Editor's Notebook

an "entrepreneurial government" coexist with the proposed Freedom From Government Competition Act? It does not seem likely--and therein lies a problem for change agents throughout the federal establishment.

The idea that government should be entrepreneurial gained currency just a few years back, after David Osborne and Ted Gabler published Reinventing Government: How the Entrepreneurial Spirit is Transforming the Public Sector (Addison Wesley, 1992). Vice President Al Gore became a disciple, and Congress found the idea attractive, as evidenced by the 1994 Government Management Reform Act.

This law allowed agencies to "franchise" services--selling them to other agencies. An important purpose was to create competition among agencies for the provision of services, thus creating economies of scale and driving down costs. There was precedent in the Agriculture Department's National Finance Center in New Orleans, which performs payroll record-keeping and accounting services for more than 100 agencies.

To conduct such activities, agencies began planning "franchise funds." This bureaucratese masked what was really happening: the arrival of new birds in the federal aviary. We called them "The Competitors" in Michael Serlin's article on franchising in our June 1996 issue. The Commerce Department began offering software solutions and services in the areas of travel, human resources, procurement, financial management, Year 2000 conversion services, and network planning and design. Other agencies got into the game as well. In the business of selling computer hardware and software, contract vehicles designed by the National Institutes of Health and NASA competed against each other and against offerings on the General Services Administration schedules. Agencies undertook corporate-style marketing campaigns, including advertising in Government Executive.

The trend carried a risk: It would showcase agencies' decisions to shed what had heretofore been deemed vital internal functions. Personnel services? Who needs them? Let someone else do it. But the natural next question is, "Why shouldn't the someone be in the private sector?" After all, privatization is in vogue, and government is shrinking down to its core duties.

So it wasn't surprising when two large business groups organized a coalition early this spring to fight the franchising trend. The protest movement got the news break it needed May 16 when the Federal Aviation Administration announced its choice of a contractor to handle payroll, personnel and flight safety computer systems. The winner of the eight-year, $250 million contract? Not Lockheed Martin or Unisys, both of which had bid, but rather the Agriculture Department's computer center in Kansas City, Mo.

This decision produced an uproar among information technology vendors-and a surge in support for the Freedom From Government Competition Act, whose author is Sen. Craig Thomas, R-Wyo. The future of this legislative threat to franchising and "entrepreneurial government" is not clear at this writing. But the paradox posed by juxtaposition of those two words in a single phrase rings clear in a legislative assistant's description of the senator's concern: "There are a million federal employees doing work that could be done better or more efficiently by the private sector."