[Senate Report 118-314]
[From the U.S. Government Publishing Office]
Calendar No. 734
118th Congress} { Report
SENATE
2d Session } { 118-314
======================================================================
TIME TO CHOOSE ACT OF 2024
__________
R E P O R T
OF THE
COMMITTEE ON HOMELAND SECURITY AND
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
TO ACCOMPANY
S. 3810
TO PROHIBIT CONFLICT OF INTERESTS AMONG CONSULTING
FIRMS THAT SIMULTANEOUSLY CONTRACT WITH THE
GOVERNMENT OF THE PEOPLE'S REPUBLIC OF CHINA AND
THE UNITED STATES GOVERNMENT, AND FOR OTHER PURPOSES
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
December 19 (legislative day, December 16), 2024.--Ordered to be
printed
__________
U.S. GOVERNMENT PUBLISHING OFFICE
WASHINGTON : 2025
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COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
GARY C. PETERS, Michigan, Chairman
THOMAS R. CARPER, Delaware RAND PAUL, Kentucky
MAGGIE HASSAN, New Hampshire RON JOHNSON, Wisconsin
KYRSTEN SINEMA, Arizona JAMES LANKFORD, Oklahoma
JACKY ROSEN, Nevada MITT ROMNEY, Utah
JON OSSOFF, Georgia RICK SCOTT, Florida
RICHARD BLUMENTHAL, Connecticut JOSH HAWLEY, Missouri
ADAM SCHIFF, California ROGER MARSHALL, Kansas
David M. Weinberg, Staff Director
Alan S. Kahn, Chief Counsel
Michelle M. Benecke, Senior Counsel
Tiffany Ann Shujath, U.S. Department of Homeland Security Detailee
William E. Henderson III, Minority Staff Director
Christina N. Salazar, Minority Chief Counsel
Andrew J. Hopkins, Minority Counsel
Kendal B. Tigner, Minority Professional Staff Member
Laura W. Kilbride, Chief Clerk
Calendar No. 734
118th Congress} { Report
SENATE
2d Session } { 118-314
======================================================================
TIME TO CHOOSE ACT OF 2024
_______
December 19 (legislative day, December 16), 2024.--Ordered to be
printed
_______
Mr. Peters, from the Committee on Homeland Security and Governmental
Affairs, submitted the following
R E P O R T
[To accompany S. 3810]
[Including cost estimate of the Congressional Budget Office]
The Committee on Homeland Security and Governmental
Affairs, to which was referred the bill (S. 3810) to prohibit
conflict of interests among consulting firms that
simultaneously contract with the Government of the People's
Republic of China and the United States Government, and for
other purposes, having considered the same, reports favorably
thereon with an amendment in the nature of a substitute and an
amendment to the title and recommends that the bill, as
amended, do pass.
CONTENTS
Page
I. Purpose and Summary..............................................1
II. Background and Need for the Legislation..........................2
III. Legislative History..............................................2
IV. Section-by-Section Analysis of the Bill, as Reported.............3
V. Evaluation of Regulatory Impact..................................5
VI. Congressional Budget Office Cost Estimate........................5
VII. Changes in Existing Law Made by the Bill, as Reported............6
I. Purpose and Summary
S. 3810, the Time to Choose Act of 2024, prohibits federal
agencies from contracting with consulting firms that
simultaneously contract with adversarial foreign governments,
such as China, Russia, Iran, and North Korea.
The bill seeks to prevent conflicts of interest that could
compromise the economic or national security interests of the
United States or bias the support provided by consultants to
federal agencies responsible for protecting and defending the
United States from foreign threats. The legislation authorizes
agency heads to act, including termination and suspension and
debarment, against consulting firms that knowingly conceal or
provide inaccurate information about contracts with foreign
adversaries. It also requires the Federal Acquisition
Regulation be amended to prohibit federal contracts for
consulting services being awarded to an entity if the entity or
any of its subsidiaries or affiliates are determined to be a
contractor of, or are otherwise providing consulting services
to, a covered foreign entity.
II. Background and Need for the Legislation
Reports have found that the Department of Defense and other
federal agencies work with consulting firms that simultaneously
provide services to adversarial governments. This has the
potential to undermine the economic and national security of
the United States by increasing opportunities for sensitive
information to make its way to bad actors. For example, the
Department of Defense has awarded contracts to consulting firms
that have simultaneously provided services to entities directly
tied to the Chinese government and projects counter to U.S.
national security interests, such as on projects for building
artificial islands to position missiles, fighters, and bombers
in the South China Sea and conducting exercises for an
amphibious assault on Taiwan.\1\
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\1\Advising Both Chinese State Companies and the Pentagon, McKinsey
& Co. Comes Under Scrutiny, NBC News (Nov. 13, 2021) (https://
www.nbcnews.com/politics/national-security/
advising-both-chinese-state-companies-pentagon-mckinsey-co-comes-under-
n1283777); How McKinsey Has Helped Raise the Stature of Authoritarian
Governments, New York Times (Dec. 15, 2018) (https://www.nytimes.com/
2018/12/15/world/asia/mckinsey-china-russia.html); McKinsey Faces
Republican Calls for Probe into China `Conflicts', Financial Times
(Oct. 18, 2024) (ft.com/content/34470ab5-aa2b-4802-bfc4-df29efa2aefc);
US Lawmakers Demand Federal Probe into Ties Between China and McKinsey
Consulting Firm, JURISTnews (Oct. 20, 2024) (https://www.jurist.org/
news/2024/10/us-lawmakers-demand-federal-probe-into-ties-between-china-
and-consulting-firm-mckinsey/).
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A 2024 report by the Government Accountability Office
assessed the national security risks posed when contractors
consult for both the U.S. and Chinese governments. The report
found that current acquisition regulations do not specifically
direct agencies to consider if contractors consulting for the
U.S. government also have consulting contracts with China. It
also found that acquisition personnel do not typically collect
information on, assess, or mitigate potential national security
risks posed by these consultants when awarding contracts.\2\
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\2\Government Accountability Office, Federal Contracting: Timely
Actions Needed to Address Risks Posed by Consultants Working for China
(GAO-24-106932) (September 2024).
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The Time to Choose Act of 2024 addresses these findings and
seeks to ensure that companies that carry out taxpayer-funded
projects for the U.S. government are working in the best
interests of the American people.
III. Legislative History
Senator Josh Hawley (R-MO) introduced S. 3810, the Time to
Choose Act of 2024, on February 27, 2024. The bill was referred
to the Committee on Homeland Security and Governmental Affairs.
Senator Rick Scott (R-FL) joined as a cosponsor on May 9, 2024.
Senator Marco Rubio (R-FL) joined as an additional cosponsor on
May 15, 2024.
The Committee considered S. 3810 at a business meeting on
May 15, 2024. At the business meeting, Senator Peters, for
himself and Senator Hawley, offered a substitute amendment to
the bill, as well as a modification to the substitute
amendment. The Peters-Hawley substitute amendment, as modified,
revised required coordination among agencies for waiver
authority, revised penalties to align with existing False
Claims Act requirements, and added a section stipulating that
no additional funding is authorized to be appropriated to carry
out the Act. Senator Peters also offered an amendment to change
the long title of the bill, as well as a modification to the
amendment to correct an error. The amended long title of the
bill is ``A bill to prohibit conflicts of interest among
consulting firms that simultaneously contract with covered
foreign entities and the United States Government, and for
other purposes.''
The Committee adopted the modification to the Peters-Hawley
substitute amendment, and the substitute amendment as modified,
by unanimous consent, with Senators Peters, Carper, Hassan,
Rosen, Blumenthal, Paul, Lankford, Romney, Scott, Hawley, and
Marshall present. The Committee adopted the modification to the
Peters title amendment, and the title amendment as modified, by
unanimous consent, with Senators Peters, Carper, Hassan, Rosen,
Blumenthal, Paul, Lankford, Romney, Scott, Hawley, and Marshall
present. The bill, as amended by the Peters-Hawley substitute
amendment as modified, and the Peters title amendment as
modified, was ordered reported favorably by a roll call of 10
yeas to 1 nay, with Senators Peters, Carper, Hassan, Rosen,
Blumenthal, Lankford, Romney, Scott, Hawley, and Marshall
voting in the affirmative, and Senator Paul voting in the
negative. Senators Sinema, Ossoff, Butler, and Johnson voted
yea by proxy, for the record only.
IV. Section-by-Section Analysis of the Bill, as Reported
Section 1. Short title
Section 1 establishes the short title of the bill as the
``Time to Choose Act of 2024.''
Section 2. Findings
Paragraph (1) finds that the Department of Defense and
other U.S. government agencies regularly award contracts to
firms that are simultaneously providing consulting services to
foreign governments and proxies or affiliates thereof.
Paragraph (2) finds that the provision of such consulting
services to covered foreign entities may support efforts by
certain foreign governments to generate economic and military
power that they can then use to undermine the economic and
national security of the American people.
Paragraph (3) finds that it is a conflict of interest for
consulting firms to simultaneously aid in the efforts of
certain foreign governments to undermine the economic and
national security of the United States while they are
simultaneously contracting with federal agencies responsible
for protecting and defending the United States from foreign
threats.
Paragraph (4) finds that firms should be prevented from
engaging in such a conflict of interest and should instead be
required to choose between aiding the efforts of certain
foreign governments or helping the U.S. government.
Section 3. Prohibition on federal contracting with entities that are
simultaneously aiding in their efforts of covered foreign
entities
Subsection (a) requires the Federal Acquisition Regulatory
Council, not later than one year after the date of the
enactment, to amend the Federal Acquisition Regulation to
require any entity that makes an offer or quotation to provide
consulting services to an executive agency, prior to entering
into a federal contract, to certify that neither it nor any of
its subsidiaries or affiliates hold a consulting contract with
one or more covered foreign entities. It also requires the
Federal Acquisition Regulation be amended to prohibit federal
contracts for consulting services being awarded to an entity if
the entity or any of its subsidiaries or affiliates are
determined to be a contractor of, or are otherwise providing
consulting services to, a covered foreign entity.
Subsection (b) authorizes the head of an executive agency
to waive the conflict of interest restrictions on a case-by-
case basis if the agency head: (1) determines the waiver to be
in the national security interests of the United States, in
consultation with the Secretary of Defense and Secretary of
National Intelligence; (2) determines that no other entity
without a conflict of interest can perform the work for the
federal contract; (3) submits to the Director of the Office of
Management and Budget a notification of such waiver at least
five days prior to issuing the waiver; (4) submits to the
appropriate congressional committees a notification of such
waiver within 30 days in unclassified form and offers a
briefing to those committees; and (5) publishes on the agency's
website a list of names of the covered foreign entities to
which the entity receiving a waiver provides consulting
services, unless the disclosure is deemed to directly harm U.S.
national security interests. Limitations to the waivers
include: no duration longer than 365 days; not more than one
waiver across all executive agencies granted to a single entity
at a given time; and notification requirements regarding
information on the contractor, the covered foreign entities
involved, the nature of the work performed for the covered
foreign entities, justification of the executive agency's need
for providing the waiver, and an acceptable management
oversight plan.
The subsection also provides that an executive agency
granting a waiver shall require the contractor to report
information to the executive agency, including any known human
rights violations, any known religious liberty violations, or
any risks to the U.S. economic or national security identified
by the contractor in the course of the contract.
Section 4. Penalties for false information
Subsection (a) requires that, if an executive agency
determines that a consulting firm knowingly submitted a false
certification or information, on or after the date of
amendments to the Federal Acquisition Regulation under section
3(a), the head of that executive agency must terminate the
contract and consider suspending or debarring the firm from
eligibility for future federal contracts.
Subsection (b) provides that if a consulting firm knowingly
hides or misrepresents one or more contracts with covered
foreign entities or otherwise violates the False Claims Act,
that firm shall be subject to the penalties and corrective
actions under the False Claims Act, including liability for
three times the amount of damages which the U.S. government
sustains.
Section 5. Definitions
Section 5 defines the following terms used in the bill:
``appropriate congressional committees,'' ``consulting
services,'' ``covered foreign entity,'' ``executive agency,''
``false claims act,'' and ``North American industry
classification system's industry group code.''
Section 6. No additional funding
Section 6 stipulates that no additional funds are
authorized to be appropriated for the purpose of carrying out
this Act.
V. Evaluation of Regulatory Impact
Pursuant to the requirements of paragraph 11(b) of rule
XXVI of the Standing Rules of the Senate, the Committee has
considered the regulatory impact of this bill and determined
that the bill will have no regulatory impact within the meaning
of the rules. The Committee agrees with the Congressional
Budget Office's statement that the bill contains no
intergovernmental or private-sector mandates as defined in the
Unfunded Mandates Reform Act (UMRA) and would impose no costs
on state, local, or tribal governments.
VI. Congressional Budget Office Cost Estimate
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
S. 3810 would generally prohibit federal agencies from
contracting with consulting firms that work with the Chinese or
Russian governments or any country that the Department of State
determines supports international terrorism. Waivers could be
available on a case-by-case basis for no more than one year.
Under the bill, penalties for false certifications would
include terminating contracts, debarring entities from future
contracts, and using the False Claims Act (FCA) to collect
damages.
CBO is not aware of any data on the number of contracts the
government has with consulting firms that also work with those
countries. CBO expects that federal agencies would be able to
replace any consulting services provided by such firms with
similar services provided by other companies at a comparable
cost. On that basis, CBO estimates that implementing the ban
could change which companies receive funds from federal
agencies but would not significantly affect total spending by
the federal government on consulting services.
Additionally, CBO expects that agencies would incur some
costs to implement the prohibition. Based on similar
government-wide administrative and reporting efforts, CBO
estimates that implementing the prohibition would cost less
than $500,000 over the 2024-2029 period. Any related spending
would be subject to the availability of appropriated funds.
CBO estimates that the provisions relating to the FCA
would, on net, increase recoveries and civil fines collected by
the federal government because they could lead to additional
claims under the FCA.
Recoveries from FCA cases are recorded as offsetting
receipts, that is, as reductions in direct spending. Civil
fines are recorded as revenues and deposited in the Treasury.
Because CBO expects relatively few cases would result in FCA
claims, CBO estimates that the net decrease in the deficit
would not be significant over the 2024-2034 period.
The CBO staff contact for this estimate is Matthew
Pickford. The estimate was reviewed by H. Samuel Papenfuss,
Deputy Director of Budget Analysis.
Phillip L. Swagel,
Director, Congressional Budget Office.
VII. Changes in Existing Law Made by the Bill, as Reported
This legislation would make no change in existing law,
within the meaning of clauses (a) and (b) of subparagraph 12 of
rule XXVI of the Standing Rules of the Senate, because this
legislation would not repeal or amend any provision of current
law.
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