[Congressional Record Volume 150, Number 61 (Wednesday, May 5, 2004)]
[Senate]
[Pages S4912-S4917]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. COLEMAN (for himself, Mr. Levin, Ms. Collins, and Mr. 
        Reed):
  S. 2383. A bill to amend title 10, United States Code, to require the 
registration of contractors' taxpayer identification numbers in the 
Central Contractor Registry database of the Department of Defense, and 
for other purposes; to the Committee on Armed Services.
  Mr. COLEMAN. Mr. President, I rise today to introduce the Central 
Contractor Registry Act of 2004 whose purpose is to establish a 
centralized contractor database within the Department of Defense and to 
require federal contractors who register in that database to provide 
their taxpayer identification number and their consent to verifying 
that number with the Internal Revenue Service as a condition that must 
precede the awarding of a contract by the Department of Defense. This 
bill will close a $3 billion tax loophole and will help to recover over 
$100 million annually from federal contractors who have not filed 
federal tax returns or who have not paid the taxes they owe the 
government. I am joined by Senators Carl Levin, Susan Collins and Jack 
Reed.
  In a hearing before the Permanent Subcommittee on Investigations, the 
General Accounting Office testified that over 27,000 contractors at the 
Department of Defense owed over $3 billion in unpaid Federal taxes. 
Normally, these taxes could be collected through the Federal Payment 
Levy Program by levying fifteen percent of the contractors' payments. 
In fiscal year 2002, the Financial Management Service should have 
collected over $100 million from tax delinquent Department of Defense 
contractors. However, actual collections for the year were less than

[[Page S4913]]

$500,000. Further, in 2001, the Department of Defense provided the 
Internal Revenue Service with over 26,000 information returns that 
could not be used to determine contractors' tax liability. One of the 
principal reasons for this anemic state of collections and the large 
volume of unusable information returns has been and remains the 
inability of the Department of Defense and the Internal Revenue Service 
to reach an accord on verifying the taxpayer identification numbers of 
the contractors who have registered in the Department of Defenses's 
Central Contractor Registration database.
  Under current law, the Department of Defense's authority to verify 
contractors' taxpayer identification numbers is limited to those 
contractors who have contracts with the Department of Defense and for 
whom the department is required to report miscellaneous income to the 
Internal Revenue Service on a Form 1099 information return. However, 
there are contractors who have registered in the Central Contractor 
Registration for whom the Department of Defense lacks authority to 
verify their taxpayer identification numbers including individuals and 
companies who would like to contract with the federal government and 
contractors who have contracts with agencies and departments other than 
the Department of Defense. On the other hand, current law also allows a 
taxpayer to consent to the verification of their taxpayer 
identification number with the Internal Revenue Service and allows the 
Internal Revenue Service to provide a validated taxpayer identification 
number.
  My bill will resolve the impasse between the Department of Defense 
and the Internal Revenue Service by requesting contractors' consent to 
the validation of their taxpayer identification number as part of the 
registration process. Contractors will not be required to provide their 
consent. But if they do not, they will not be awarded a contract by the 
Department of Defense.
  Further, my bill requires the Department of Defense to warn 
contractors as part of the registration process that if they do not 
provide a valid taxpayer identification number they may be subject to 
backup withholding. This would apply to those contractors who list an 
invalid taxpayer identification number, have a contract with the 
Department of Defense, and will earn miscellaneous income that is 
required to be reported to the Internal Revenue Service.
  I would like to briefly summarize the major provisions of my bill. It 
provides a statutory basis for the Central Contractor Registration and 
renames the database as the Central Contractor Registry. It requires 
that the registry contain contractor's taxpayer identification numbers, 
their consent to verifying their numbers with the Internal Revenue 
Service and for the Internal Revenue Service to provide a corrected 
number if possible. It requires that registrants furnish this 
information as a condition for registration, and requires the 
Department of Defense to warn contractors who fail to provide a valid 
taxpayer identification number that they may be subject to backup 
withholding and requires implementation of backup withholding in cases 
where it is required. It precludes awarding a contract to any 
registrant who has not provided a valid taxpayer identification number 
and excludes from coverage any registrant who is not required to have a 
taxpayer identification number.
  It directs the Secretary of Defense to apply to the Internal Revenue 
Service for inclusion in the Taxpayer Identification Number Matching 
Program and directs the Commissioner of Internal Revenue to provide 
response to the Department of Defense. It directs the Secretary of 
Defense to provide any registrant who is determined to have an invalid 
taxpayer identification number with an opportunity to provide a valid 
number. It further requires that the Central Contractor Registry 
clearly indicate whether a registrant's taxpayer identification number 
is valid, under review, invalid, or not required. Finally, it requires 
that contractors taxpayer identification numbers be treated as 
confidential by federal contract officers who have access to the 
Central Contractor Registry.
  My overall objective in introducing this bill is to ensure that tax 
cheats are not rewarded with federal contracts. If the Department of 
Defense and the Internal Revenue Service do not have accurate and 
reliable taxpayer identification numbers then we will not be able to 
stop this practice. My bill takes the necessary first step toward 
ensuring that the Department of Defense and the Internal Revenue 
Service have valid taxpayer identification numbers in the Central 
Contractor Registry database.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the  
Record, as follows:

                                S. 2383

       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 ``Central Contractor Registry 
     Act of 2004''.

     SEC. 2. CENTRAL CONTRACTOR REGISTRY DATABASE.

       (a) Authority.--Chapter 137 of title 10, United States 
     Code, is amended by inserting after section 2302d the 
     following new section:

     ``Sec. 2302e. Central contractor registry

       ``(a) Establishment.--The Secretary of Defense shall 
     maintain a centralized, electronic database for the 
     registration of sources of property and services who seek to 
     participate in contracts and other procurements entered into 
     by the various procurement officials of the United States. 
     The database shall be known as the `Central Contractor 
     Registry'.
       ``(b) Taxpayer Information.--(1) The Central Contractor 
     Registry shall include the following tax-related information 
     for each source registered in that registry:
       ``(A) Each of that source's taxpayer identification 
     numbers.
       ``(B) The source's authorization for the Secretary of 
     Defense to obtain from the Commissioner of Internal Revenue--
       ``(i) verification of the validity of each of that source's 
     taxpayer identification numbers; and
       ``(ii) in the case of any of such source's registered 
     taxpayer identification numbers that is determined invalid, 
     the correct taxpayer identification number (if any).
       ``(2)(A) The Secretary of Defense shall require each 
     source, as a condition for registration in the Central 
     Contractor Registry, to provide the Secretary with the 
     information and authorization described in paragraph (1).
       ``(B) The Secretary shall--
       ``(i) warn each source seeking to register in the Central 
     Contractor Registry that the source may be subject to backup 
     for a failure to submit each such number to the Secretary; 
     and
       ``(ii) take the actions necessary to initiate the backup 
     withholding in the case of a registrant who fails to register 
     each taxpayer identification number valid for the registrant 
     and is subject to the backup withholding requirement.
       ``(3) A source registered in the Central Contractor 
     Registry is not eligible for a contract entered into under 
     this chapter or title III of the Federal Property and 
     Administrative Services Act of 1949 (41 U.S.C. 251 et seq.) 
     if that source--
       ``(A) has failed to provide the authorization described in 
     paragraph (1)(B);
       ``(B) has failed to register in that registry all valid 
     taxpayer identification numbers for that source; or
       ``(C) has registered in that registry an invalid taxpayer 
     identification number and fails to correct that registration.
       ``(4)(A) The Secretary of Defense shall make arrangements 
     with the Commissioner of Internal Revenue for each head of an 
     agency within the Department of Defense to participate in the 
     taxpayer identification number matching program of the 
     Internal Revenue Service.
       ``(B) The Commissioner of Internal Revenue shall cooperate 
     with the Secretary of Defense to determine the validity of 
     taxpayer identification numbers registered in the Central 
     Contractor Registry. As part of the cooperation, the 
     Commissioner shall promptly respond to a request of the 
     Secretary of Defense or the head of an agency within the 
     Department of Defense for electronic validation of a taxpayer 
     identification number for a registrant by notifying the 
     Secretary or head of an agency, respectively, of--
       ``(i) the validity of that number; and
       ``(ii) in the case of an invalid taxpayer identification 
     number, any correct taxpayer identification number for such 
     registrant that the Commissioner can promptly and reasonably 
     determine.
       ``(C) The Secretary shall transmit to a registrant a 
     notification of each of the registrant's taxpayer 
     identification numbers, if any, that is determined invalid by 
     the Commissioner of Internal Revenue and shall provide the 
     registrant with an opportunity to substitute a valid taxpayer 
     identification number.
       ``(5) The Secretary of Defense shall require that, at the 
     place in the Central Contractor Registry where the taxpayer 
     identification numbers of a registrant are to be displayed, 
     the display bear (as applicable)--
       ``(A) for each taxpayer identification number of that 
     registrant, an indicator of whether such number has been 
     determined valid, is

[[Page S4914]]

     being reviewed for validity, or has been determined invalid; 
     or
       ``(B) an indicator that no taxpayer identification number 
     is required for the registrant.
       ``(6) This subsection applies to each source who registers 
     any information regarding that source in the Central 
     Contractor Registry after December 31, 2004, except that 
     paragraphs (1), (2), and (3) do not apply to a source who 
     establishes to the satisfaction of the Secretary of Defense 
     that such source is not required to have a taxpayer 
     identification number.
       ``(c) Confidentiality of Information.--The Secretary of 
     Defense shall ensure that taxpayer identification numbers in 
     the Central Contractor Registry are not made available to the 
     public. The Secretary shall prescribe a requirement for 
     procurement officials of the United States having access to 
     such numbers in that registry to maintain the confidentiality 
     of those numbers.''.
       (b) Clerical Amendment.--The table of sections at the 
     beginning of such chapter is amended by inserting after the 
     item relating to section 2302d the following new item:

``2302e. Central Contractor Registry.''.

  Mr. LEVIN. Mr. President, I rise today to join my colleagues, 
Senators Norm Coleman, Susan Collins and Jack Reed, in introducing the 
Central Contractor Registry Act of 2004. The purpose of this bipartisan 
bill is to strengthen the ability of the Federal Government to stop tax 
cheats from obtaining Federal contracts or use a portion of their 
contract payments to repay their tax debts.
  In February, the Permanent Subcommittee on Investigations, on which 
Senator Coleman and I sit, held a hearing on a report by the General 
Accounting Office which disclosed that over 27,000 contractors at the 
Department of Defense owe $3 billion in unpaid taxes, mostly from 
failing to transmit payroll taxes to the IRS. Think about that for a 
minute--27,000 DOD contractors--more than one in every ten DOD 
contractors--had outstanding tax debts at the same time they were 
holding out their hands for taxpayer dollars.
  Allowing tax cheats to bid on federal contracts is a disservice to 
all of the honest taxpayers out there who manage to meet their tax 
obligations. It is a disservice to all of the military men and women 
who put their lives on the line for us every day. It is a disservice to 
all of the honest companies that compete for the same DOD contracts, 
since companies that do not pay their taxes have lower costs and a 
competitive advantage over the companies that do.
  Under current law, DOD has an obligation to identify any DOD 
contractor with unpaid taxes, to withhold up to 15 percent of their 
contract payments, and to forward that money to the IRS to be applied 
to the contractor's tax debt. The official title of the DOD program to 
carry out this obligation is the Federal Payment Levy Program, also 
sometimes referred to as the DOD tax levy program.
  The first step in the program is for DOD to identify tax delinquent 
DOD contractors who are scheduled to get a contract payment in the near 
future. To identify these contractors, DOD participates in a computer 
matching program administered by the Treasury Department that cross-
checks DOD lists of upcoming contractor payments with IRS lists of 
delinquent taxpayers. If a match occurs, DOD is supposed to withhold 
money from the identified contractor's upcoming contract payments.
  The problem is that the DOD-IRS computer matching program has so far 
produced relatively few matches. In 2003, for example, DOD collected 
only about $680,000 of back taxes through its tax levy program instead 
of the $100 million that GAO estimates should have been collected. That 
means DOD collected less than 1 percent of the back taxes it should 
have.
  On major impediment to the computer matching program has been that it 
depends upon DOD's providing the correct taxpayer identification number 
or TIN for each of its contractors, when many DOD contractors have 
either failed to submit a TIN or supplied an incorrect number.
  When a TIN is incorrect or missing, the computer matching program is 
unable to determine whether the relevant DOD contractor is on the IRS 
list of delinquent taxpayers. Data indicates that, in one year, DOD 
sent the IRS over 26,000 invalid TINs that could not be used.
  To increase the efficiency of the computer matching program, DOD and 
the IRS have tried to improve the accuracy of the TINs in DOD's 
contractor data. The IRS has, for example, set up a computer-based TIN 
validation system that can electronically verify a TIN number in 
seconds. This electronic system is available for use by DOD and all 
other Federal agencies. Unfortunately, the IRS has also interpreted 
certain tax laws as prohibiting DOD from obtaining TIN validations for 
many types of contracts. In addition, in the case of TIN numbers with 
clerical errors, the IRS has interpreted current taxpayer 
confidentiality laws as prohibiting it from supplying DOD with a 
corrected number.
  The bill we are introducing today would eliminate this bureaucratic 
red tape and significantly increase the effectiveness of the tax levy 
program by increasing the accuracy of the TINs used by DOD.
  The bill would strengthen TIN accuracy by focusing primarily on the 
TINs in the Central Contractor Registry, a government-wide database of 
persons wishing to bid on federal contracts. This registry is currently 
administered by DOD, and current Federal regulations require potential 
bidders to self-register in the system by supplying specified 
information. As part of the process, registrants are currently supposed 
to supply a TIN, but many either do not or supply an incorrect number. 
The bill would, for the first time, impose a legal requirement on 
registrants to supply a valid TIN and would also bar contracts from 
being awarded to contractors who fail to supply a valid TIN.
  In addition, the bill would require registrants to authorize DOD to 
validate their TINs with the IRS and obtain a corrected TIN from the 
IRS, if needed and possible. This requirement would apply to all 
registrants in the Central Contractor Registry, no matter what type of 
contract is involved and whether the contract is with DOD or another 
Federal agency. It would also allow the IRS to supply corrected TINs 
where it can promptly and reasonably do so.
  If, by chance, a registrant managed to obtain a DOD contract without 
having supplied a valid TIN, the bill would direct DOD to withhold a 
portion of their contract payments to satisfy their tax debt as 
specified under existing law. Although this backup holding requirement 
has been on the books for years, DOD has not implemented it. The bill 
would require DOD to start doing so.
  Finally, the bill would provide a number of protections. It would 
require DOD and other federal procurement officials not to make TIN 
numbers available to the public, so that this information is kept 
confidential within the procurement community using the Central 
Contractor Registry. It would explicitly exempt from the TIN 
requirements any contractor, such as a foreign business, not required 
by U.S. law to have a taxpayer identification number. The bill would 
also require DOD to show in the registry database whether a particular 
TIN has been validated, is awaiting validation, has been found invalid, 
or is not required, so that procurement officials using the database 
will know the status of a contractor's TIN. If the IRS were to 
determine that a particular TIN was invalid, the bill would require DOD 
to give the relevant contractor an opportunity to correct the number. 
DOD would also be required to warn all registrants in the Central 
Contractor Registry of the possibility of backup withholding in the 
event they fail to provide a valid TIN.
  It is common business sense for the Federal Government to require 
contractors who want to be paid with Federal taxpayer dollars to allow 
the United States to determine whether they owe any taxes and, if so, 
to offset a portion of their contract payments to reduce their tax 
debts. To accomplish that objective, the Federal Government has to do a 
better job in identifying federal contractors with unpaid taxes. Our 
bill, by improving the accuracy of taxpayer identification numbers in 
the Central Contractor Registry, will strengthen DOD's ability to 
identify tax delinquent contractors and either deny them new contracts 
or reduce their tax debts.
  I hope all my colleagues will join us in supporting this 
legislation's enactment during this Congress.
                                 ______
                                 
      By Mr. BOND (for himself, Ms. Snowe, and Mr. Kennedy):

[[Page S4915]]

  S. 2384. A bill to amend the Small Business Act to permit business 
concerns that are owned by venture capital operating companies or 
pension plans to participate in the Small Business Innovation Research 
Program; to the Committee on Small Business and Entrepreneurship.
  Mr. BOND. Mr. President, the United States biotechnology industry is 
the world leader in innovation. This is due, in large part, to the 
Federal Government's partnership with the private sector to foster 
growth and commercialization in the hope that one day we will uncover a 
cure for unmet medical needs such as cystic fibrosis, heart disease, 
various cancers, multiple sclerosis, and AIDS.
  However, the industry was dealt a major set-back when the Small 
Business Administration (SBA) determined that venture-backed 
biotechnology companies can no longer participate in the Small Business 
Innovation Research (SBIR) program. Until recently, the SBIR program 
was an example of a highly successful Federal initiative to encourage 
economic growth and innovation in the biotechnology industry by funding 
the critical start-up and development stages of a company.
  Traditionally, to qualify for an SBIR grant a small-business 
applicant had to meet two requirements; one, that the company have less 
than 500 employees; and two, that the business be 51 percent owned by 
one or more individuals. Recently, however, the SBA determined that the 
term ``individuals'' only means natural persons, whereas for the past 
20 years the term ``individual'' has included venture-capital 
companies. As a result, biotech companies backed by venture-capital 
funding in Missouri and throughout our Nation, who are on the cutting 
edge of science, can no longer participate in the program.
  The biotech industry is like no other in the world because it takes 
such a long span of time and intense capital expenditures to bring a 
successful product to market. In fact, according to a recent study 
completed by the Tufts Center for the Study of Drug Development, it 
takes roughly 10-15 years and $800 million dollars for a company to 
bring just one product to market. As you can imagine, the industry's 
entrepreneurs are seeking financial assistance wherever they can find 
it.
  For the past 20 years, the SBIR program has been a catalyst for 
developing our Nation's most successful biotechnology companies. In 
addition to these important government grants, venture-capital funding 
plays a vital role in the financial support of these same companies. 
The strength of our biotechnology industry is a direct result of 
government grants and venture-capital working together.
  However, some have argued that a biotech firm with a majority of 
venture-capital backing is a large business. This is simply a bogus 
conclusion. Venture-capital firms solely invest in biotech start-ups 
for the possibility of a future innovation and financial return and 
generally do not seek to take control over the management functions or 
day-to-day operations of the company. Venture-capital firms that seek 
to invest in small biotech businesses do not, simply by their 
investment, turn a small business into a large business. These are 
legitimate, small, start-up businesses. Let's not punish them.
  Instead, we must work together to avoid stifling innovation. Let me 
be clear. Our impact today will foster cures and medicines tomorrow 
that were once thought to be inconceivable. However, the industry 
cannot do it alone. We must nurture biotechnology and help the industry 
grow for the future of our economy and for our well-being.
  This bill that I am introducing today will do just that. It will 
ensure that the biotechnology industry has access to SBIR grants, as it 
has had for 20 years. It will level the playing field to ensure that 
SBIR grants are given to small businesses based on fruitful science and 
nothing else. This is still a young and fragile industry, and we are on 
the cusp of great scientific advances. However, there will be profound 
consequences if biotechnology companies continue to be excluded from 
the SBIR program.
  I ask unanimous consent that the full text of the bill be printed in 
the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2384

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

     SECTION 1. SBIR AWARDS TO BUSINESS CONCERNS OWNED BY VENTURE 
                   CAPITAL OPERATING COMPANIES OR EMPLOYEE BENEFIT 
                   OR PENSION PLANS.

       (a) In General.--Section 9(f) of the Small Business Act (15 
     U.S.C. 638(f)) is amended by adding at the end the following:
       ``(4) Eligibility.--A business concern shall not be 
     prevented from participating in the Small Business Innovation 
     Research Program solely because such business concern is 
     owned in part by--
       ``(A) a venture capital operating company that is managed 
     and controlled by 1 or more United States citizens or 
     permanent resident aliens; or
       ``(B) an employee benefit or pension plan.''.
       (b) Rulemaking Authority.--Not later than 180 days after 
     the date of enactment of this Act, the Administrator of the 
     Small Business Administration shall issue regulations to--
       (1) carry out the amendment made by subsection (a);
       (2) ensure that a Small Business Innovation Research award 
     is not given to a business concern that is majority owned 
     by--
       (A) another business concern that is ineligible to 
     participate in the Small Business Innovation Research 
     Program; or
       (B) a venture capital operating company or an employee 
     benefit or pension plan that is the alter ego, 
     instrumentality, or identity of another business concern that 
     is ineligible to participate in the Small Business Innovation 
     Research Program.
      By Mr. BINGAMAN:
  S. 2385. A bill to designate the United States courthouse at South 
Federal Place in Santa Fe, New Mexico, as the ``Santiago E. Campos 
United States Courthouse''; to the Committee on Environment and Public 
Works.
  Mr. BINGAMAN. Mr. President, I rise today with my colleague Senator 
Domenici to introduce a bill to designate the United States Courthouse 
in Santa Fe, NM as the ``Honorable Santiago E. Campos United States 
Courthouse.'' Santiago Campos was appointed to the Federal Bench in 
1978 by President Jimmy Carter and was the first Hispanic Federal judge 
in New Mexico. He held the title of Chief U.S. District Judge from 
February 5, 1987 to December 31, 1989 and took senior status in 1992.
  Judge Campos was a dedicated and passionate public servant who spent 
most of his life committed to working for the people of New Mexico and 
our Nation. He served as a seaman first class in the United States Navy 
from 1944 to 1946, as the Assistant Attorney General and then First 
Assistant Attorney General of New Mexico from 1954 to 1957, and as a 
district court judge from 1971 to 1978 in the First Judicial District 
in the state of New Mexico. He was the prime mover in reestablishing 
Federal court judicial activity in Santa Fe and had his chambers in the 
courthouse there for over 22 years. For his dedication to the State, 
Judge Campos received distinguished achievement awards in 1993 from 
both the State Bar of New Mexico and the University of New Mexico.
  Sadly, Judge Campos passed away January 20, 2001 after a long battle 
with cancer. Judge Campos was an extraordinary jurist and served as a 
role model and mentor to others in New Mexico. He was admired and 
respected by all that knew him. I believe that it would be an 
appropriate tribute to Judge Campos to have the courthouse in Santa Fe 
bear his name.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2385

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

     SECTION 1. DESIGNATION OF SANTIAGO E. CAMPOS UNITED STATES 
                   COURTHOUSE.

       The United States courthouse at South Federal Place in 
     Santa Fe, New Mexico, shall be known and designated as the 
     ``Santiago E. Campos United States Courthouse''.

     SEC. 2. REFERENCES.

       Any reference in a law, map, regulation, document, paper, 
     or other record of the United States to the United States 
     courthouse referred to in section 1 shall be deemed to be a 
     reference to the ``Santiago E. Campos United States 
     Courthouse''.
                                 ______
                                 
      By Mr. CONRAD (for himself and Mr. Dorgan):

[[Page S4916]]

  S. 2387. A bill to amend the Water Resources Development Act of 1999 
to direct the Secretary of the Army to provide assistance to design and 
construct a project to provide a continued safe and reliable municipal 
water supply system for Devils Lake, North Dakota; to the Committee on 
Environment and Public Works.
  Mr. CONRAD. Mr. President, I rise today to introduce legislation to 
authorize the U.S. Army Corps of Engineers to construct a new municipal 
water supply system for the city of Devils Lake, ND. This project is 
very important to the reliability of the water supply for the residents 
of Devils Lake and is needed to mitigate long-term consequences from 
the rising flood waters of Devils Lake.
  As many of my colleagues know, the Devils Lake region has been 
plagued by a flooding disaster since 1993. During that time, Devils 
Lake, a closed basin lake, has risen 25 feet, consuming land, 
destroying homes, and impacting vital infrastructure. As a result of 
this disaster, the city of Devils Lake faces a significant risk of 
losing its water supply. Currently, six miles or approximately one-
third of the city's 40-year-old water transmission line is covered by 
the rising waters of Devils Lake. The submerged section of the water 
line includes numerous gate valves, air relief valves, and blow-off 
discharges.
  All of the water for the city's residents and businesses must flow 
through this single transmission line. It is also the only link between 
the water source and the city's water distribution system. Since the 
transmission line is operated under relatively low pressures and is 
under considerable depths of water, a minor leak could cause 
significant problems. If a failure in the line were to occur, it would 
be almost impossible to identify the leak and make necessary repairs, 
and the city would be left without a water supply.
  The city is in the process of accessing a new water source due both 
to the threat of a transmission line failure and the fact that its 
current water source exceeds the new arsenic standard that will take 
effect in 2006. The city has worked closely with the North Dakota State 
Water Commission in identifying a new water source that will not be 
affected by the rising flood waters and will provide the city with 
adequate water to meet its current and future needs.
  The bill I am introducing today will authorize the Corps to construct 
a new water supply system for the city. I believe the Federal 
Government has a responsibility to assist communities mitigate the 
adverse consequences resulting from this ongoing flooding disaster. In 
my view, the Corps should be responsible for addressing the unintended 
consequences of this flood and mitigate its long-term consequences. 
This bill will help the Federal Government live up to its 
responsibility and ensure that the residents of Devils Lake have a safe 
and reliable water supply. I urge my colleagues to review this 
legislation quickly so we can pass it this year.
                                 ______
                                 
      By Mr. ENSIGN (for himself, Mr. Miller, Mr. Smith, Mr. Graham of 
        South Carolina, Mr. Sessions, Mr. Kyl, Mr. Brownback, Mr. 
        Thomas, Mr. Burns, Mr. Lott, Mr. Coleman, Mr. Santorum, Mr. 
        Cornyn, Mr. Craig, and Mr. Allard):
  S. 2389. A bill to require the withholding of United States 
contributions to the United Nations until the President certifies that 
the United Nations is cooperating in the investigation of the United 
Nations Oil-for-Food Program; to the Committee on Foreign Relations.
  Mr. ENSIGN. Mr. President, I rise today to introduce legislation in 
the hopes that it will correct a grave injustice committed against the 
people of Iraq as well as the honest and law-abiding citizens of the 
world community.
  We now believe that Saddam Hussein, corrupt U.N. officials, and 
corrupt well-connected countries were the real benefactors of the Oil-
for-Food Program. Their benefits came from illegal oil shipments, 
financial transactions, kickbacks, and surcharges and allowed Saddam 
Hussein to build up his armed forces and live in the lap of luxury.
  The evidence in this far-reaching scandal tells an unbelievable 
story. In January of this year, the Iraqi Governing Council (IGC) 
released a list of 270 former government officials, businessmen, 
political parties, and foreign cronies of Hussein from more than 46 
countries suspected of profiting from illegal oil sales that were part 
of the U.N.'s Oil-for-Food Program.
  Our own U.S. General Accounting Office estimates that Saddam Hussein 
siphoned off $4.4 billion through oil sale surcharges. Saddam Hussein 
also demanded kickbacks on the humanitarian relief side from suppliers 
which amounted to 10-20 percent on many contracts.
  Saddam used this revenue to rebuild Iraq's military capabilities, to 
maintain lavish palaces, buy loyalty, oppress his people and 
financially support terrorism. And as Claude Hankes-Drielsma, an IGC 
consultant investigating the scandal testified, the secret payments 
``provided Saddam Hussein and his corrupt regime with a convenient 
vehicle through which he bought support internationally by bribing 
political parties, companies and journalists . . . This secured the 
cooperation and support of countries that included members of the 
Security Council of the United Nations.''
  The United Nations should be embarrassed.
  What resulted from the goodwill gesture was international scandal, 
corruption at the highest levels, and suffering Iraqi citizens. Not 
exactly a model U.N. program.
  Contrary to its protestations, the United Nations Secretariat had a 
critical role in the implementation and management of the program. It 
kept the contract records. It controlled the bank accounts and was the 
only entity allowed to release Saddam Hussein's oil earnings. And it 
arranged for the audits. As Secretary General Kofi Annan noted, ``under 
the program, the [U.N.] Secretary General was required to supervise the 
sale of Iraqi oil, and to monitor the spending of the proceeds on 
specific goods and services for the benefit of the Iraqi people.''
  Well, he did a lousy job.
  Tasked by the international community to deny Saddam Hussein the 
ability to rebuild his military apparatus while providing humanitarian 
needs, the United Nations allowed the corrupt to become richer and 
innocent Iraqis to be oppressed.
  Today we have a chance to rectify that injustice. We must demand that 
the United Nations cooperate completely with efforts to extrapolate the 
truth from this scandal and punish the guilty. We know that the Volker 
panel does not have subpoena power.
  And we've now learned that officials acting on behalf of Benon Sevan, 
the Executive Director of the Oil-for-Food Program, who is personally 
implicated in the scandal, are asking contractors not to release 
documents relating to the program to congressional investigators 
without getting U.N. authorization. An April 2, 2004, U.N. letter to a 
Swiss firm Cotecna reminded the firm that according to its contract all 
documents: ``shall be property of the United Nations, shall be treated 
as confidential and shall be delivered only to United Nations 
authorized officials.'' Cotecna, was in charge of inspecting the 
humanitarian goods shipped to Iraq under Oil-for-Food. It had Kofi 
Annan's son Kojo on its payroll until the month it won its U.N. 
contract. And an April 14 letter reminded a Dutch company called 
Saybolt of its confidentiality agreements with the U.N., demanding 
``that Saybolt address any further requests for documentation or 
information concerning these matters to us.'' Saybolt was in charge of 
making sure oil invoices matched shipments.
  The United Nations should be more interested in bringing the truth to 
light then trying to protect its tattered reputation and its corrupt 
officials.
  The legislation I am introducing today will hold the United Nations' 
feet to the fire on this scandal. It calls for transparency and 
accountability. Under this bill, the United Nations must allow GAO and 
law enforcement agencies access to its Oil-for-Food records. U.N. 
officials must waive their immunity for any crimes committed on United 
States soil and repay their ill-gotten gains.
  If not, 10 percent of our assessed U.N. regular budget contributions 
will be withheld the first year and 20 percent the second year. 
Granted, the withholding of $36 million in the first year is no where 
near the more than $1 billion that the United Nations skimmed

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off the top of Iraqi oil sales for administrative costs or the billions 
that were stolen from the Iraqi people through corruption and 
mismanagement. But the 10 percent withholding worked in the past when 
the 103rd Congress used it to compel the United Nations to create an 
inspector general. And I believe it can work again.
  But we have to make an important choice first. We can do nothing and 
allow the word ``humanitarianism'' to be the new code word for 
corruption scandal from here on out. Or we can stand up and make the 
United Nations rightfully accountable for the corruption that harmed 
innocent Iraqis. The answer is clear. We must act.
  The U.N. is broken. This scandal revealed that the U.N. Security 
Council is unable to do its job when some members are more interested 
in lining their pockets than preserving security. I contend that there 
was no way that the U.S. could get France and Russia to enforce 
Security Council resolutions on Iraq and go to war when so many of 
their politically connected individuals, companies, and institutions 
received Iraqi oil contracts. Victory brought their corruption to 
light. And I am deeply worried that the ability of the United Nations 
to convey ``legitimacy'' to the new Iraqi government and assist in 
postwar Iraq is hampered by its history of corruption and mismanagement 
in the Oil-for-Food program.
  The U.N. needs to come clean and start over. The first step toward 
doing that is to accept the terms and conditions of the Oil-for-Food 
Accountability Act.

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