II

106TH CONGRESS

1ST SESSION S. 1169

To require that certain multilateral development banks and other lending

institutions implement independent third-party procurement monitoring,

and for other purposes.

IN THE SENATE OF THE UNITED STATES

MAY 27, 1999

Mr. MCCAIN (for himself, Mr. COCHRAN, and Mr. BURNS) introduced the following bill; which was read twice and referred to the Committee on Foreign Relations

A BILL

To require that certain multilateral development banks and

other lending institutions implement independent thirdparty procurement monitoring, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Fair Competition in

5 Foreign Commerce Act of 1999’’.

6 SEC. 2. FINDINGS AND STATEMENT OF PURPOSE.

7 (a) FINDINGS.—Congress finds that—

8 (1) The United States makes substantial con9 tributions and provides significant funding for major
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1 international development projects through the

2 International Bank for Reconstruction and Develop3 ment, the International Development Association,

4 the International Finance Corporation, the Inter5 American Development Bank, the International

6 Monetary Fund, the Asian Development Bank, the

7 Inter-American Investment Corporation, the North

8 American Development Bank, the African Develop9 ment Fund, and other multilateral lending institu10 tions.

11 (2) These international development projects

12 are often plagued with fraud, corruption, waste, in13 efficiency, and misuse of funding.

14 (3) Fraud, corruption, waste, inefficiency, mis15 use, and abuse are major impediments to competi16 tion in foreign commerce throughout the world.

17 (4) Identifying these impediments after they

18 occur is inadequate and meaningless.

19 (5) Detection of impediments before they occur

20 helps to ensure that valuable United States re21 sources contributed to important international devel22 opment projects are used appropriately.

23 (6) Independent third-party procurement moni24 toring is an important tool for detecting and pre25 venting such impediments.
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1 (7) Third-party procurement monitoring in2 cludes evaluations of each stage of the procurement

3 process and assures the openness and transparency

4 of the process.

5 (8) Improving transparency and openness in the

6 procurement process helps to minimize fraud, cor7 ruption, waste, inefficiency, and other misuse of

8 funding, and promotes competition, thereby

9 strengthening international trade and foreign com10 merce.

11 (b) PURPOSE.—The purpose of this Act is to build

12 on the excellent progress associated with the Organization

13 on Economic Development and Cooperation Agreement on

14 Bribery and Corruption, by requiring the use of inde15 pendent third-party procurement monitoring as part of the

16 United States participation in multilateral development

17 banks and other lending institutions and in the disburse18 ment of nonhumanitarian foreign assistance funds.

19 SEC. 3. DEFINITIONS.

20 (a) DEFINITIONS.—In this Act:

21 (1) APPROPRIATE COMMITTEES.—The term

22 ‘‘appropriate committees’’ means the Committee on

23 Commerce, Science, and Technology of the Senate

24 and the Committee on Commerce of the House of

25 Representatives.
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1 (2) INDEPENDENT THIRD-PARTY PROCURE2 MENT MONITORING.—The term ‘‘independent third3 party procurement monitoring’’ means a program

4 to—

5 (A) eliminate bias,

6 (B) promote transparency and open com7 petition, and

8 (C) minimize fraud, corruption, waste, in9 efficiency, and other misuse of funds,

10 in international procurement through independent

11 evaluation of the technical, financial, economic, and

12 legal aspects of the procurement process.

13 (3) INDEPENDENT.—The term ‘‘independent’’

14 means that the person monitoring the procurement

15 process does not render any paid services to private

16 industry and is neither owned nor controlled by any

17 government or government agency.

18 (4) EACH STAGE OF PROCUREMENT.—The term

19 ‘‘each stage of procurement’’ means the development

20 and issuance of technical specifications, bidding doc21 uments, evaluation reports, contract preparation,

22 and the delivery of goods and services.

23 (5) MULTILATERAL DEVELOPMENT BANKS AND

24 OTHER LENDING INSTITUTIONS.—The term ‘‘multi25 lateral development banks and other lending institu-
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1 tions’’ means the International Bank for Recon2 struction and Development, the International Devel3 opment Association, the International Finance Cor4 poration, the Inter-American Development Bank, the

5 International Monetary Fund, the Asian Develop6 ment Bank, the Inter-American Investment Corpora7 tion, the North American Development Bank, and

8 the African Development Fund.

9 SEC. 4. REQUIREMENTS FOR FAIR COMPETITION IN FOR10 EIGN COMMERCE.

11 (a) IN GENERAL.—Not later than 180 days after the

12 date of enactment of this Act, the Secretary of the Treas13 ury shall transmit to the President and to appropriate

14 committees of Congress a strategic plan for requiring the

15 use of independent third-party procurement monitoring

16 and other international procurement reforms relating to

17 the United States participation in multilateral develop18 ment banks and other lending institutions.

19 (b) STRATEGIC PLAN.—The strategic plan shall in20 clude an instruction by the Secretary of the Treasury to

21 the United States Executive Director of each multilateral

22 development bank and lending institution to use the voice

23 and vote of the United States to oppose the use of funds

24 appropriated or made available by the United States for

25 any non-humanitarian assistance, until—
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1 (1) the recipient international financial institu2 tion has adopted an anticorruption plan that re3 quires the use of independent third-party procure4 ment monitoring services and ensures openness and

5 transparency in government procurement; and

6 (2) the recipient country institutes specific

7 strategies for minimizing corruption and maximizing

8 transparency in each stage of the procurement proc9 ess.

10 (c) ANNUAL REPORTS.—Not later than June 29 of

11 each year, the Secretary of the Treasury shall report to

12 Congress on the progress in implementing procurement re13 forms made by each multilateral development bank and

14 lending institution and each country that received assist15 ance from a multilateral development bank or lending in16 stitution during the preceding year.

17 (d) RESTRICTIONS ON ASSISTANCE.—Notwith18 standing any other provision of law, no funds appropriated

19 or made available for nonhumanitarian foreign assistance

20 programs, including the activities of the Agency for Inter21 national Development, may be expended for those pro22 grams unless the recipient country, multilateral develop23 ment bank or lending institution has demonstrated that—
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1 (1) procurement practices are open, trans2 parent, and free of corruption, fraud, inefficiency,

3 and other misuse, and

4 (2) independent third-party procurement moni5 toring has been adopted and is being used by the re6 cipient.

7 SEC. 5. EXCEPTIONS.

8 (a) NATIONAL SECURITY INTEREST.—Section 4 shall

9 not apply with respect to a country if the President deter10 mines with such respect to such country that making

11 funds available is important to the national security inter12 est of the United States. Any such determination shall

13 cease to be effective 6 months after being made unless

14 the President determines that its continuation is impor15 tant to the national security interest of the United States.

16 (b) OTHER EXCEPTIONS.—Section 4 shall not apply

17 with respect to assistance to—

18 (1) meet urgent humanitarian needs (including

19 providing food, medicine, disaster, and refugee re20 lief);

21 (2) facilitate democratic political reform and

22 rule of law activities;

23 (3) create private sector and nongovernmental

24 organizations that are independent of government

25 control; and
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1 (4) facilitate development of a free market eco2 nomic system.

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