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108th Congress                                            Rept. 108-117
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 2

======================================================================



 
                SERVICES ACQUISITION REFORM ACT OF 2003

                                _______
                                

 September 3, 2003.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

 Mr. Sensenbrenner, from the Committee on the Judiciary, submitted the 
                               following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 1837]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 1837) to improve the Federal acquisition workforce 
and the process for the acquisition of services by the Federal 
Government, and for other purposes, having considered the same, 
reports favorably thereon with an amendment and recommends that 
the bill as amended do pass.

                                CONTENTS

                                                                   Page
The Amendment....................................................     2
Purpose and Summary..............................................     2
Background and Need for the Legislation..........................     2
Hearings.........................................................     3
Committee Consideration..........................................     3
Vote of the Committee............................................     3
Committee Oversight Findings.....................................     3
New Budget Authority and Tax Expenditures........................     3
Congressional Budget Office Cost Estimate........................     3
Performance Goals and Objectives.................................     7
Constitutional Authority Statement...............................     7
Section-by-Section Analysis and Discussion.......................     7
Changes in Existing Law Made by the Bill, as Reported............     9
Markup Transcript................................................     9
Additional Views.................................................    97
    The amendment adopted by this Committee is identical to the 
text reported by the Committee on Government Reform shown in 
their report filed May 19, 2003 (Rept. 108-117, Part 1).

                          Purpose and Summary

    H.R. 1837, the ``Services Acquisition Reform Act of 2003,'' 
(SARA) reforms Federal Government acquisition services and 
creates an acquisition workforce training program. As part of 
these reforms, the bill establishes a program to allow for 
exchanges of employees on a temporary basis between Federal 
agencies and private sector organizations. Also, the bill 
extends to the contracting officers of the various civilian 
agencies, including the new Department of Homeland Security, 
the same powers available to the Department of Defense in their 
dealings with Federal Prison Industries, Inc. (FPI).

                Background and Need for the Legislation

    The Chairman of the Committee on Government Reform, 
Representative Tom Davis, introduced H.R. 1837, the ``Services 
Acquisition Reform Act of 2003,'' on April 29, 2003. This 
legislation was referred to the Committees on Government Reform 
and Armed Services. The Committee on the Judiciary requested a 
sequential referral. The bill was referred to the Committee on 
the Judiciary for consideration through September 3, 2003.
    The bill would reform how the government buys services and 
creates an acquisition workforce training program. As the 
Committee on Government Reform reported:

        [H.R. 1837, The Services Acquisition Reform Act of 2003 
        (SARA),] will provide our acquisition workforce with 
        the necessary tools to succeed through a carefully 
        crafted set of provisions along with training and 
        insightful management based on results and 
        accountability. SARA is targeted towards the goal of a 
        modern, responsive, flexible, market-based acquisition 
        system that will result in the government leveraging 
        the best the private sector has to offer at fair and 
        reasonable prices. SARA will address training of our 
        acquisition workforce to meet the challenges of the new 
        service-oriented economy, it will provide for the 
        adoption of business-like acquisition practices within 
        the government, facilitate the acquisition of 
        commercial services by building on the prior reforms in 
        the acquisition of commercial items and enable our 
        government to access cutting-edge technology within 
        today's commercial environment.\1\
---------------------------------------------------------------------------
    \1\ H.R. Rept. No. 108-117, Part I, at 26.

    The Committee on Government Reform reported the bill, as 
amended, favorably on May 19, 2003. The bill as introduced was 
referred to the Committee on the Judiciary because it contains 
several substantial provisions that fall within the Committee's 
subject matter jurisdiction pertaining to government ethics and 
the Federal Tort Claims Act. These provisions apply to an 
exchange program for government and private sector acquisition 
employees. The details concerning these provisions are set 
forth in the section by section analysis.
    Additionally, the bill as reported by the Committee on 
Government Reform affects FPI. Federal Prison Industries was 
first authorized in 1934 to create work opportunities for 
inmates in the Federal prison system. Under the FPI program, 
all Federal agencies are required to purchase products offered 
by FPI, commonly referred to as FPI's ``mandatory source'' 
rule. FPI, rather than the buying agency, determines if FPI's 
offered product and delivery schedule meets the mission needs 
of the buying agency. Currently, FPI, rather than the buying 
agency, determines the reasonableness of FPI's offered price. 
The details of the FPI provisions are set forth in the section 
by section analysis.

                                Hearings

    No hearings were held on H.R. 1837 in the Committee on the 
Judiciary.

                        Committee Consideration

    On July 25, 2003, the Committee met in open session and 
ordered favorably reported the bill H.R. 1837 with an amendment 
by voice vote, a quorum being present. The amendment consisted 
of the text of the bill as reported by the Committee on 
Government Reform.

                         Vote of the Committee

    In compliance with clause 3(b) of Rule XIII of the Rules of 
the House of Representatives, the Committee notes that there 
were no recorded votes during the Judiciary Committee's 
consideration of H.R. 1837.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of Rule XIII of the Rules 
of the House of Representatives, the Committee reports that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of Rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of Rule XIII of the Rules of the House of 
Representatives is inapplicable because this legislation does 
not provide new budgetary authority or increased tax 
expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of Rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, H.R. 1837, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 29, 2003.
Hon. F. James Sensenbrenner, Jr., Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1837, the Services 
Acquisition Reform Act of 2003.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Matthew 
Pickford, who can be reached at 226-2860.
            Sincerely,
                                       Douglas Holtz-Eakin.

Enclosure

cc:
        Honorable John Conyers, Jr.
        Ranking Member
H.R. 1837--Services Acquisition Reform Act of 2003.

                                SUMMARY

    H.R. 1837 would amend the laws governing how the Federal 
Government procures goods and services. The provisions of the 
bill with the largest budgetary effects would expand the 
authorized uses of share-in-savings (SIS) contracts by 
Government agencies to procure products and services and 
establish a fund to train Federal personnel in acquisition and 
contracting positions.
    CBO estimates that expanding the use of SIS contracts would 
increase direct spending by $80 million over the 2004-2008 
period and by a total of about $450 million over the 2004-2013 
period. Enacting the bill would not affect revenues. In 
addition, CBO estimates that implementing H.R. 1837 would cost 
$28 million over the 2004-2008 period for various 
administrative requirements, including a new advisory panel and 
council, as well as studies related to procurement issues, 
assuming appropriation of the necessary amounts.
    H.R. 1837 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would not affect the budgets of State, local, or tribal 
governments.

                ESTIMATED COST TO THE FEDERAL GOVERNMENT

    The estimated budgetary impact of H.R. 1837 is shown in the 
following table. The costs of this legislation fall within 
budget function 800 (general government).


                           BASIS OF ESTIMATE

    For this estimate, CBO assumes H.R. 1837 will be enacted by 
the end of fiscal year 2003. We assume that the necessary 
amounts will be appropriated for each year and that outlays 
will occur at historical rates for similar programs.
Share-in-Savings Contracts
    Section 301 would expand the authority for Federal agencies 
to use SIS contracts to acquire goods and services. Currently, 
the use of those contracts is limited to purchasing information 
technology. The bill would allow such contracts to be awarded 
for up to 10 years.
    A SIS contract is a contracting and funding strategy 
whereby a service or product required by an agency is provided 
by a private firm without full up-front funding. Instead, 
payment for this service or product is made by spending some of 
the estimated annual savings generated by the goods or services 
provided. Under H.R. 1837, agencies would be authorized to 
enter into SIS contracts without sufficient funds available for 
the termination cost of the contract if sufficient funds are 
available for the first year's payment under the contract. The 
bill would limit the amount of such unfunded termination 
liability to $10 million per contract (or 50 percent of the 
termination costs, whichever is less).
    Under current law, agencies are authorized to use a limited 
pilot program to enter into SIS contracts to obtain data and 
information-processing equipment and services. To date, use of 
the pilot program has been very limited. Because H.R. 1837 
would broaden the potential use of this contracting mechanism, 
CBO expects that its use would become more widespread as 
agencies became familiar with it. In the mid-1980's, a similar 
contracting mechanism, energy-savings performance contracts 
(ESPCs), was authorized by the Congress. Use of ESPCs has 
accelerated over time, and today Federal agencies enter into 
around $250 million worth of such contracts a year. Based on 
the experience with ESPCs, CBO expects that agencies would need 
a few years to become familiar with SIS contracts before use of 
that type of contract would become common. We estimate that 
agencies would agree to acquire about $115 million in goods and 
services through SIS contracts over the next 5 years and that 
obligations for such acquisitions would grow to $425 million 
over the following 5 years.
    Because both ESPC and SIS contracts authorize agencies to 
commit Federal funds in advance of appropriations, CBO 
considers the execution of such contracts to be a form of 
direct spending that should be reflected in the budget when 
such contracts are entered into and a new Government obligation 
is made. CBO's estimate assumes that outlays would be recorded 
when the services or equipment are provided (similar to the 
budgetary treatment of lease-purchases of buildings and 
facilities).
Spending Subject to Appropriation
    CBO estimates that several sections of the bill would 
affect spending subject to appropriation. The following 
paragraphs discuss those costs.
    Funding for Acquisition Workforce Training Fund. The bill 
would authorize the establishment of an Acquisition Workforce 
Training Fund. Under the bill, 5 percent of the fees collected 
by the General Services Administration (GSA) from other, 
nondefense agencies that procure goods and services through 
GSA's Governmentwide contracts would be deposited in the new 
fund. GSA generates most of those fees by charging other 
Federal agencies approximately 1 percent of the cost of 
purchases made through GSA's supply schedule services and data 
processing contracts. That fee is designed to recover 
administrative costs incurred by GSA. In 2002, GSA collected 
$88 million in fees from agencies other than the Department of 
Defense. Thus, CBO estimates that the bill would authorize GSA 
to charge agencies a fee sufficient to establish a $5 million 
Acquisition Workforce Training Fund each year, as well as 
continuing to cover the administrative costs of GSA's 
Governmentwide contracting programs.
    Government-Industry Exchange Program. H.R. 1837 would 
establish an exchange program for certain types of employees 
between the Federal Government and private-sector employers to 
promote acquisition management skills. The bill would allow the 
exchange of employees for between 6 months and 2 years. 
Private-sector employers could be reimbursed for all or part of 
their employees' assignment with the Federal Government. 
Alternatively, H.R. 1837 would allow Federal agencies to accept 
voluntary employment services from private-sector employees.
    Based on information from GSA and the experience of similar 
exchange programs, CBO expects that few private-sector 
employers would be willing to part with such employees for 
extended periods of time. Thus, we estimate that this provision 
would not result in significant additional costs to the 
Government. Any costs for reimbursing private-sector employers 
would be subject to the availability of appropriated funds.
    Other Costs. H.R. 1837 also would establish a new advisory 
panel to review procurement policies, a Chief Acquisition 
Officers Council, and a center of excellence in the Office of 
Federal Procurement Policy. The bill would require various 
implementing regulations to be issued by GSA, the Office of 
Personnel Management, and the Office of Management and Budget. 
In addition, the bill would require the General Accounting 
Office to prepare certain studies for the Congress on 
procurement issues. In total, CBO estimates that preforming 
those responsibilities would cost $1 million per year over the 
2004-2008 period.

              INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT

    H.R. 1837 contains no intergovernmental or private-sector 
mandates as defined in UMRA and would not affect the budgets of 
State, local, or tribal governments.

                         PREVIOUS CBO ESTIMATE

    On May 14, 2003, CBO transmitted a cost estimate for H.R. 
1837 as ordered reported by the House Committee on Government 
Reform on May 8, 2003. The two versions of the bill are 
similar, and our cost estimates are identical.

                         ESTIMATE PREPARED BY:

Federal Costs: Matthew Pickford and Lisa Cash Driskill (226-
    2860), and
Matthew Schmit (226-2840)
Impact on State, Local, and Tribal Governments: Sarah Puro 
    (225-3220)
Impact on the Private Sector: Paige Piper/Bach (226-2940)

                         ESTIMATE APPROVED BY:

Peter H. Fontaine
Deputy Assistant Director for Budget Analysis

                    Performance Goals and Objectives

    The provisions of H.R. 1837 which the Judiciary Committee 
has jurisdiction over does not authorize funding. Therefore, 
clause 3(c)(4) of Rule XIII of the Rules of the House of 
Representatives is inapplicable.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of Rule XIII of the Rules of the 
House of Representatives, the Committee finds the authority for 
this legislation in article I, section 8, of the United States 
Constitution.

               Section-by-Section Analysis and Discussion

    H.R. 1837 was referred to the Judiciary Committee because 
of its jurisdiction over sections 103 and 215. For a 
description of the other provisions of the bill, please refer 
to the report of the Committee on Government Reform. (H. Rept. 
No. 108-117, Part I)
Sec. 103. Government-Industry Exchange Program.
    Section 103 of this bill amends Subpart B of part III of 
title 5 of the United States Code by adding Chapter 38--
Acquisition Professional Exchange Program. Specifically, 
section 103 establishes a program to allow for exchanges of 
high performing acquisition employees on a temporary basis 
between Federal agencies and private sector organizations. The 
Committee's jurisdiction is based on the criminal provisions 
related to the ethics requirements for Federal employees. The 
section has criminal, ethical, and tort provisions identical to 
those included in the Digital Tech Corps Act of 2002, which 
created a government-industry exchange program for high-tech 
managers.
    The purpose of section 103 and the bill generally is to 
promote more efficient and effective government. Section 103 
allows an agency employee to be assigned to a private sector 
organization or a private sector employee to be assigned to an 
agency. To be eligible the employee has to be an exceptional 
performer in the field of Federal acquisition and is expected 
to assume increased acquisition management responsibilities 
within the Federal Government.
    This program benefits the participating agencies by 
exposing the acquisition components of these agencies to the 
very best practices of the private sector. It exposes the 
private sector participants to the special procurement 
requirements and processes of the Federal Government.
    Under this section, public employees who are temporarily 
sent to the private sector would remain under the protections 
of the Federal Tort Claims Act, a matter which falls within the 
Committee on the Judiciary's Rule X jurisdiction. Also, under 
this section, private sector employees who are temporarily sent 
to the government would receive the protections of the Federal 
Tort Claims Act as well as coming under a variety of government 
ethics statutes, including Title 18 provisions, both matters 
which fall within the Committee on the Judiciary's Rule X 
jurisdiction. Private-sector employees could still be paid by 
the private-sector but would be considered a Federal employee 
for most purposes. Federal employees would only be assigned 
pursuant to a program developed by the Office of Federal 
Procurement Policy and the Office of Personnel Management.
Sec. 215. Products of Federal Prison Industries Procedural 
        Requirements.
    Under FPI's 1934 authorizing statute, it is the mandatory 
source for purchases by all Federal agencies of the products 
FPI makes. Federal contracting officers must purchase products 
offered by FPI, unless FPI authorizes, through the granting of 
a ``waiver,'' solicitation of competitive offers from the 
private sector. The decision as to whether to grant a waiver is 
made by FPI, rather than the buying agency. FPI determines 
whether FPI's offered product and delivery schedule meets the 
mission needs of the buying agency. FPI, rather than the buying 
agency, determines the reasonableness of FPI's price.
    The only limitation, under current law, is that FPI's 
offered price cannot exceed the highest price for a comparable 
item offered to the Federal Government by the private sector. 
FPI, rather than the buying agency, makes the determination of 
comparability. The result is that under FPI's current 
authorizing statute, businesses and their non-inmate workers, 
are foreclosed from even being able to bid on Federal contract 
opportunities funded with their tax dollars.
    Section 215 would extend to the contracting officers of the 
various civilian agencies, including the new Department of 
Homeland Security, the same powers available to the Department 
of Defense in its dealings with FPI. It will better enable them 
to get the ``best value'' for the taxpayer dollars being 
expended with FPI. Specifically, this section amends Title III 
of the Federal Property and Administrative Services Act of 
1949, which governs procurement by the civilian agencies.
    Section 215 will--

        (a) make explicit that a contracting officer is fully 
        empowered to determine if a product offered by FPI is 
        ``comparable to products available from the private 
        sector that best meet the Department's needs in terms 
        of price, quality, and time of delivery;''

        (b) provide a contracting officer access to the full 
        range of ``market research'' tools to make the required 
        comparability determination and full discretion on how 
        to use such tools;

        (c) make explicit that the full range of competitive 
        procurement techniques are available to a contracting 
        officer;

        (d) preclude FPI staff from challenging a contracting 
        officer's determination regarding the comparability of 
        a product offered by FPI; and

        (e) empower contracting officers to ensure that FPI 
        ``performs its contractual obligations to the same 
        extent as any other contractor.''

         Changes in Existing Law Made by the Bill, as Reported

    The bill was referred to this Committee for consideration 
of such provisions of the bill and amendment as fall within the 
jurisdiction of this Committee pursuant to clause 1(k) of Rule 
X of the Rules of the House of Representatives. The changes 
made to existing law by the amendment reported by the Committee 
on Government Reform are shown in the report filed by that 
Committee (Rept. 108-117, Part 1).

                           Markup Transcript



                            BUSINESS MEETING

                         FRIDAY, JULY 25, 2003

                  House of Representatives,
                                Committee on the Judiciary,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 9:40 a.m., in 
Room 2141, Rayburn House Office Building, Hon. F. James 
Sensenbrenner, Jr., [Chairman of the Committee] presiding.
    Chairman Sensenbrenner. The Committee will be in order. A 
working quorum is present. It is the Chair's intention to do 
the noncontroversial bills first while Members are staggering 
in after our 3:30 a.m. vote last night. So pursuant to notice, 
I now call up the bill H.R. 1837, the ``Services Acquisition 
Reform Act of 2003'' for purposes of markup and move its 
favorable recommendation to the House.
    Without objection, the bill will be considered as read and 
open for amendment at any point, and the text of the bill as 
reported by the Committee on Government Reform, which the 
Members have before them, will be considered as read, 
considered as the original text for purposes of amendment and 
open for amendment at any point.
    [The Committee Print showing the text of H.R. 1837, as 
approved by the Committee on Government Reform, follows:]
      
  


    Chairman Sensenbrenner. I have a lengthy opening statement 
which will put everybody to sleep, so I would ask unanimous 
consent that all Members, including the Chair, be able to 
insert opening statements in the record at this time.
    [The prepared statement of Mr. Sensenbrenner follows:]
  Prepared Statement of the Honorable F. James Sensenbrenner, Jr., a 
 Representative in Congress From the State of Wisconsin, and Chairman, 
                       Committee on the Judiciary
    H.R. 1837, the ``Service Acquisition Reform Act of 2003,'' was 
introduced by Mr. Davis, the Chairman of the Government Reform 
Committee, to improve Federal acquisition workforce and services. The 
bill was reported by that Committee and sequentially referred to this 
Committee because of the ethics and Federal Tort Claims Act provisions 
that relate to an exchange program for public and private sector 
employees. In addition, the Government Reform Committee added language 
relating to Federal Prison Industries. The Committee received a one-day 
referral for consideration, which was subsequently extended to July 25, 
2003. Because that time is about to expire, we are marking this bill up 
today.
    As the Committee on Government Reform reported ``the Service 
Acquisition Reform Act of 2003 (SARA), . . . is targeted at the root 
causes of the dilemma facing the government's acquisition system today: 
(1) The lack of up-to-date comprehensive training for our acquisition 
professionals; (2) the inability of the current government structure to 
reflect business-like practices by integrating the acquisition function 
into the overall agency mission and facilitating cross-agency 
acquisitions and information sharing; and (3) the lack of good tools 
and incentives to encourage the participation of the best commercial 
firms in the government market.''
    Section 103 of this bill authorizes a government-industry exchange 
program for public and private employees, who specialize in 
acquisition, to meet these goals. The section has criminal, ethical, 
and tort provisions identical to those that were included in the 
Digital Tech Corps Act of 2002. That Act created a government-industry 
exchange program for high tech managers and was reported out of the 
Judiciary Committee on March 20, 2002 and became law in December 2002.
    This bill creates a similar employee exchange program between the 
Federal Government and the private sector in the acquisition workforce.
    Under H.R. 1837, public employees who are temporarily sent to the 
private sector would remain under the protections of the Federal Tort 
Claims Act and private sector employees assigned to the government 
would receive the protections of the Federal Tort Claims Act.
    Private sector employees detailed to Federal agencies for the 
exchange program, would be deemed Federal employees for certain 
purposes and subject to the same ethics rules, revolving door 
prohibitions and accountability provisions that cover Federal 
employees.
    Additionally, this legislation would extend to the contracting 
officers of the various Civilian Agencies, including the new Department 
of Homeland Security, the same powers available to DOD in their 
dealings with Federal Prison Industries, Inc. (FPI).
    It will better enable them to get ``best value'' for the tax-payers 
dollars being expended with FPI. Specifically, this section amends 
Title III of the Federal Property and Administrative Services Act of 
1949, which governs procurement by the Civilian Agencies, to make 
explicit that a contracting officer is fully empowered to determine if 
a product offered by FPI is ``comparable to products available from the 
private sector that best meet the Department's needs in terms of price, 
quality, and time of delivery.''
    It will provide a contracting officer access to the full range of 
``market research'' tools to make the required comparability 
determination, make explicit that the full range of competitive 
procurement techniques are available to a contracting officer, preclude 
FPI staff from challenging a contracting officer's determination 
regarding the comparability of a product offered by FPI, and empower 
contracting officers to ensure that FPI ``performs its contractual 
obligations to the same extent as any other contractor.''
    These provisions are not inconsistent with H.R. 1829 and can 
operate in conjunction with the provisions of that legislation.
    I support the bill and encourage my colleague to support it as 
well.

    [The prepared statement of Ms. Jackson Lee follows:]
       Prepared Statement of the Honorable Sheila Jackson Lee, a 
           Representative in Congress From the State of Texas
    Thank you Chairman Sensenbrenner and Ranking Member Conyers for 
convening this Full Committee Markup opportunity concerning H.R. 1837, 
the Services Acquisition Reform Act of 2003 (SARA). The purpose of this 
legislation is to streamline the federal government procurement process 
as to its billion dollar goods and services requirements. While I 
support this bill and its goal of creating a chief acquisition officer 
post and establishing a training fund for acquisition of personnel, I 
regret that some of the amendments that my colleagues offered did not 
pass with the draft we have before us. They suggested ways to 
facilitate the government's ability to protect against waste, fraud, 
and abuse in federal contracting. One amendment offered by 
Representative Kucinich proposed to create a comprehensive, government-
wide system to track the cost and quality of agency contracting 
efforts, focusing on contracts entered into as the result of a public-
private competition as to Contract Tracking. The other as to the issue 
of Standing would have given federal employees or their representatives 
standing to appeal the results of an A-76 decision transferring federal 
jobs to private contractors. In the area of Competition, Representative 
Van Hollen offered an amendment to require any decision by an agency to 
transfer the performance of a function from federal employees to a 
contractor to be based on the results of a public-private competition 
process. To distinguish and ward against Corporate Expatriates, 
Representative Sanchez offered an amendment to prohibit agencies from 
entering into any contract with a subsidiary of a publicly traded 
corporation if the corporation is incorporated in a tax haven country 
but the United States is the principal market for the public trading of 
the corporation's stock. Furthermore, Representative Maloney offered an 
amendment to allow debarment officials across agencies to share 
information regarding contractors' activities. Finally, Mr. Maloney 
also offered an amendment to ensure the bill's position of Chief 
Acquisition Officer is held by a career professional. All of the above 
proposals would have made a substantive and positive contribution to 
improving the thrust of this bill.
    I share the sentiment of my Democratic Colleagues in bemoaning the 
potential shortfalls of H.R. 1837 in the areas of Contractor 
Involvement in Federal Acquisition Decisions; ``Share in Savings'' 
Contracts; and ``Other Transaction'' Authority.
    In the area of Contractor Involvement, this bill, as drafted, would 
give very weighty oversight duties of acquisition personnel to the 
private sector. This provision could give private contractors undue 
influence over the federal contracting and procurement process. I am a 
staunch advocate of the advancement and increased opportunity for small 
businesses; however, overall control of the process should remain in 
the hands of the federal government lest we develop a system that 
fosters unfair dealing and unsavory trade practices.
    Section 301 of the bill authorizes a contract type called ``share-
in-savings.'' Under these contracts, the contractor agrees to bear the 
initial project costs until the agency begins to achieve specified 
savings or enhanced revenues from the work. Payment is based on a 
percentage of the savings or revenues realized by the agency.
    These contracts are largely untested, both in the public and 
private sector. For this reason, after extensive negotiations, the E-
Government Act of 2003 (P.L. 107-347) authorized 15 share-in-savings 
contracts in military departments and 15 in civilian agencies over a 
three-year period. The idea was that these 30 contracts would serve as 
pilot projects.
    H.R. 1837 eliminates these carefully negotiated limits and gives 
all agencies permanent authority to enter into an unlimited number of 
share-in-savings contracts before any of the pilots have even begun. 
Moreover, SARA eliminates other safeguards in the E-Government Act, 
such as the requirement that ``share in savings'' contracts not be used 
in revenue enhancement. Revenue enhancing contracts raise a host of 
complicated issues, such as ensuring that share-in-savings contracts 
for debt collection do not bring about opportunities for excessive 
harassment.
    One of the major concerns about these contracts is that they 
contravene congressional appropriations procedures. For other 
contracts, agencies must come to Congress for budget authority for the 
contracts. However, section 301 specifically waives this requirement if 
the government's potential liability under the contract is $10 million 
or less. This removes an important element of oversight and 
accountability.
    In addition, this legislation, in providing for ``Other 
Transaction'' Authority, unfairly allows certain agencies to contract 
absent the guidance of the procurement laws. Section 501 of SARA would 
extend to all civilian agencies ``other transaction'' authority for 
research and development projects related to defense against terrorism. 
This authority permits agencies to enter into contracts without regard 
to almost all federal statutes and regulations, including the Federal 
Acquisition Regulation, the Federal Property Act, the Competition in 
Contracting Act, the Federal Acquisition Streamlining Act, and the 
Federal Grant and Cooperative Agreement Act, as well as the Truth in 
Negotiations Act and Cost Accounting Standards.
    In the recently passed Homeland Security Act, the new Department of 
Homeland Security was given this authority for five years. The effect 
of the SARA provision is to repeal this time limit and to extend use of 
the authority to all agencies.
    Mr. Chairman and Ranking Member, for the foregoing reasons, I 
support H.R. 1837 with reservations as to those areas covered by the 
amendments of my Democratic Colleagues that were rejected in Committee. 
Thank you very much for this opportunity to provide input.

    Chairman Sensenbrenner. I would point out that this bill 
has been referred to us under a sequential referral which 
expires today. There are some provisions within the 
jurisdiction of the Committee. I have no amendments. Does 
anybody else have an amendment?
    The gentleman from Virginia Mr. Scott.
    Mr. Scott. Mr. Chairman, I have an amendment at the desk.
    Chairman Sensenbrenner. The clerk will report the 
amendment.
    The Clerk. Mr. Chairman, I don't have an amendment.
    Chairman Sensenbrenner. There is no amendment at the desk.
    The clerk will report the amendment.
    The Clerk. Amendment to H.R. 1837 offered by Mr. Scott of 
Virginia. Strike section 215 of the bill, page 44, line 9 
through page 48, line 15, and conform the table of contents 
accordingly.
    [The amendment follows:]
      
      

  


    Chairman Sensenbrenner. The gentleman from Virginia is 
recognized for 5 minutes.
    Mr. Scott. Mr. Chairman, I won't take 5 minutes, because I 
think the purpose of the amendment is fairly simple. The bill 
would apply the Department of Defense contract restrictions to 
the rest of the Government contracting--the prison provisions 
to the rest of the Government contracting.
    Already we have seen about 2,000 inmates' jobs lost. In a 
few minutes, Mr. Chairman, we will be marking up a 
comprehensive prison industries bill. So the provision is 
duplicative and unnecessary. Moreover, we are the Committee 
responsible for public safety, the safe, orderly and productive 
operation of our prisons and the productive and feeding of the 
prisoners. So anybody who believes that the public is better 
served by more inmates coming out of prison without more work 
and real work experience is, I think, speaking--is looking at 
different numbers than I am.
    I would hope, Mr. Chairman, that we would focus the debate 
on the other bill and take the provision out of this 
legislation.
    I yield back the balance of my time.
    Chairman Sensenbrenner. The Chair recognizes himself in 
opposition to the amendment.
    This amendment should be defeated because it seeks to 
continue during the 5-year transition period the current 
captive relationship of the Federal agencies in which the 
Federal Prison Industries rather than the buying agency 
determines whether Prison Industries offer product, and 
delivery schedule meets the buying agency's need; and Prison 
Industries, rather than the buying agency, determine the 
reasonableness of the offered price by Federal Prison 
Industries.
    This amendment would simply continue to allow Federal 
Prison Industries unilaterally to take Federal contracts and 
thus wasting taxpayers' dollars. It has written, the provision 
authorizes sole-source contract awards to Prison Industries 
during the 5-year transition period to full and open 
competition, which is a major concession to the business--by 
the business-labor coalition supporting comprehensive Federal 
prison industry reform.
    The proponents of this amendment want to deprive the buying 
agency of getting what it needs when it needs it and at a 
reasonable price, and I urge a no vote on the amendment.
    The question is on the--the gentleman from North Carolina.
    Mr. Watt. Move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Watt. Mr. Chairman, I don't get to do this very often, 
so I want to take advantage of it. I just want to agree with 
the Chairman.
    Chairman Sensenbrenner. With that, the question is on the 
Scott amendment. Those in favor will say aye.
    Opposed, no.
    The ayes appear--excuse me. The noes appear to have it. The 
noes have it, and the amendment is not agreed to.
    Are there further amendments?
    If not, a reporting quorum is not present. Without 
objection, the previous question is ordered on the motion to 
report the bill favorably.
    [Intervening business.]
    Chairman Sensenbrenner. A reporting quorum is now present. 
The unfinished business is the motion to report favorably the 
bill H.R. 1837, the ``Services Acquisition Reform Act of 
2003,'' upon which the previous question has been ordered on 
the motion to favorably report the bill. Those in favor will 
say aye.
    Those opposed, no.
    The ayes appear to have it. The ayes have it. The motion to 
report favorably is agreed to.
    Without objection, the staff will be authorized to make 
technical and conforming changes.
    Without objection, the Chair is authorized to go to 
conference pursuant to House rules, and all Members will be 
given 2 days under the rules in which to submit additional 
dissenting and minority or supplemental views.

                            Additional Views

                            I. BILL SUMMARY

    Each year the U.S. government spends well over $200 billion 
buying services and goods ranging from sophisticated 
information technology and management services to grass cutting 
and window washing, from paper clips to advanced weapon 
systems. More than half of that $200 billion, over $135 
billion, is now spent on services--an increase of about 24 
percent since 1990--establishing services as the Nation's 
largest single spending category.
    The Services Acquisition Reform Act (SARA) affects how the 
Federal Government procures these Federal goods and services. 
The aim of the legislation is to ``streamline'' the procurement 
process by remedying the following purported deficiencies: (1) 
the lack of up-to-date comprehensive training for acquisition 
professionals, (2) the inability of the current government 
structure to reflect business-like practices by integrating the 
acquisition function into the overall agency mission and 
facilitating cross-agency acquisitions and information sharing, 
and (3) the lack of effective tools and incentives to encourage 
the participation of the best commercial firms in the 
government market.
    A similar SARA was introduced in the 107th Congress as H.R. 
3832 and referred to the Committees on Government Reform and 
Armed Services. No action was taken on the bill in either 
Committee. Also introduced in the 107th Congress was H.R. 3925, 
the ``Digital Tech Corps Act of 2002,'' which allowed for the 
exchange of mid-level information technology staff between the 
government and private sector. This bill was reported favorably 
by the Judiciary Committee and passed the House on a voice 
vote. The bill was referred to a Senate Subcommittee and no 
action was taken.
    In the 108th Congress, the new SARA was reintroduced and 
referred to the Committees on Government Reform, Armed 
Services, and Judiciary. The Government Reform Committee 
reported the bill favorably on May 7, 2003. However, key 
amendments on important acquisition issues offered by 
Democratic members were rejected during markup. In their 
dissenting views, the Democrats on the Committee concluded, 
``While we support the goal of streamlining Federal procurement 
laws, we cannot support SARA in its current form. 
Unfortunately, as reported by the Committee, the bill exposes 
the taxpayer to new forms of waste, fraud, and abuse in Federal 
contracting.''

                          II. POLICY CONCERNS

    We support the goal of improving the Federal procurement 
process. Toward this end, the legislation creates a chief 
acquisition officer and establishes a training fund for 
acquisition personnel. These steps will help promote a 
professional, well-trained Federal acquisition workforce and we 
applaud these developments. There are, however, a number of 
significant problems with the legislation. There are two 
problematic sections, both of which fall under the jurisdiction 
of the Judiciary Committee: 1) Section 103--the government-
industry exchange program for acquisition personnel and 2) 
Section 215--procedural requirements for civilian agencies 
relating to products of Federal prison industries.
A. Section 103
    This program is troublesome because it could give private 
contractors undue influence over the Federal contracting 
process. In effect, industry workers would be making government 
decisions on ensuring that contractors are not overpaid and 
that the work performed meets Federal standards. Turning these 
functions over to private sector employees is not only 
irresponsible, but dangerous.
    Even if private sector contractors follow conflict of 
interest laws (which they are subject to in the bill) and do 
not work on projects involving their private employers, their 
involvement is still inappropriate. They will still be paid by 
their private employers and are expected to return to take on 
``increased acquisition management responsibilities'' after the 
exchange is completed. They will still be making decisions 
concerning the overall industry they are employed in which will 
include decisions on competing private companies. Only persons 
who work for the government or are being paid by the government 
should be involved in making decisions about how much specific 
contractors are paid.
    There have been many questions raised in recent months 
about possible ties between current members of the 
administration and certain private companies that contract with 
the government. How can the American people be sure that 
contracting is handled impartially and objectively when the 
very companies that benefit are also supplying the government 
decision-makers. The American people will only become more 
suspicious of this process if the bill in its current form 
passes.
    Furthermore, we are concerned that Section 103 of the bill 
amounts to little more than a corporate welfare program for 
companies that have fallen on leaner times as a result of our 
ongoing economic recession. Rather than layoff workers in order 
to decrease expenditures, companies will try to temporarily 
shift their workers to government jobs. The expectation will be 
that those workers will return to the company in higher-paying 
jobs when the economy improves. And while these workers can 
retain their salaries while participating in the exchange 
program, they may apply for government funding and attempt to 
save their employers money.
B. Section 215
    Because the Judiciary Committee already passed a 
comprehensive Federal Prison Industries bill, H.R. 1829, we 
feel that Section 215 is unnecessary. The bill would apply the 
Department of Defense contract restrictions to the rest of 
government contracting. Yet these restrictions have already 
brought about the loss of nearly 2,000 inmate jobs. Moreover, 
we are the Committee responsible for public safety and the 
safe, orderly and productive operation of our prisons. Research 
has shown that inmates who are released from prison with 
practical work skills and work experience have a better chance 
of securing employment in the private sector. Prison work 
programs reduce crime and recidivism rates. Section 215 will 
take needed jobs away from inmates and have a negative effect 
on our efforts to fight crime and reduce the prison population.
    During the markup, Rep. Scott offered an amendment to 
strike section 215 of the bill which was defeated by voice 
vote.

                            III. CONCLUSION

    In conclusion, we feel that Sections 103 and 215 of the 
bill should be deleted and hope that amendments accomplishing 
this will be ruled in order when the bill comes before the 
whole House for a vote. This will go a long way toward fighting 
crime, helping our prison population, and assuring the American 
people that government contracting is conducted in an impartial 
way--free of the undue influence of the private companies who 
stand to benefit. An amendment eliminating Section 103 will 
also remove what we see as little more than a government hand-
out to contractors who have fallen on hard times because of the 
recession. An amendment eliminating Section 215 will ultimately 
help reduce our growing prison population.

                                   John Conyers, Jr.
                                   Robert C. Scott.
                                   Maxine Waters.