[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 1004 Introduced in Senate (IS)]







110th CONGRESS
  1st Session
                                S. 1004

    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 SENATE OF THE UNITED STATES

                             March 28, 2007

 Mr. Brown (for himself and Mr. Dorgan) introduced the following bill; 
which was read twice and referred to the Committee on Homeland Security 
                        and Governmental Affairs

_______________________________________________________________________

                                 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 ``Restoring Integrity in Contracting 
Act of 2007''.

SEC. 2. DEFINITIONS.

    (a) Corporate Expatriation Transaction Defined.--
            (1) In general.--In this Act, the term ``corporate 
        expatriation transaction''--
                    (A) means any transaction in which--
                            (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
                    (B) includes any transaction in which--
                            (i) a foreign corporation acquires, as a 
                        result of such transaction, directly or 
                        indirectly properties constituting a trade or 
                        business of a domestic partnership; 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 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).
            (2) Lower stock ownership threshold for certain acquiring 
        corporations.--Clause (ii) of paragraph (1)(A) shall be applied 
        by substituting ``50 percent'' for ``80 percent'' with respect 
        to any foreign corporation if--
                    (A) 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
                    (B) the stock of the corporation is publicly traded 
                and the principal market for the public trading of such 
                stock is in the United States.
            (3) Rules for determining ownership and scope of 
        transaction.--For purposes of this subsection--
                    (A) a series of related transactions shall be 
                treated as 1 transaction; and
                    (B) stock held by members of the expanded 
                affiliated group which includes the acquiring 
                corporation shall not be taken into account in 
                determining ownership.
    (b) Other Definitions.--In this Act:
            (1) Domestic.--The term ``domestic'' means created or 
        organized in the United States or under the law of the United 
        States or of any State.
            (2) Executive agency.--The term ``executive agency'' has 
        the meaning given the term in section 102 of title 31, United 
        States Code.
            (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.
            (4) Foreign subsidiary.--The term ``foreign subsidiary'' 
        means any foreign entity owned or controlled (directly or 
        indirectly) by a potential contractor.
            (5) 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 (50 U.S.C. App. 2405(j)), 
        section 620A of the Foreign Assistance Act of 1961 (22 U.S.C. 
        2371), section 40 of the Arms Export Control Act (22 U.S.C. 
        2780), or any other provision of law, to be a government that 
        has provided support for acts of international terrorism.
            (6) 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).

SEC. 3. 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 
after the date of the enactment of this Act shall be eligible to be 
awarded a Federal contract for the 5-year period beginning on the date 
that a disclosure regarding such transaction is made under section 5.
    (b) Penalties for Failure to Disclose.--In the event that the 
Administrator for Federal Procurement Policy determines that an entity 
is ineligible for a Federal contract under subsection (a) as a result 
of a corporate expatriation transaction that the entity fails to 
disclose under section 5(a), the period of ineligibility--
            (1) shall begin on the date that the Administrator makes 
        such determination; and
            (2) may be extended by the Administrator for a period that 
        is longer than the period otherwise applicable under subsection 
        (a) as a penalty for such failure to disclose.
    (c) 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. 4. 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) Ineligibility.--
            (1) In general.--Except as provided under paragraph (2), 
        any entity doing business with, or having a parent or 
        subsidiary doing business with, a state sponsor of terrorism or 
        foreign terrorist organization after the date of the enactment 
        of this Act shall be ineligible to be awarded a Federal 
        contract for the period described in subsection (b).
            (2) Exception for entities doing business in compliance 
        with the trade sanctions reform and export enhancement act of 
        2000.--
                    (A) Authority unaffected.--Nothing in this section 
                shall be construed to prohibit or restrict an entity 
                from selling food, agricultural commodities, medicine, 
                or medical products to a state sponsor of terrorism or 
                foreign terrorist organization pursuant to section 906 
                of the Trade Sanctions Reform and Export Enhancement 
                Act of 2000 (22 U.S.C. 7205).
                    (B) Eligibility for contracts unaffected.--No 
                entity selling food, agricultural commodities, 
                medicine, or medical products to a state sponsor of 
                terrorism or foreign terrorist organization in full 
                compliance with the requirements of section 906 of the 
                Trade Sanctions Reform and Export Enhancement Act of 
                2000 (22 U.S.C. 7205), or any parent or subsidiary of 
                such entity, shall be deemed ineligible to be awarded a 
                Federal contract under subsection (a) as a result of 
                conducting such business.
    (b) Period of Ineligibility.--
            (1) Duration.--The period of ineligibility referred to in 
        subsection (a)(1), as determined by the Administrator for 
        Federal Procurement Policy, in cooperation with the Secretary 
        of State, shall be--
                    (A) 5 years for a first offense;
                    (B) 10 years for a second offense; and
                    (C) 15 years for any offense after a second 
                offense.
            (2) Commencement.--The period of ineligibility under this 
        subsection shall begin on the date that a contractor makes a 
        disclosure under section 5 that, according to the criteria 
        under such section, the contractor is doing or has done 
        business with, or has a subsidiary that is doing or has done 
        business with, a state sponsor of terrorism or foreign 
        terrorist organization.
            (3) Penalties for failure to disclose.--In the event that 
        the Administrator for Federal Procurement Policy determines 
        that an entity is ineligible for a Federal contract under 
        subsection (a) as a result of a transaction or activity that 
        the entity fails to disclose under section 5(a), the period of 
        ineligibility--
                    (A) shall begin on the date that the Administrator 
                makes such determination; and
                    (B) may be extended by the Administrator for a 
                period longer than the period otherwise applicable 
                under paragraph (1) as a penalty for such failure to 
                disclose.
    (c) Complaints.--
            (1) In general.--Any United States citizen may file a 
        complaint with an executive agency regarding a Federal 
        contractor that has committed an offense under this section.
            (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.

SEC. 5. DISCLOSURE REQUIREMENTS.

    (a) Certification.--Not later than 180 days after the date of the 
enactment of this Act, the Federal Acquisition Regulation issued 
pursuant to section 25 of the Office of Federal Procurement Policy Act 
(41 U.S.C. 421) shall be revised to require that every contractor that 
submits a bid for a government contract shall be required to submit 
with such bid a certification describing--
            (1) whether the contractor or the contractor's parent 
        company has entered into a corporate expatriation transaction 
        after the date of the enactment of this Act; and
            (2) whether the contractor, the contractor's domestic 
        parent company, or any other domestic subsidiaries of the 
        domestic parent company are doing business, or own a foreign 
        subsidiary that is doing business, or has done business since 
        the date of the enactment of this Act, with a state sponsor of 
        terrorism or a foreign terrorist organization.
    (b) Information Sharing.--The head of each executive agency shall 
regularly transmit information disclosed pursuant to subsection (a) to 
the Administrator for Federal Procurement Policy.
    (c) Database.--The Office of Federal Procurement Policy Act (41 
U.S.C. 403 et seq.) is amended by adding at the end the following new 
section:

``SEC. 43. DATABASE OF CORPORATE EXPATRIATION TRANSACTIONS AND 
              TRANSACTIONS WITH STATE SPONSORS OF TERRORISM OR FOREIGN 
              TERRORIST ORGANIZATIONS.

    ``(a) Database.--The Administrator for Federal Procurement Policy 
shall establish and maintain a database listing each contractor that, 
after the date of the enactment of the Restoring Integrity in 
Contracting Act of 2007--
            ``(1) has entered into a corporate expatriation 
        transaction, or has a parent company that has entered into such 
        a transaction; or
            ``(2) has done business with, or owns a foreign subsidiary 
        that has done business with, a state sponsor of terrorism or a 
        foreign terrorist organization, or has a domestic parent 
        company that has done, or has any other domestic subsidiaries 
        that have done, such business.
    ``(b) Collection of Information.--The Administrator shall establish 
and maintain the database under subsection (a) using information 
compiled from certifications submitted by contractors pursuant to 
section 5(a) of the Restoring Integrity in Contracting Act of 2007.
    ``(c) Corporate Expatriation Transaction Defined.--
            ``(1) In general.--In this section, the term `corporate 
        expatriation transaction'--
                    ``(A) means any transaction in which--
                            ``(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
                    ``(B) includes any transaction in which--
                            ``(i) a foreign corporation acquires, as a 
                        result of such transaction, directly or 
                        indirectly properties constituting a trade or 
                        business of a domestic partnership; 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 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).
            ``(2) Lower stock ownership threshold for certain acquiring 
        corporations.--Clause (ii) of paragraph (1)(A) shall be applied 
        by substituting `50 percent' for `80 percent' with respect to 
        any foreign corporation if--
                    ``(A) 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
                    ``(B) the stock of the corporation is publicly 
                traded and the principal market for the public trading 
                of such stock is in the United States.
            ``(3) Rules for determining ownership and scope of 
        transaction.--For purposes of this subsection--
                    ``(A) a series of related transactions shall be 
                treated as 1 transaction; and
                    ``(B) stock held by members of the expanded 
                affiliated group which includes the acquiring 
                corporation shall not be taken into account in 
                determining ownership.
    ``(d) Other Definitions.--In this section:
            ``(1) Domestic.--The term `domestic' means created or 
        organized in the United States or under the law of the United 
        States or of any State.
            ``(2) 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.
            ``(3) Foreign subsidiary.--The term `foreign subsidiary' 
        means any foreign entity owned or controlled (directly or 
        indirectly) by a potential contractor.
            ``(4) 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 (50 U.S.C. App. 2405(j)), section 
        620A of the Foreign Assistance Act of 1961 (22 U.S.C. 2371), 
        section 40 of the Arms Export Control Act (22 U.S.C. 2780), or 
        any other provision of law, to be a government that has 
        provided support for acts of international terrorism.
            ``(5) 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).''.
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