[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 925 Introduced in House (IH)]







105th CONGRESS
  1st Session
                                H. R. 925

To prohibit the Department of Defense from allowing defense contractors 
    to recoup merger-related restructuring costs from the taxpayers.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 5, 1997

  Mr. Smith of New Jersey (for himself, Mr. Sanders, Mr. DeFazio, Mr. 
 Klug, Mr. Dickey, Mr. Neumann, Mr. Ackerman, Mr. Barrett of Nebraska, 
 Mr. Lipinski, Mr. Franks of New Jersey, Mrs. Maloney of New York, Mr. 
Chabot, Mrs. Kennelly of Connecticut, Mr. Watts of Oklahoma, Mr. Stark, 
 Mr. Hoekstra, Ms. Jackson-Lee of Texas, Mr. LoBiondo, Mr. Evans, Ms. 
Norton, Mr. Frank of Massachusetts, Ms. Stabenow, Mr. Lewis of Georgia, 
 Mrs. Carson, and Mr. Blumenauer) introduced the following bill; which 
           was referred to the Committee on National Security

_______________________________________________________________________

                                 A BILL


 
To prohibit the Department of Defense from allowing defense contractors 
    to recoup merger-related restructuring costs from the taxpayers.

    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 ``Payoffs-for-Layoffs Corporate 
Welfare Elimination Act of 1997''.

SEC. 2. PROHIBITION ON PAYMENTS UNDER DEFENSE CONTRACTS FOR 
              RESTRUCTURING COSTS OF A DEFENSE CONTRACTOR MERGER OR 
              ACQUISITION.

    (a) Prohibition.--No funds appropriated or otherwise made available 
to the Department of Defense may be obligated or expended under section 
2324 of title 10, United States Code, for payment of any restructuring 
cost associated with a merger or acquisition that is incurred by a 
contractor under contract with the Department of Defense.
    (b) Applicability.--(1) The prohibition in subsection (a) applies 
with respect to any merger or acquisition occurring on or after the 
date of the enactment of this Act.
    (2) In the case of a merger or acquisition that occurred before the 
date of the enactment of this Act, funds appropriated or otherwise made 
available to the Department of Defense may be used to process or pay a 
claim for restructuring costs associated with the merger or acquisition 
only if the relevant contract or advance agreement specifies that 
payment for such costs may be made under the contract or agreement 
using funds appropriated or otherwise made available to the Department 
of Defense.
    (c) Conforming Repeal.--Subsection (a) of section 818 of the 
National Defense Authorization Act for Fiscal Year 1995 (Public Law 
103-337; 10 U.S.C. 2324 note) is repealed.
    (d) Reports by Secretary of Defense.--Subsection (e) of such 
section is amended--
            (1) in the matter preceding paragraph (1), by striking out 
        ``and 1997'' and inserting in lieu thereof ``1997, 1998, 1999, 
        and 2000''; and
            (2) by adding at the end of paragraph (3) the following:
                    ``(F) An analysis of the dollar amount of any 
                windfalls achieved by the combining defense contractors 
                which results from the reduction of overhead on fixed-
                price type contracts from the Department of Defense 
                that existed before the business combination.
                    ``(G) A list of each major weapons system purchased 
                by the Department of Defense since July 21, 1993, for 
                which actual prices have actually been reduced that are 
                attributable to the contractors' restructuring efforts.
                    ``(H) The total number of pending restructuring 
                proposals submitted to the Department of Defense as of 
                the date of the report and the total dollar amount of 
                the requests for restructuring costs contained in those 
                proposals.''.
    (e) Comptroller General Report.--Subsection (g)(3) of such section 
is amended by adding at the end the following: ``The report shall 
include an estimate and detailed description of the net effect on the 
Federal budget of reimbursing defense contractors for their merger-
related restructuring costs, including the following:
            ``(A) The payment by the Department of Defense of 
        restructuring costs resulting from business combinations of 
        defense contractors.
            ``(B) The reduction of Federal tax revenues from 
        unemployment resulting from business combinations of defense 
        contractors who have been reimbursed for their merger-related 
        restructuring costs.
            ``(C) The increase in Federal expenditures in other Federal 
        adjustment programs from unemployment resulting from business 
        combinations of defense contractors who have been reimbursed 
        for their merger-related restructuring costs, including food 
        stamps, housing and energy assistance, and any other programs 
        the Comptroller General determines that unemployed persons are 
        likely to use at a rate higher than employed persons.
            ``(D) The increase in Federal grants of cash and in-kind 
        assistance to States and local communities that have 
        experienced significant layoffs or facility relocation (or 
        both) resulting from the business combination, that are 
        attributable to losses in the State and local tax base and 
        increased the use of State and local government services 
        similar to those described in subparagraph (C).
            ``(E) The effect of reduced competition resulting from 
        business combinations on the prices the Department of Defense 
        pays for military equipment and services.''.
    (f) Definitions.--Such section is further amended by adding at the 
end the following new subsection:
    ``(h) Definitions.--For purposes of this section:
            ``(1) The term `windfall' means the savings, either 
        actually realized or anticipated, by the combining defense 
        contractors as a result of reducing overhead through merger-
        related restructuring which are foregone by the Government 
        because certain defense contracts are fixed-price type 
        contracts that existed before the business combination and 
        cannot be adjusted to reflect the contractor's reduced 
        overhead.
            ``(2) The term `significant layoffs' means a situation in 
        which the number of layoffs exceed 500 full-time equivalent 
        employees or in which one of the combining defense contractors 
        previously represented the fifth largest employer or greater in 
        the relevant State or local community.''.
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