The Federal Activities Inventory Reform (FAIR) Act of 1998, which requires agencies to review their activities and define them as either inherently governmental or potentially subject to privatization, passed a crucial milestone Oct. 5, passing the House under a suspension of rules. Because the bill had already been approved by unanimous consent in the Senate in August, it now goes to President Clinton. Supporters say they're confident he will sign it into law.
"In light of the nearly 50-year fight to remove the federal government from the private sector, we view the FAIR Act as a major legislative victory for the 105th Congress," said John S. Satagaj, president of the Small Business Legislative Council (SBLC), an umbrella group of 90 trade associations that had been one of the lead lobbying groups in favor of the act. "SBLC would have liked a stronger bill, but given the current administration's position on the issue and unforeseen opposition within Congress, [we] could not have expected a much broader bill this year."
Under the act, federal agencies must inventory their activities annually and print them in the Federal Register, opening them up to public comment. Interested parties will have 30 days to challenge the agency's characterization. The agency will then have 28 days to respond with a decision and explanation. Agencies will also have to use competitive processes-"by a reasonable time"-to assign the functions labeled non-governmental.
The legislation has had a somewhat zigzag history. It was introduced in February 1997 as the Freedom from Government Competition Act, which would have privatized any non-inherently governmental function. But after opposition from federal employee labor unions and the Clinton administration, lawmakers moderated the bill's reach.
Many critics of the bill were mollified by the current version because it seemed mostly to codify a regulation that already exists: Office of Management and Budget Circular A-76. The bill on the President's desk takes A-76 a step further by requiring, for the first time, publication of agency-function classifications. It also sets up a new outside-scrutiny system, open to both private companies who want to get into contracting as well as unions seeking to protect existing government jobs.
In addition to Satagaj and most of his allies--who figured that the bill took enough steps in the right direction to support it as an interim measure--OMB itself decided that "the administration would not object to the passage of the FAIR Act provisions," according to testimony by OMB acting deputy director for management Edward DeSeve before the House Government Reform and Oversight Committee.
But the modifications were not enough for Max Sawicky, an economist with the Economic Policy Institute, a labor-backed think tank. "The whole concept is backwards," Sawicky-who testified against the bill-said in an interview after the House passage. "For most things, there's no binary distinction for governmental and non-governmental functions. If you're running a company and have to make a decision whether to make a product or buy it, you don't sit there and classify things first-you figure out which way is cheaper and delivers better quality. It's not just a waste of time; it will also cost money or lower service quality."
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