I

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 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.

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 ‘‘Child Nutrition Protec5 tion Act of 1994’’.
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1 SEC. 2. FINDINGS.

2 The Congress finds the following:

3 (1) In recent years, there has been a substan4 tial number of instances of price-fixing, bid-rigging,

5 and other fraudulent activity regarding foods pur6 chased for—

7 (A) the school lunch program established

8 under the National School Lunch Act (42

9 U.S.C. 1751 et seq.); and

10 (B) the school breakfast program estab11 lished under section 4 of the Child Nutrition

12 Act of 1966 (42 U.S.C. 1773).

13 (2) In 1986, President Reagan issued Executive

14 Order 12549 which was intended to curb fraud,

15 waste, and abuse in Federal programs, increase ac16 countability, and ensure consistency among agency

17 regulations concerning debarment and suspension of

18 participants in Federal programs.

19 (3) During the past several years, the Antitrust

20 Division of the Department of Justice has filed over

21 95 criminal cases against companies and individuals

22 accused of bid-rigging conspiracies, false statements,

23 mail fraud, price-fixing, and similar activities involv24 ing dairy products sold to schools or to the Depart25 ment of Defense.
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1 (4) Over 30 grand juries in several States are

2 investigating similar activities.

3 (5) 45 corporations and 48 individuals have

4 been convicted by Federal courts of similar activi5 ties, and total fines and civil damages of approxi6 mately $100,000,000 have been assessed in Federal

7 and State court actions for similar activities.

8 (6) Although several companies have violated

9 the regulations of food and nutrition programs of

10 the Department of Agriculture, such companies con11 tinue to participate in such programs and monetarily

12 benefit from such programs.

13 (7) A report of the Comptroller General of the

14 United States noted that, as of March 1992, the

15 Secretary of Agriculture had neither suspended nor

16 debarred any of the 13 dairy companies or 28 indi17 viduals convicted of milk contract bid-rigging from

18 participating in the school lunch and school break19 fast programs.

20 (8) Effective educational and monitoring pro21 grams can greatly reduce the incidence of fraud,

22 price-fixing, and bid-rigging by companies that sell

23 food products to schools.

24 (9) Reducing the incidence of fraud, price-fix25 ing, and bid-rigging in connection with the school
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1 lunch and school breakfast programs could save

2 school districts, parents, and taxpayers millions of

3 dollars per year.

4 (10) The Comptroller General of the United

5 States has noted that bid-rigging awareness training

6 is an effective means of deterring improper collusion

7 and bid-rigging.

8 (11) The Comptroller General of the United

9 States in a General Accounting Office report ad10 dressed many of the concerns described in this sec11 tion with respect to bid-rigging in the school lunch

12 program.

13 SEC. 3. DUTIES OF THE SECRETARY OF AGRICULTURE RE14 LATING TO NONPROCUREMENT DEBARMENT

15 UNDER CERTAIN CHILD NUTRITION PRO16 GRAMS.

17 (a) IN GENERAL.—The National School Lunch Act

18 (42 U.S.C. 1751 et seq.) is amended by adding at the end

19 the following new section:

20 ‘‘SEC. 25. DUTIES OF THE SECRETARY RELATING TO

21 NONPROCUREMENT DEBARMENT.

22 ‘‘(a) DEFINITIONS.—For purposes of this section, the

23 following definitions apply:

24 ‘‘(1) APPROPRIATE CONGRESSIONAL COMMIT25 TEES.—The term ‘appropriate congressional com-
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1 mittees’ means the Committee on Education and

2 Labor of the House of Representatives and the Com3 mittee on Agriculture, Nutrition, and Forestry of

4 the Senate.

5 ‘‘(2) CHILD NUTRITION PROGRAM.—The term

6 ‘child nutrition program’ means—

7 ‘‘(A) the school lunch program established

8 under this Act;

9 ‘‘(B) the school breakfast program estab10 lished under section 4 of the Child Nutrition

11 Act of 1966 (42 U.S.C. 1773);

12 ‘‘(C) the special milk program established

13 under section 3 of such Act (42 U.S.C. 1772);

14 ‘‘(D) the special nutrition program for

15 women, infants, and children authorized under

16 section 17 of such Act (42 U.S.C. 1786);

17 ‘‘(E) the summer food service program for

18 children established under section 13 of this

19 Act; and

20 ‘‘(F) the child and adult care food program

21 established under section 17 of this Act.

22 ‘‘(3) CONTRACTOR.—The term ‘contractor’

23 means a person that contracts with a State, an

24 agency of a State, or a local agency to provide goods
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1 or services in conjunction with the participation of

2 a local agency in a child nutrition program.

3 ‘‘(4) LOCAL AGENCY.—The term ‘local agency’

4 means a school, school food authority, child care

5 center, sponsoring organization, or other entity au6 thorized to operate a child nutrition program at the

7 local level.

8 ‘‘(5) NONPROCUREMENT DEBARMENT.—The

9 term ‘nonprocurement debarment’ means an action

10 to bar a person from programs and activities involv11 ing Federal financial and nonfinancial assistance,

12 but not including Federal procurement programs

13 and activities.

14 ‘‘(6) PERSON.—The term ‘person’ means any

15 individual, corporation, partnership, association, or

16 other legal entity, however organized.

17 ‘‘(b) ASSISTANCE TO IDENTIFY AND PREVENT

18 FRAUD AND ANTICOMPETITIVE ACTIVITIES.—The Sec19 retary shall—

20 ‘‘(1) through the food service management in21 stitute authorized under section 21, provide advice,

22 training, technical assistance, and guidance (which

23 may include awareness training, training films, and

24 troubleshooting advice) to representatives of States

25 and local agencies regarding means of identifying
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1 and preventing fraud and anticompetitive activities

2 relating to the provision of goods or services in con3 junction with the participation of a local agency in

4 a child nutrition program; and

5 ‘‘(2) provide information to, and fully cooperate

6 with, the Attorney General and State attorneys gen7 eral regarding investigations of fraud and anti8 competitive activities relating to the provision of

9 goods or services in conjunction with the participa10 tion of a local agency in a child nutrition program.

11 ‘‘(c) NONPROCUREMENT DEBARMENT.—

12 ‘‘(1) IN GENERAL.—Except as provided in para13 graph (3), not later than 180 days after notification

14 of the occurrence of a cause for debarment described

15 in paragraph (2), the Secretary shall initiate

16 nonprocurement debarment proceedings against the

17 contractor who has committed the cause for debar18 ment.

19 ‘‘(2) CAUSES FOR DEBARMENT.—Actions re20 quiring initiation of nonprocurement debarment pur21 suant to paragraph (1) shall include the following:

22 ‘‘(A) A contractor commits an action or se23 ries of actions which constitute a substantial

24 and material violation of a regulation of a child
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1 nutrition program of the Department of Agri2 culture, as determined by the Secretary.

3 ‘‘(B) A contractor is found guilty in any

4 criminal, civil, or administrative proceeding, or

5 found liable in any civil or administrative pro6 ceeding, in connection with the supplying, pro7 viding, or selling of a product or commodity to

8 any local agency or to any Federal agency in

9 connection with the child nutrition programs,

10 of—

11 ‘‘(i) an anticompetitive activity, in12 cluding bid-rigging, price-fixing, the alloca13 tion of customers between competitors, or

14 other violation of Federal or State anti15 trust laws;

16 ‘‘(ii) fraud, bribery, theft, forgery or

17 embezzlement;

18 ‘‘(iii) breach of contract;

19 ‘‘(iv) making a false claim or state20 ment; or

21 ‘‘(v) other obstruction of justice.

22 ‘‘(3) EXCEPTION.—If the Secretary determines

23 that a decision on initiating nonprocurement debar24 ment proceedings cannot be made within 180 days

25 after notification of the occurrence of a cause for de-
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1 barment described in paragraph (2) because of the

2 need to further investigate matters relating to the

3 possible debarment, the Secretary may have such ad4 ditional time as the Secretary considers necessary to

5 make a decision, but not to exceed an additional 180

6 days.

7 ‘‘(4) MANDATORY CHILD NUTRITION PROGRAM

8 DEBARMENT PERIODS.—

9 ‘‘(A) IN GENERAL.—Subject to the other

10 provisions of this paragraph and notwithstand11 ing any other provision of law except subsection

12 (d), if, after deciding to initiate non13 procurement debarment proceedings pursuant

14 to paragraph (1), the Secretary decides to

15 debar a contractor, the debarment shall be for

16 a period of not less than 3 years.

17 ‘‘(B) PREVIOUS DEBARMENT.—If the con18 tractor has been previously debarred pursuant

19 to nonprocurement debarment proceedings initi20 ated pursuant to paragraph (1), and the cause

21 for debarment is described in paragraph (2)

22 based on activities that occurred subsequent to

23 the initial debarment, the debarment shall be

24 for a period of not less than 5 years.
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1 ‘‘(C) SCOPE.—At a minimum, a debarment

2 under this subsection shall serve to bar the con3 tractor for the specified period from contracting

4 to provide goods or services in conjunction with

5 the participation of a local agency in a child nu6 trition program.

7 ‘‘(D) REVERSAL, REDUCTION, OR EXCEP8 TION.—Nothing in this paragraph shall restrict

9 the ability of the Secretary to reverse a debar10 ment decision, to reduce the period or scope of

11 a debarment, nor to grant an exception permit12 ting a debarred contractor to participate in a

13 particular contract to provide goods or services

14 in conjunction with the participation of a local

15 agency in a child nutrition program, if the Sec16 retary determines there is good cause for the

17 action.

18 ‘‘(5) INFORMATION.—On request, the Secretary

19 shall present to the appropriate congressional com20 mittees information regarding the decisions required

21 by this subsection.

22 ‘‘(6) RELATIONSHIP TO OTHER AUTHORI23 TIES.—A debarment imposed under this section

24 shall not reduce or diminish the authority of a Fed25 eral, State, or local government agency or court to
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1 penalize, imprison, fine, suspend, debar, or take

2 other adverse action against a person in a civil,

3 criminal, or administrative proceeding.

4 ‘‘(7) REGULATIONS.—The Secretary shall issue

5 such regulations as are necessary to carry out this

6 subsection.

7 ‘‘(d) MANDATORY DEBARMENT.—Notwithstanding

8 any other provision of this section, the Secretary shall ini9 tiate nonprocurement debarment proceedings against the

10 contractor (including any cooperative) who has committed

11 the cause for debarment (as determined under section

12 (c)(2)), unless the action—

13 ‘‘(1) is likely to have a significant adverse effect

14 on competition or prices in the relevant market or

15 nationally;

16 ‘‘(2) will interfere with the ability of a local

17 agency to procure a needed product for a child nu18 trition program;

19 ‘‘(3) is unfair to a person, subsidiary corpora20 tion, affiliate, parent company, or local division of a

21 corporation that is not involved in the improper ac22 tivity that would otherwise result in the debarment;

23 or

24 ‘‘(4) is not in the public interest, as determined

25 by the Secretary.
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1 ‘‘(e) EXHAUSTION OF ADMINISTRATIVE REM2 EDIES.—Prior to seeking judicial review in a court of com3 petent jurisdiction, a contractor against whom a

4 nonprocurement debarment proceeding has been initiated

5 shall—

6 ‘‘(1) exhaust all administrative procedures pre7 scribed by the Secretary; and

8 ‘‘(2) receive notice of the final determination of

9 the Secretary.

10 ‘‘(f) INFORMATION RELATING TO PREVENTION AND

11 CONTROL OF ANTICOMPETITIVE ACTIVITIES.—On re12 quest, the Secretary shall present to the appropriate con13 gressional committees information regarding the activities

14 of the Secretary relating to anticompetitive activities,

15 fraud, nonprocurement debarment, and any waiver grant16 ed by the Secretary under this section.’’.

17 (b) APPLICABILITY.—Section 25(c) of the National

18 School Lunch Act (as added by subsection (a)) shall not

19 apply to a cause for debarment as described in section

20 25(c)(2) of such Act that is based on an activity that took

21 place prior to the date of enactment of this Act.

22 SEC. 4. REPORT ON CONSISTENT DEBARMENT POLICY.

23 Not later than 120 days after the date of enactment

24 of this Act, the Secretary of Agriculture, in consultation

25 with the Director of the Office of Management and Budg-
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1 et, the Secretary of Defense, and such other officials as

2 the Secretary of Agriculture determines are appropriate,

3 shall advise the appropriate committees of the Congress

4 and the Comptroller General of the United States as to

5 the appropriateness and usefulness of a consistent debar6 ment policy under—

7 (1) the Federal acquisition regulations issued

8 under title 48, Code of Federal Regulations; and

9 (2) Federal nonprocurement regulations.

10 SEC. 5. NO REDUCTION IN AUTHORITY TO DEBAR OR SUS11 PEND A PERSON FROM FEDERAL FINANCIAL

12 AND NONFINANCIAL ASSISTANCE AND BENE13 FITS.

14 (a) IN GENERAL.—The authority of the Secretary of

15 Agriculture that exists on the date of enactment of this

16 Act to debar or suspend a person from Federal financial

17 and nonfinancial assistance and benefits under Federal

18 programs and activities, on a government-wide basis, shall

19 not be diminished or reduced by this Act or the amend20 ment made by section 3 of this Act.

21 (b) DEBARMENT OR SUSPENSION.—The Secretary

22 may continue, after the date of enactment of this Act, to

23 debar or suspend a person on a government-wide basis,

24 from Federal financial and nonfinancial assistance and

25 benefits for any cause for debarment or suspension that
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1 is specified in part 3017 of chapter XXX of subtitle B

2 of title 7, Code of Federal Regulations, or as otherwise

3 permitted by law, including regulations.

Æ