Latest Privatization Push

September 23, 1996
THE DAILY FED

Latest Privatization Push

In the latest effort to privatize federal services, the Senate Governmental Affairs Committeee is considering legislation that would require agencies to outsource all government activities that are "commercial in nature."

The "Freedom From Government Competition Act of 1996," sponsored by Sen. Craig Thomas, R-Wyo., would require the Office of Management and Budget and the heads of federal agencies to review all the services the government provides and all the goods it produces to determine whether those functions could be provided by the private sector. Agencies would keep a service in-house only "if the function is so intimately related to the public interest as to mandate performance by government employees."

Agencies would be required to further review those services deemed inherently governmental to determine whether state or local governments could satisfactorily handle them.

Thomas says the government could save $5 billion to $9 billion a year by implementing the legislation.

"There is no reason why the federal government should be competing with the private sector," Thomas said. "Our goal should be supporting small business and jobs, not setting up publicly supported competitors who aren't subject to market forces or the need to be efficient with the taxpayers' investment."

Thomas identified janitorial services, technical services like map making and surveying, and maintenance of government motor pools as some services that could be privatized.

Robert Tobias, president of the National Treasury Employees' Union, called the measure irresponsible. Citing General Accounting Office studies, Tobias said that service contracting often doesn't save money.

Tobias said the bill "would actually rob taxpayers of the best possible return on their tax dollar in those instances where the option of performing certain activities in-house are actually less costly than contracting out to the private sector."

A hearing on the legislation scheduled for last week was cancelled, and has not been rescheduled.

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