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[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4220 Introduced in House (IH)]

103d CONGRESS
  2d Session
                                H. R. 4220

To amend the National School Lunch Act to protect school districts and 
   the Department of Agriculture from anticompetitive activities of 
  suppliers that sell commodities to schools that participate in the 
 school lunch program, the school breakfast program, the special milk 
  program, and the summer food service program for children, and for 
                            other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             April 14, 1994

Mr. Goodling (for himself, Mr. Cunningham, Mr. Fawell, and Mr. McKeon) 
 introduced the following bill; which was referred to the Committee on 
                          Education and Labor

_______________________________________________________________________

                                 A BILL

 
To amend the National School Lunch Act to protect school districts and 
   the Department of Agriculture from anti-competitive activities of 
  suppliers that sell commodities to schools that participate in the 
 school lunch program, the school breakfast program, the special milk 
  program, and the summer food service program for children, and for 
                            other purposes.

    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 ``Child Nutrition Protection Act of 
1994''.

SEC. 2. FINDINGS.

    The Congress finds the following:
            (1) In recent years, there has been a substantial number of 
        instances of price-fixing, bid-rigging, and other fraudulent 
        activity regarding foods purchased for--
                    (A) the school lunch program established under the 
                National School Lunch Act (42 U.S.C. 1751 et seq.); and
                    (B) the school breakfast program established under 
                section 4 of the Child Nutrition Act of 1966 (42 U.S.C. 
                1773).
            (2) In 1986, President Reagan issued Executive Order 12549 
        which was intended to curb fraud, waste, and abuse in Federal 
        programs, increase accountability, and ensure consistency among 
        agency regulations concerning debarment and suspension of 
        participants in Federal programs.
            (3) During the past several years, the Antitrust Division 
        of the Department of Justice has filed over 95 criminal cases 
        against companies and individuals accused of bid-rigging 
        conspiracies, false statements, mail fraud, price-fixing, and 
        similar activities involving dairy products sold to schools or 
        to the Department of Defense.
            (4) Over 30 grand juries in several States are 
        investigating similar activities.
            (5) 45 corporations and 48 individuals have been convicted 
        by Federal courts of similar activities, and total fines and 
        civil damages of approximately $100,000,000 have been assessed 
        in Federal and State court actions for similar activities.
            (6) Although several companies have violated the 
        regulations of food and nutrition programs of the Department of 
        Agriculture, such companies continue to participate in such 
        programs and monetarily benefit from such programs.
            (7) A report of the Comptroller General of the United 
        States noted that, as of March 1992, the Secretary of 
        Agriculture had neither suspended nor debarred any of the 13 
        dairy companies or 28 individuals convicted of milk contract 
        bid-rigging from participating in the school lunch and school 
        breakfast programs.
            (8) Effective educational and monitoring programs can 
        greatly reduce the incidence of fraud, price-fixing, and bid-
        rigging by companies that sell food products to schools.
            (9) Reducing the incidence of fraud, price-fixing, and bid-
        rigging in connection with the school lunch and school 
        breakfast programs could save school districts, parents, and 
        taxpayers millions of dollars per year.
            (10) The Comptroller General of the United States has noted 
        that bid-rigging awareness training is an effective means of 
        deterring improper collusion and bid-rigging.
            (11) The Comptroller General of the United States in a 
        General Accounting Office report addressed many of the concerns 
        described in this section with respect to bid-rigging in the 
        school lunch program.

SEC. 3. DUTIES OF THE SECRETARY OF AGRICULTURE RELATING TO 
              NONPROCUREMENT DEBARMENT UNDER CERTAIN CHILD NUTRITION 
              PROGRAMS.

    (a) In General.--The National School Lunch Act (42 U.S.C. 1751 et 
seq.) is amended by adding at the end the following new section:

``SEC. 25. DUTIES OF THE SECRETARY RELATING TO NONPROCUREMENT 
              DEBARMENT.

    ``(a) Definitions.--For purposes of this section, the following 
definitions apply:
            ``(1) Appropriate congressional committees.--The term 
        `appropriate congressional committees' means the Committee on 
        Education and Labor of the House of Representatives and the 
        Committee on Agriculture, Nutrition, and Forestry of the 
        Senate.
            ``(2) Child nutrition program.--The term `child nutrition 
        program' means--
                    ``(A) the school lunch program established under 
                this Act;
                    ``(B) the school breakfast program established 
                under section 4 of the Child Nutrition Act of 1966 (42 
                U.S.C. 1773);
                    ``(C) the special milk program established under 
                section 3 of such Act (42 U.S.C. 1772);
                    ``(D) the special nutrition program for women, 
                infants, and children authorized under section 17 of 
                such Act (42 U.S.C. 1786);
                    ``(E) the summer food service program for children 
                established under section 13 of this Act; and
                    ``(F) the child and adult care food program 
                established under section 17 of this Act.
            ``(3) Contractor.--The term `contractor' means a person 
        that contracts with a State, an agency of a State, or a local 
        agency to provide goods or services in conjunction with the 
        participation of a local agency in a child nutrition program.
            ``(4) Local agency.--The term `local agency' means a 
        school, school food authority, child care center, sponsoring 
        organization, or other entity authorized to operate a child 
        nutrition program at the local level.
            ``(5) Nonprocurement debarment.--The term `nonprocurement 
        debarment' means an action to bar a person from programs and 
        activities involving Federal financial and nonfinancial 
        assistance, but not including Federal procurement programs and 
        activities.
            ``(6) Person.--The term `person' means any individual, 
        corporation, partnership, association, or other legal entity, 
        however organized.
    ``(b) Assistance to Identify and Prevent Fraud and Anticompetitive 
Activities.--The Secretary shall--
            ``(1) through the food service management institute 
        authorized under section 21, provide advice, training, 
        technical assistance, and guidance (which may include awareness 
        training, training films, and troubleshooting advice) to 
        representatives of States and local agencies regarding means of 
        identifying and preventing fraud and anticompetitive activities 
        relating to the provision of goods or services in conjunction 
        with the participation of a local agency in a child nutrition 
        program; and
            ``(2) provide information to, and fully cooperate with, the 
        Attorney General and State attorneys general regarding 
        investigations of fraud and anticompetitive activities relating 
        to the provision of goods or services in conjunction with the 
        participation of a local agency in a child nutrition program.
    ``(c) Nonprocurement Debarment.--
            ``(1) In general.--Except as provided in paragraph (3), not 
        later than 180 days after notification of the occurrence of a 
        cause for debarment described in paragraph (2), the Secretary 
        shall initiate nonprocurement debarment proceedings against the 
        contractor who has committed the cause for debarment.
            ``(2) Causes for debarment.--Actions requiring initiation 
        of nonprocurement debarment pursuant to paragraph (1) shall 
        include the following:
                    ``(A) A contractor commits an action or series of 
                actions which constitute a substantial and material 
                violation of a regulation of a child nutrition program 
                of the Department of Agriculture, as determined by the 
                Secretary.
                    ``(B) A contractor is found guilty in any criminal, 
                civil, or administrative proceeding, or found liable in 
                any civil or administrative proceeding, in connection 
                with the supplying, providing, or selling of a product 
                or commodity to any local agency or to any Federal 
                agency in connection with the child nutrition programs, 
                of--
                            ``(i) an anticompetitive activity, 
                        including bid-rigging, price-fixing, the 
                        allocation of customers between competitors, or 
                        other violation of Federal or State antitrust 
                        laws;
                            ``(ii) fraud, bribery, theft, forgery or 
                        embezzlement;
                            ``(iii) breach of contract;
                            ``(iv) making a false claim or statement; 
                        or
                            ``(v) other obstruction of justice.
            ``(3) Exception.--If the Secretary determines that a 
        decision on initiating nonprocurement debarment proceedings 
        cannot be made within 180 days after notification of the 
        occurrence of a cause for debarment described in paragraph (2) 
        because of the need to further investigate matters relating to 
        the possible debarment, the Secretary may have such additional 
        time as the Secretary considers necessary to make a decision, 
        but not to exceed an additional 180 days.
            ``(4) Mandatory child nutrition program debarment 
        periods.--
                    ``(A) In general.--Subject to the other provisions 
                of this paragraph and notwithstanding any other 
                provision of law except subsection (d), if, after 
                deciding to initiate nonprocurement debarment 
                proceedings pursuant to paragraph (1), the Secretary 
                decides to debar a contractor, the debarment shall be 
                for a period of not less than 3 years.
                    ``(B) Previous debarment.--If the contractor has 
                been previously debarred pursuant to nonprocurement 
                debarment proceedings initiated pursuant to paragraph 
                (1), and the cause for debarment is described in 
                paragraph (2) based on activities that occurred 
                subsequent to the initial debarment, the debarment 
                shall be for a period of not less than 5 years.
                    ``(C) Scope.--At a minimum, a debarment under this 
                subsection shall serve to bar the contractor for the 
                specified period from contracting to provide goods or 
                services in conjunction with the participation of a 
                local agency in a child nutrition program.
                    ``(D) Reversal, reduction, or exception.--Nothing 
                in this paragraph shall restrict the ability of the 
                Secretary to reverse a debarment decision, to reduce 
                the period or scope of a debarment, nor to grant an 
                exception permitting a debarred contractor to 
                participate in a particular contract to provide goods 
                or services in conjunction with the participation of a 
                local agency in a child nutrition program, if the 
                Secretary determines there is good cause for the 
                action.
            ``(5) Information.--On request, the Secretary shall present 
        to the appropriate congressional committees information 
        regarding the decisions required by this subsection.
            ``(6) Relationship to other authorities.--A debarment 
        imposed under this section shall not reduce or diminish the 
        authority of a Federal, State, or local government agency or 
        court to penalize, imprison, fine, suspend, debar, or take 
        other adverse action against a person in a civil, criminal, or 
        administrative proceeding.
            ``(7) Regulations.--The Secretary shall issue such 
        regulations as are necessary to carry out this subsection.
    ``(d) Mandatory Debarment.--Notwithstanding any other provision of 
this section, the Secretary shall initiate nonprocurement debarment 
proceedings against the contractor (including any cooperative) who has 
committed the cause for debarment (as determined under section (c)(2)), 
unless the action--
            ``(1) is likely to have a significant adverse effect on 
        competition or prices in the relevant market or nationally;
            ``(2) will interfere with the ability of a local agency to 
        procure a needed product for a child nutrition program;
            ``(3) is unfair to a person, subsidiary corporation, 
        affiliate, parent company, or local division of a corporation 
        that is not involved in the improper activity that would 
        otherwise result in the debarment; or
            ``(4) is not in the public interest, as determined by the 
        Secretary.
    ``(e) Exhaustion of Administrative Remedies.--Prior to seeking 
judicial review in a court of competent jurisdiction, a contractor 
against whom a nonprocurement debarment proceeding has been initiated 
shall--
            ``(1) exhaust all administrative procedures prescribed by 
        the Secretary; and
            ``(2) receive notice of the final determination of the 
        Secretary.
    ``(f) Information Relating to Prevention and Control of 
Anticompetitive Activities.--On request, the Secretary shall present to 
the appropriate congressional committees information regarding the 
activities of the Secretary relating to anticompetitive activities, 
fraud, nonprocurement debarment, and any waiver granted by the 
Secretary under this section.''.
    (b) Applicability.--Section 25(c) of the National School Lunch Act 
(as added by subsection (a)) shall not apply to a cause for debarment 
as described in section 25(c)(2) of such Act that is based on an 
activity that took place prior to the date of enactment of this Act.

SEC. 4. REPORT ON CONSISTENT DEBARMENT POLICY.

    Not later than 120 days after the date of enactment of this Act, 
the Secretary of Agriculture, in consultation with the Director of the 
Office of Management and Budget, the Secretary of Defense, and such 
other officials as the Secretary of Agriculture determines are 
appropriate, shall advise the appropriate committees of the Congress 
and the Comptroller General of the United States as to the 
appropriateness and usefulness of a consistent debarment policy under--
            (1) the Federal acquisition regulations issued under title 
        48, Code of Federal Regulations; and
            (2) Federal nonprocurement regulations.

SEC. 5. NO REDUCTION IN AUTHORITY TO DEBAR OR SUSPEND A PERSON FROM 
              FEDERAL FINANCIAL AND NONFINANCIAL ASSISTANCE AND 
              BENEFITS.

    (a) In General.--The authority of the Secretary of Agriculture that 
exists on the date of enactment of this Act to debar or suspend a 
person from Federal financial and nonfinancial assistance and benefits 
under Federal programs and activities, on a government-wide basis, 
shall not be diminished or reduced by this Act or the amendment made by 
section 3 of this Act.
    (b) Debarment or Suspension.--The Secretary may continue, after the 
date of enactment of this Act, to debar or suspend a person on a 
government-wide basis, from Federal financial and nonfinancial 
assistance and benefits for any cause for debarment or suspension that 
is specified in part 3017 of chapter XXX of subtitle B of title 7, Code 
of Federal Regulations, or as otherwise permitted by law, including 
regulations.

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