HR 4394 IH

108th CONGRESS

2d Session

H. R. 4394

To make ineligible for Federal contract awards any expatriated corporations and any companies that do business with, or own foreign subsidiaries that do business with, state sponsors of terrorism or foreign terrorist organizations.

IN THE HOUSE OF REPRESENTATIVES

May 19, 2004

Mr. BROWN of Ohio (for himself, Mr. NEAL of Massachusetts, Ms. DELAURO, and Mr. WAXMAN) introduced the following bill; which was referred to the Committee on Government Reform

A BILL

To make ineligible for Federal contract awards any expatriated corporations and any companies that do business with, or own foreign subsidiaries that do business with, state sponsors of terrorism or foreign terrorist organizations.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Accountability and Responsibility in Contracting Act'.

SEC. 2. INELIGIBILITY OF EXPATRIATED CORPORATIONS FOR FEDERAL CONTRACT AWARDS.

(a) IN GENERAL- No acquiring corporation or any subsidiary of such a corporation that enters into a corporate expatriation transaction shall be eligible to be awarded a Federal contract.

(b) PERIOD OF INELIGIBILITY- The period of ineligibility under subsection (a) shall be 3 years, beginning on the date of completion of the corporate expatriation transaction.

(c) EXCEPTION FOR REPATRIATED CORPORATIONS- If an acquiring corporation reorganizes as a domestic corporation within one year after the date of the enactment of this Act under the applicable incorporation laws of a State, subsection (a) shall not apply.

(d) DEFINITIONS- In this Act:

(1) CORPORATE EXPATRIATION TRANSACTION- (A) The term `corporate expatriation transaction'--

(i) means any transaction if--

(I) a foreign corporation (referred to in this section as the `acquiring corporation') acquires, as a result of such transaction, directly or indirectly substantially all of the properties held directly or indirectly by a domestic corporation; and

(II) immediately after the transaction, more than 80 percent of the stock (by vote or value) of the acquiring corporation is held by former shareholders of the domestic corporation by reason of holding stock in the domestic corporation; and

(ii) includes any transaction if--

(I) a foreign corporation acquires, as a result of such transaction, directly or indirectly properties constituting a trade or business of a domestic partnership;

(II) immediately after the transaction, more than 80 percent of the stock (by vote or value) of the acquiring corporation is held by former partners of the domestic partnership or related foreign partnership (determined without regard to stock of the acquiring corporation which is sold in a public offering related to the transaction); and

(III) the acquiring corporation meets the requirements of clauses (i) and (ii) of subparagraph (B).

(B) Subclause (II) of subparagraph (A)(i) shall be applied by substituting `50 percent' for `80 percent' with respect to any foreign corporation if--

(i) such corporation does not have substantial business activities (when compared to the total business activities of the expanded affiliated group) in the foreign country in which or under the law of which the corporation is created or organized; and

(ii) the stock of the corporation is publicly traded and the principal market for the public trading of such stock is in the United States.

(C) For purposes of this paragraph--

(i) a series of related transactions shall be treated as 1 transaction; and

(ii) stock held by members of the expanded affiliated group which includes the acquiring corporation shall not be taken into account in determining ownership.

(2) DOMESTIC- The term `domestic' means created or organized in the United States or under the law of the United States or of any State.

(3) EXPANDED AFFILIATED GROUP- The term `expanded affiliated group' means an affiliated group as defined in section 1504(a) of the Internal Revenue Code of 1986, without regard to section 1504(b) of such Code.

(e) APPLICABILITY- This section shall apply with respect to a corporate expatriation transaction occurring before, on, or after the date of the enactment of this Act.

(f) WAIVER-

(1) IN GENERAL- Subject to paragraph (2), the President may waive this section with respect to any specific contract if the President certifies to Congress that the waiver is required in the interest of national security.

(2) REPORT- The President may not carry out a waiver under paragraph (1) until a period of 30 days has expired after the President submits to Congress a report containing the certification described in paragraph (1) and setting forth the rationale for the waiver.

SEC. 3. INELIGIBILITY FOR FEDERAL CONTRACT AWARDS OF COMPANIES DOING BUSINESS WITH, AND COMPANIES WITH FOREIGN SUBSIDIARIES DOING BUSINESS WITH, STATE SPONSORS OF TERRORISM OR FOREIGN TERRORIST ORGANIZATIONS.

(a) IN GENERAL- No entity doing business with a state sponsor of terrorism or foreign terrorist organization, and no entity with a foreign subsidiary doing business with a state sponsor of terrorism or foreign terrorist organization, shall be eligible to be awarded a Federal contract.

(b) PERIOD OF INELIGIBILITY- The period of ineligibility under subsection (a), as determined by the head of the executive agency entering into the contract concerned, in cooperation with the Secretary of State, shall be--

(1) 3 years for a first offense;

(2) 10 years for a second offense; and

(3) 15 years for any offense after a second offense, beginning on the date of certification under subsection (c) or (d).

(c) CERTIFICATION FOR CURRENT CONTRACTS- Each executive agency shall require, for each contract with the agency that is in effect on the date of the enactment of this Act, that the contractor certify in writing that the contractor, the contractor's domestic parent company, and all other domestic subsidiaries of the domestic parent company did not do business, and did not own a foreign subsidiary that did business, during the 10-year period ending on the date of the enactment of this Act, with a state sponsor of terrorism or a foreign terrorist organization. A certification that the contractor, the parent, or other subsidiaries did do such business, or did own one or more foreign subsidiaries that did such business, shall be considered a first offense under subsection (b).

(d) CERTIFICATION FOR FUTURE CONTRACTS- Each executive agency shall require, as a condition of entering into a contract after the date of the enactment of this Act, that a potential contractor certify in writing that the potential contractor, the potential contractor's domestic parent company, and all other domestic subsidiaries of the domestic parent company is not doing business, and does not own a foreign subsidiary that is doing business, or has done business within the last ten years, with a state sponsor of terrorism or a foreign terrorist organization. Each certification that the potential contractor, the parent, or other subsidiaries is doing such business, or owned one or more foreign subsidiaries doing such business currently or in the last ten years, shall be considered a separate offense under subsection (b).

(e) COMPLAINTS-

(1) IN GENERAL- Citizens may file complaints with executive agencies regarding Federal contractors.

(2) REPORT- The head of each executive agency shall submit to Congress an annual report on the complaints received by citizens under this subsection, including the nature of the complaint and the manner in which the agency handled the complaint.

(f) DEFINITIONS- In this section:

(1) EXECUTIVE AGENCY- The term `executive agency' has the meaning provided in section 102 of title 31, United States Code.

(2) FOREIGN SUBSIDIARY- The term `foreign subsidiary' means any foreign entity owned or controlled (directly or indirectly) by a potential contractor.

(3) STATE SPONSOR OF TERRORISM- The term `state sponsor of terrorism' means any government which the Secretary of State has determined, for purposes of section 6(j) of the Export Administration Act of 1979, section 620A of the Foreign Assistance Act of 1961, section 40 of the Arms Export Control Act, or other provision of law, is a government that has provided support for acts of international terrorism.

(4) FOREIGN TERRORIST ORGANIZATION- The term `foreign terrorist organization' means a foreign terrorist organization designated under section 219 of the Immigration and Nationality Act (8 U.S.C. 1189).

END