[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6426 Introduced in House (IH)]







110th CONGRESS
  2d Session
                                H. R. 6426

 To prohibit the use of funds by the Department of Defense on the KC-X 
   tanker contract, and for other purposes related to that contract.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 26, 2008

    Mr. Tiahrt (for himself, Mr. Moran of Kansas, Mr. Shimkus, Mr. 
  Reichert, and Mr. LaHood) introduced the following bill; which was 
              referred to the Committee on Armed Services

_______________________________________________________________________

                                 A BILL


 
 To prohibit the use of funds by the Department of Defense on the KC-X 
   tanker contract, and for other purposes related to that contract.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``KC-X Tanker 
Recompete Act''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. KC-X Tanker contract.
Sec. 3. Independent cost estimate.
Sec. 4. Requirement to offset illegal subsidization to foreign persons 
                            participating in KC-135 replacement 
                            competition.
Sec. 5. Ensuring fair competition.
Sec. 6. National security considerations.
Sec. 7. Industrial base considerations.
Sec. 8. Loss of employee tax revenue.
Sec. 9. Loss of corporate tax revenue.
Sec. 10. Regulatory burden.
Sec. 11. Foreign Corrupt Practices Act.
Sec. 12. Covered contractor definition.
Sec. 13. Report.

SEC. 2. KC-X TANKER CONTRACT.

    (a) Prohibition.--No funds may be used by the Department of Defense 
on the KC-X tanker contract. In this subsection, the term ``KC-X tanker 
contract'' means the contract awarded by the Department of the Air 
Force on February 29, 2008, for the next generation air-refueling 
tanker aircraft.
    (b) Replacement.--If the Department of the Air Force chooses not to 
exercise its authority to award a new contract for the KC-X tanker to 
the bidder whose protest of the February 29, 2008, award was sustained 
by the Government Accountability Office on June 18, 2008, the Secretary 
of Defense, using competitive procedures, shall award a contract for a 
replacement for the KC-135 tanker. Such funds as may be necessary are 
authorized to conduct the competition for such contract.

SEC. 3. INDEPENDENT COST ESTIMATE.

    As part of the acquisition process for the award of a contract for 
a replacement for the KC-135 tanker, as required by section 2(b), the 
Secretary of Defense and the source selection authority shall ensure 
that an independent cost estimate is completed. The cost estimate shall 
include an estimate of--
            (1) all costs borne by the suppliers;
            (2) all costs borne by foreign governments;
            (3) all costs borne by domestic suppliers (if the proposal 
        involves any domestic suppliers); and
            (4) all costs covered by cost accounting standards under 
        the Federal Acquisition Regulation.

SEC. 4. REQUIREMENT TO OFFSET ILLEGAL SUBSIDIZATION TO FOREIGN PERSONS 
              PARTICIPATING IN KC-135 REPLACEMENT COMPETITION.

    (a) Requirement.--As part of the acquisition process for the award 
of a contract for a replacement of the KC-135 tanker, as required by 
section 2(b), the Secretary of Defense shall, in conducting the cost or 
price evaluation of any proposal submitted by a subsidized person, 
increase the cost or price of the proposal by the amount of illegal 
subsidization.
    (b) Illegal Subsidization.--For purposes of subsection (a), the 
amount of illegal subsidization with respect to a proposal submitted by 
a subsidized person is the amount of the illegal subsidy referred to in 
subsection (c), as determined jointly by the Secretary of Commerce and 
the United States Trade Representative after receipt of a request from 
the Secretary of Defense for such a determination.
    (c) Subsidized Persons.--With respect to any proposal submitted to 
the Department of Defense for a contract for a replacement of the KC-
135 tanker, a subsidized person is any of the following:
            (1) Foreign person.--A foreign person to which the 
        government of a foreign country that is a member of the World 
        Trade Organization has provided a subsidy for the tanker if--
                    (A) the United States has requested consultations 
                with that foreign country under the Agreement on 
                Subsidies and Countervailing Measures on the basis that 
                the subsidy is an illegal subsidy under that Agreement; 
                and
                    (B) the World Trade Organization has ruled that the 
                subsidy provided by the foreign country is an illegal 
                subsidy under the Agreement on Subsidies and 
                Countervailing Measures.
            (2) Joint ventures.--Any joint venture, cooperative 
        organization, partnership, or contracting team of which a 
        foreign person described in paragraph (1) is a member.
            (3) Subcontracts.--Any person proposing to use a foreign 
        person described in paragraph (1) or an entity described in 
        paragraph (2) as a subcontractor in performing the contract for 
        which the proposal is submitted.
    (d) Definitions.--In this section:
            (1) The term ``Agreement on Subsidies and Countervailing 
        Measures'' means the agreement described in section 101(d)(12) 
        of the Uruguay Round Agreements Act (19 U.S.C. 3501(d)(12)).
            (2) The term ``illegal subsidy'' means a prohibited subsidy 
        or an actionable subsidy under the Agreement on Subsidies and 
        Countervailing Measures.
            (3) The term ``foreign person'' means--
                    (A) an individual who is not a United States person 
                or an alien lawfully admitted for permanent residence 
                into the United States; or
                    (B) a corporation, partnership, or other 
                nongovernmental entity which is not a United States 
                person.
            (4) The term ``United States person'' means--
                    (A) a natural person who is a citizen of the United 
                States or who owes permanent allegiance to the United 
                States; and
                    (B) a corporation or other legal entity which is 
                organized under the laws of the United States, any 
                State or territory thereof, or the District of 
                Columbia, if natural persons described in subparagraph 
                (A) own, directly or indirectly, more than 50 percent 
                of the outstanding capital stock or other beneficial 
                interest in such legal entity.
            (5) The term ``cost or price evaluation'' means an 
        evaluation conducted by a source selection authority pursuant 
        to subpart 15.305(a)(1) of the Federal Acquisition Regulation.

SEC. 5. ENSURING FAIR COMPETITION.

    As part of the acquisition process for the award of a contract for 
a replacement for the KC-135 tanker, as required by section 2(b), the 
Secretary of Defense and the source selection authority shall ensure 
that any covered contractor, foreign or domestic, for the contract, as 
part of the cost criteria, is evaluated both on the cost borne by the 
supplier and any cost borne by a foreign government that is not borne 
by a government (local, State, or Federal) in the United States. The 
costs considered in the evaluation shall be consistent with the costs 
estimated in the independent cost estimate completed pursuant to 
section 3.

SEC. 6. NATIONAL SECURITY CONSIDERATIONS.

    As part of the acquisition process for the award of a contract for 
a replacement for the KC-135 tanker, as required by section 2(b), it is 
the responsibility of the Department of Defense to take into 
consideration the national security impacts, the industrial base 
impacts, and the economic impact to the United States of awarding 
contracts for critical capabilities to foreign entities.

SEC. 7. INDUSTRIAL BASE CONSIDERATIONS.

    As part of the acquisition process for the award of a contract for 
a replacement for the KC-135 tanker, as required by section 2(b), it is 
the responsibility of the Department of Defense to take into 
consideration the industrial base impacts and the economic impact to 
the United States of awarding contracts involving critical jobs to 
foreign entities.

SEC. 8. LOSS OF EMPLOYEE TAX REVENUE.

    As part of the acquisition process for the award of a contract for 
a replacement for the KC-135 tanker, as required by section 2(b), it is 
the responsibility of the Department of Defense to take into 
consideration the impact of lost personal income tax revenues to the 
United States, as a result of awarding defense contracts to foreign 
entities.

SEC. 9. LOSS OF CORPORATE TAX REVENUE.

    As part of the acquisition process for the award of a contract for 
a replacement for the KC-135 tanker, as required by section 2(b), it is 
the responsibility of the Department of Defense to take into 
consideration the impact of lost corporate tax revenues to the United 
States, as a result of awarding defense contracts to foreign entities.

SEC. 10. REGULATORY BURDEN.

    As part of the acquisition process for the award of a contract for 
a replacement for the KC-135 tanker, as required by section 2(b), it is 
the responsibility of the Department of Defense to take into 
consideration the impact of all regulations waived or that are not 
applicable with respect to foreign entities. These regulations include 
cost accounting standards, Buy America provisions, specialty metal 
provisions, the Foreign Corrupt Practices Acts, and compliance with the 
International Traffic in Arms Regulation.

SEC. 11. FOREIGN CORRUPT PRACTICES ACT.

    (a) Condition for Prospective Award of Contract.--
            (1) In general.--As part of the acquisition process for the 
        award of a contract for a replacement for the KC-135 tanker, as 
        required by section 2(b), the Secretary of Defense and the 
        source selection authority shall require that any contractor or 
        subcontractor described in paragraph (2) that is not already 
        covered by the Foreign Corrupt Practices Act shall be required, 
        as a condition of the contract, to comply with the requirements 
        of such Act.
            (2) Contractor and subcontractors described.--A contractor 
        or subcontractor described in this paragraph is any of the 
        following:
                    (A) A prospective defense contractor that is part 
                of an internationally controlled group of entities.
                    (B) A prospective subcontractor that is part of an 
                internationally controlled group of entities, provided 
                that the subcontractor is at the second tier or higher 
                and is to be used by the prospective defense contractor 
                (as described in subparagraph (A)) to perform the 
                contract.
    (b) Compliance Program.--
            (1) In general.--With respect to compliance with the 
        Foreign Corrupt Practices Act, the Secretary of Defense shall 
        require that all contractors and subcontractors described in 
        subsection (a)(2) have a compliance program and certify in 
        writing that they have completed an audit of that compliance 
        program.
            (2) Debarment.--
                    (A) In general.--Any contractor described in 
                subsection (a)(2) that engages in conduct that violates 
                the requirements of the Foreign Corrupt Practices Act 
                or any similar applicable laws in foreign countries 
                shall be debarred from contracting with the Department 
                of Defense.
                    (B) Period of debarment.--The period of debarment 
                under subparagraph (A) shall be at least 3 years.
    (c) National Security Waiver Authority.--
            (1) In general.--The Secretary of Defense may waive the 
        applicability of subsections (a) and (b) in specific instances 
        if the Secretary determines that the waiver is necessary in the 
        national security interests of the United States.
            (2) Non-delegation.--The Secretary of Defense may not 
        delegate the waiver authority under paragraph (1).
            (3) Notification.--Upon issuing a waiver under paragraph 
        (1), the Secretary of Defense shall notify the appropriate 
        Congressional committees in writing not later than 30 days 
        after issuing such waiver.
    (d) Definitions.--In this section:
            (1) Foreign corrupt practices act.--The term ``Foreign 
        Corrupt Practices Act'' means--
                    (A) section 30A of the Securities Exchange Act of 
                1934 (15 U.S.C. 78dd-1); and
                    (B) sections 104 and 104A of the Foreign Corrupt 
                Practices Act of 1977 (15 U.S.C. 78dd-2).
            (2) Internationally controlled group of entities.--The term 
        ``internationally controlled group of entities'' means a 
        controlled group of entities the common parent of which is a 
        company organized under the laws of a foreign government and to 
        which the Foreign Corrupt Practices Act does not, by its 
        jurisdictional terms, apply.
            (3) Appropriate congressional committees.--In this 
        subsection, the term ``appropriate Congressional committees'' 
        means--
                    (A) the Committee on Armed Services, the Committee 
                on Appropriations, and the Permanent Select Committee 
                on Intelligence of the House of Representatives; and
                    (B) the Committee on Armed Services, the Committee 
                on Appropriations, and the Select Committee on 
                Intelligence of the Senate.

SEC. 12. COVERED CONTRACTOR DEFINITION.

    In this Act, the term ``covered contractor'', with respect to a 
prime contract of the Department of Defense, means any of the 
following:
            (1) Contractor and subsidiaries and affiliates.--
                    (A) Any prospective contractor making an offer for 
                the contract.
                    (B) The contractor awarded the contract.
                    (C) Any subsidiary or affiliate of the contractor 
                awarded the contract.
            (2) Subcontractors and subsidiaries and affiliates.--
                    (A) Any subcontractor of a contractor described in 
                paragraph (1)(B) that is at the second tier or higher 
                and is to be used by the contractor in the performance 
                of the contract.
                    (B) Any subsidiary or affiliate of any such 
                subcontractor.

SEC. 13. REPORT.

    (a) Report Requirement.--The Secretary of Defense shall submit to 
the congressional defense committees a report on compliance by the 
Department of Defense with the provisions of this Act during the 
acquisition process for the award of a contract for a replacement for 
the KC-135 tanker, as required by section 2(b).
    (b) Deadline.--The report shall be submitted no later than the date 
of award of such contract.
    (c) Congressional Defense Committees.--In this section, the term 
``congressional defense committees'' means--
            (1) the Committee on Armed Services and the Committee on 
        Appropriations of the Senate; and
            (2) the Committee on Armed Services and the Committee on 
        Appropriations of the House of Representatives.
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