	H.R. 716 Provides a Tool but Not a Substitute for a Political Champion

The history of government reform has demonstrated that new policies, whether based in law or in administrative directives, are not self-implementing. H.R. 716 Would Establish a Flexible Implementation Structure

To implement their privatization initiatives, the governments we visited reported the need to establish an organizational and analytical structure. Implementation of H.R. 716 Would Be Helped by Integrating It With Agencies’ Strategic and Performance Planning Activities

The experiences of other governments as well as of major private firms indicate that, when the outsourcing of functions is contemplated, answers to fundamental questions about the purpose and mission of an organization should precede any major outsourcing activities. The Relationship of H.R. 716 to Other Relevant Laws Is Unclear

In our state and local work, we found that all five states and the city of Indianapolis used some combination of legislative changes and resource cuts as part of their privatization initiatives. These actions were taken to encourage greater use of privatization. Reliable and Complete Cost Information Needed for Privatization Decisions

In the governments we visited, reliable and complete cost data on government activities were deemed essential in assessing the overall performance of activities targeted for privatization, in supporting informed privatization decisions, and in making these decisions easier to implement and justify to potential critics. H.R. H.R. 716 Recognizes Federal Workforce Transition Needs

We found that governments we visited needed to develop strategies to help their workforces make the transition to a private-sector environment. Effective Monitoring and Oversight of Contractor Performance Are Essential

When a government’s direct role in the delivery of services is reduced through privatization, we found that, at least among the state and local governments we visited, the need for aggressive monitoring and oversight grew. The Freedom From Government Competition Act would redirect current policy, which does not now have the weight of legislative authority and significantly affect the operation and management of the federal government.
Why GAO Did This Study

GAO discussed H.R. 716, the Freedom From Government Competition Act, as a potential vehicle for competitive contracting, using the results of GAO's recent work on privatization initiatives at the state and local government levels.

What GAO Found

GAO noted that: (1) on the basis of GAO's literature review, privatization experiences and lessons learned by state and city governments in implementing privatization efforts, the views of a panel of privatization experts, and GAO's work in Georgia, Massachusetts, Michigan, New York, and Virginia, as well as the city of Indianapolis, GAO identified six lessons that were generally common to all six governments; (2) in general, the governments found that they needed to: (a) have committed political leaders to champion the privatization initiative; (b) establish an organizational and analytical structure to implement the initiative; (c) enact legislative changes and/or reduce resources available to government agencies to encourage greater use of privatization; (d) develop reliable and complete cost data on government activities to assess their performance, support informed privatization decisions, and make these decisions easier to implement and justify to potential critics; (e) develop strategies to help their workforces make the transition to a private-sector environment; and (f) enhance monitoring and oversight to evaluate compliance and performance and ensure that the government's interests are fully protected; (3) H.R. 716 provides a tool but not a substitute for a political champion; (4) H.R. 716 would establish a flexible implementation structure; (5) implementation of H.R. 716 would be helped by integrating it with agencies' strategic and performance planning activities; (6) incentives may be needed for implementing change; (7) the relationship of H.R. 716 to other relevant laws is unclear; (8) reliable and complete cost information is needed for privatization decisions; (9) H.R. 716 recognizes federal workforce transition needs; (10) effective monitoring and oversight of contractor performance are essential to successful privatization; and (11) the Freedom From Government Competition Act would redirect current policy, which does not now have the weight of legislative authority and significantly affect the operation and management of the federal government.