more vigorous market competition into government."

DeSeve told the House Subcommittee on Government Management, Information and Technology that federal acquisition is more efficient when decisions are left up to agencies. "Our guiding principle for determining when the government engages in commercial activities and when it considers outsourcing, privatization or competition is to ensure that we get the best deal for the American taxpayer," he said.

But Bert Concklin, president of the Professional Services Council, a trade organization with many IT industry members, disagreed. "I would seriously challenge that the government is offering a better value," he said.

Concklin said the goal of the legislation is to ultimately create a government in which all inherently nongovernmental services are handled strictly by the private sector. The current legislative proposal— in which agencies still would be allowed to compete with the private sector to provide such services— is viewed as a stepping stone to that ultimate goal, he said.

The federal American Federation of Government Employees union opposes the bills. Proponents of the bills said they still have a way to go to get the needed support, and they will push the legislation in 1999 if they fail this year.

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