Private Federal Corporation

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A Private Federal Corporation (PFC), also known as a Federal Government Corporation (FGC), is a corporation which has been established by the Federal Government. There are, of course, benefits to this, not the least of which would be the disbursement and management of funding by the corporation that would not be subject to Congressional oversight or monitoring. An additional benefit would be autonomy in operations.

Examples of existing PFCs are:

"In wholly owned federal corporations, such as the Commodity Credit Corporation, the federal government holds 100% of the equity and exercises 100% of the votes on the board of directors or other governing body ...

"In mixed-ownership federal corporations, such as the RTC and the Resolution Funding Corporation (REFCORP), the United States may own some or none of the equity. A mixed-ownership FGC's charter often guarantees that the President will appoint at least a minority of the directors even if the federal government does not own shares ...

"In private federal corporations, such as COMSAT, the federal government holds no stock but may have a statutory right to select members of the board of directors. A private federal corporation is, formally, little different from a corporation chartered by a state although it may have publicly appointed directors and tax advantages, and its debts may carry an implicit guarantee from the federal government."[1]

"Since 1945 Congress has usually created FGCs for one of four reasons: efficiency, political insulation, subsidy, and subterfuge."

Federally Funded Research and Development Centers (FFRDC) could possibly be considered another category of PFCs. Totally funded by the U.S. Government, actual administration of the entities are by an outside/non-government contracted source. Some FFRDCs are administered by universities and colleges, others by non-profit institutions, and yet others by industrial firms. Many have existed in this form since the 1950s.

The MITRE Corporation runs 3 FFRDCs for the DoD, FAA, and the IRS. MITRE itself is a non-profit 501(c)(3) corporation. According to Mitretek Systems, the company links its origin to The MITRE Corporation. MITRE was itself spun off from the Massachusetts Institute of Technology (MIT) MIT Lincoln Laboratory which began in the 1950s as the Lincoln Project at MIT. The Lincoln Laboratory was created to develop ground radar air defense systems for the United States. The MITRE Corporation was established as the "system engineer and overseer for the development of this highly complex system."

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