II

103D CONGRESS

1ST SESSION S. 1269

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.

IN THE SENATE OF THE UNITED STATES

JULY 20 (legislative day, JUNE 30), 1993

Mr. LEAHY (for himself and Mr. HARKIN) introduced the following bill; which

was read twice and referred to the Committee on Agriculture, Nutrition,

and Forestry

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 ‘‘School Lunch Protec5 tion Act of 1993’’.
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1 SEC. 2. FINDINGS.

2 Congress finds that—

3 (1) in recent years, there has been an alarming

4 number of instances of price-fixing and bid-rigging

5 regarding foods purchased for—

6 (A) the school lunch program established

7 under the National School Lunch Act (42

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

9 (B) the school breakfast program estab10 lished under the Child Nutrition Act of 1966

11 (42 U.S.C. 1771 et seq.);

12 (2) during the past several years, the Antitrust

13 Division of the Department of Justice has filed over

14 95 criminal cases against persons accused of bid-rig15 ging conspiracies, false statements, mail fraud,

16 price-fixing, and similar activities involving dairy

17 products sold to schools or the Department of De18 fense;

19 (3) over 30 grand juries in States are inves20 tigating similar activities, especially in connection

21 with activities involving the dairy industry;

22 (4) 45 corporations and 48 individuals have

23 been convicted by Federal courts of similar activi24 ties, and total fines and civil damages of approxi25 mately $100,000,000 have been assessed in Federal

26 and State actions for similar activities;
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1 (5) a report of the Comptroller General of the

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

3 Secretary of Agriculture had neither suspended nor

4 debarred any of the 13 dairy companies or 28 indi5 viduals convicted, as of March 1992, of milk con6 tract bid-rigging from participating in the school

7 lunch and breakfast programs;

8 (6) effective educational and monitoring pro9 grams can greatly reduce the incidence of price-fix10 ing and bid-rigging by companies that sell products

11 to schools;

12 (7) reducing the incidence of price-fixing and

13 bid-rigging in connection with the school lunch and

14 breakfast programs could save school districts, par15 ents, and taxpayers millions of dollars per year;

16 (8) the Comptroller General of the United

17 States has noted that bid-rigging awareness training

18 is an effective means of deterring improper collusion

19 and bid-rigging; and

20 (9) the Comptroller General of the United

21 States in a General Accounting Office report ad22 dressed many of the concerns described in this sec23 tion with respect to bid rigging in the school lunch

24 program.
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1 SEC. 3. DUTIES OF THE SECRETARY RELATING TO ANTI2 COMPETITIVE ACTIVITIES.

3 The National School Lunch Act (42 U.S.C. 1751 et

4 seq.) is amended by adding at the end the following new

5 section:

6 ‘‘SEC. 25. DUTIES OF THE SECRETARY RELATING TO ANTI7 COMPETITIVE ACTIVITIES.

8 ‘‘(a) IN GENERAL.—The Secretary shall—

9 ‘‘(1) provide advice, training, technical assist10 ance, and guidance to representatives of States, con11 tracting entities, and school food service authorities

12 regarding means of identifying and preventing anti13 competitive activities relating to the acquisition of

14 commodities for—

15 ‘‘(A) the school lunch program established

16 under this Act;

17 ‘‘(B) the school breakfast program estab18 lished under the Child Nutrition Act of 1966

19 (42 U.S.C. 1771 et seq.);

20 ‘‘(C) the special milk program established

21 under section 3 of the Child Nutrition Act of

22 1966 (42 U.S.C. 1772); and

23 ‘‘(D) the summer food service program for

24 children established under section 13 of this

25 Act;
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1 ‘‘(2) provide information to, and fully cooperate

2 with, the Attorney General and State attorneys gen3 eral regarding investigations of anticompetitive ac4 tivities relating to the acquisition of commodities for

5 the programs referred to in paragraph (1);

6 ‘‘(3) provide awareness training, training films,

7 technical advice, troubleshooting advice, and other

8 guidance related to avoiding or detecting bid-rigging,

9 price-fixing, or other anticompetitive activities con10 cerning the acquisition of commodities for the pro11 grams; and

12 ‘‘(4) debar or suspend a person under section

13 12A, applicable regulations issued by the Secretary

14 (such as part 3017 of chapter XXX of subtitle B of

15 title 7, Code of Federal Regulations), and other ap16 plicable Federal laws (including regulations).

17 ‘‘(b) FOOD SERVICE MANAGEMENT INSTITUTE.—

18 The Secretary may request assistance from the food serv19 ice management institute authorized under section 21 in

20 carrying out this section. The Secretary may contract with

21 the institute to carry out all or part of the duties described

22 in paragraphs (1) and (3) of subsection (a).

23 ‘‘(c) FUNDING.—The Secretary shall make available

to carry out this section not less than 1 24 ⁄2 of 1 percent of
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1 the funds made available for the salaries and expenses of

2 the Food and Nutrition Service for each fiscal year.

3 ‘‘(d) TERMINATION.—The authority provided by this

4 section shall terminate on September 30, 1999.’’.

5 SEC. 4. NONPROCUREMENT DEBARMENT.

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

7 is amended by inserting after section 12 (42 U.S.C. 1760)

8 the following new section:

9 ‘‘SEC. 12A. NONPROCUREMENT DEBARMENT.

10 ‘‘(a) IN GENERAL.—Except as provided in sub11 sections (b) and (c), the Secretary shall debar a person,

12 and each principal and affiliate of the person, for at least

13 1 year from supplying, providing, or selling a product or

14 commodity to a school, school district, school food service

15 authority, or school district consortium participating in

16 the school lunch program established under this Act, the

17 school breakfast program established under the Child Nu18 trition Act of 1966 (42 U.S.C. 1771 et seq.), the special

19 milk program established under section 3 of the Child Nu20 trition Act of 1966 (42 U.S.C. 1772), or the summer food

21 service program for children established under section 13

22 of this Act if the person, or a principal or affiliate of the

23 person, is convicted, in connection with supplying, provid24 ing, or selling a product or commodity to any school,

25 school district, school food service authority, or school dis-
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1 trict consortium participating in any of the programs, or

2 to any Federal agency, of—

3 ‘‘(1) an anticompetitive activity, including bid4 rigging, price-fixing, the allocation of customers be5 tween competitors, or other violation of Federal or

6 State law related to protecting competition;

7 ‘‘(2) mail fraud, bribery, theft, or embezzle8 ment;

9 ‘‘(3) making a false statement or claim;

10 ‘‘(4) making a false declaration before a grand

11 jury; or

12 ‘‘(5) other obstruction of justice.

13 ‘‘(b) SUBSEQUENT CONVICTIONS.—Except as pro14 vided in subsection (c), if a person, or a principal or affili15 ate of the person, is convicted of an activity described in

16 subsection (a) after having been previously debarred under

17 this section, the person, and each principal and affiliate

18 of the person, shall be debarred for at least 3 years from

19 supplying, providing, or selling a product or commodity

20 to any school, school district, school food service authority,

21 or school district consortium participating in a program

22 described in subsection (a) or to any Federal agency.

23 ‘‘(c) WAIVERS.—The Secretary may waive a debar24 ment imposed under subsection (a) or (b) if the Secretary

25 determines that debarment would—
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1 ‘‘(1) likely have a significant adverse effect on

2 competition or prices in the relevant market or na3 tionally;

4 ‘‘(2) seriously interfere with the ability of a

5 school, school district, school food service authority,

6 or school district consortium to procure a needed

7 product or commodity for a program described in

8 subsection (a);

9 ‘‘(3) be unfair to a person, subsidiary corpora10 tion, affiliate, parent company, or local division of a

11 corporation that is not involved in the improper ac12 tivity that would otherwise result in the debarment;

13 or

14 ‘‘(4) not be in the public interest.

15 ‘‘(d) RELATIONSHIP TO OTHER AUTHORITY.—A de16 barment imposed under this section shall not reduce or

17 diminish the authority of a Federal, State, or local govern18 ment agency or court to—

19 ‘‘(1) penalize, fine, suspend, debar, or otherwise

20 punish, in a civil or criminal action, a person or a

21 principal or affiliate of the person; or

22 ‘‘(2) imprison, debar, suspend, fine, or other23 wise punish a person or a principal or affiliate of the

24 person.
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1 ‘‘(e) REGULATIONS.—The Secretary shall issue such

2 regulations as are necessary to carry out this section.’’.

3 (b) IMPLEMENTATION.—

4 (1) APPLICATION.—The amendment made by

5 subsection (a) shall not apply to a conviction that is

6 based on an activity that took place prior to the date

7 of enactment of this Act.

8 (2) REGULATIONS.—Not later than July 1,

9 1994, the Secretary of Agriculture shall amend the

10 nonprocurement regulations established under part

11 3017 of chapter XXX of subtitle B of title 7, Code

12 of Federal Regulations, to conform with section 12A

13 of the National School Lunch Act (as added by sub14 section (a)).

15 (3) CONSISTENT DEBARMENT POLICY.—Not

16 later than 90 days after the date of enactment of

17 this Act, the Secretary of Agriculture, in consulta18 tion with the Director of the Office of Management

19 and Budget, the Secretary of Defense, and such

20 other officials as the Secretary of Agriculture deter21 mines are appropriate, shall advise the appropriate

22 committees of Congress and the Comptroller General

23 of the United States as to the appropriateness and

24 usefulness of a consistent debarment policy under—
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1 (A) the Federal acquisition regulations is2 sued under title 48, Code of Federal Regula3 tions; and

4 (B) Federal nonprocurement regulations.

5 (4) NO REDUCTION IN AUTHORITY.—

6 (A) IN GENERAL.—The authority of the

7 Secretary of Agriculture that exists on the date

8 of enactment of this Act to debar or suspend a

9 person, or a principal or affiliate of the person,

10 from Federal financial and nonfinancial assist11 ance and benefits under Federal programs and

12 activities, on a government-wide basis, shall not

13 be diminished or reduced by this section or the

14 amendment made by this section.

15 (B) DEBARMENT OR SUSPENSION.—The

16 Secretary may continue, after the date of enact17 ment of this Act, to debar or suspend a person

18 (or a principal or affiliate of the person), on a

19 government-wide basis, from Federal financial

20 and nonfinancial assistance and benefits for any

21 cause for debarment or suspension that is speci22 fied in part 3017 of chapter XXX of subtitle B

23 of title 7, Code of Federal Regulations, or as

24 otherwise permitted by law (including regula25 tions).
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1 SEC. 5. PREVENTION AND CONTROL OF ANTICOMPETITIVE

2 ACTIVITIES.

3 The National School Lunch Act (as amended by sec4 tion 3) is further amended by adding at the end the follow5 ing new section:

6 ‘‘SEC. 26. PREVENTION AND CONTROL OF ANTICOMPETI7 TIVE ACTIVITIES.

8 ‘‘(a) ASSISTANCE.—The Secretary shall provide fi9 nancial assistance and other support to States, State at10 torneys general, law enforcement organizations, school

11 food contracting agents, and school food service authori12 ties to assist in the prevention and control of anticompeti13 tive activities relating to—

14 ‘‘(1) the school lunch program established

15 under this Act;

16 ‘‘(2) the school breakfast program established

17 under the Child Nutrition Act of 1966 (42 U.S.C.

18 1771 et seq.);

19 ‘‘(3) the special milk program established under

20 section 3 of the Child Nutrition Act of 1966 (42

21 U.S.C. 1772); and

22 ‘‘(4) the summer food service program for chil23 dren established under section 13 of this Act.

24 ‘‘(b) INFORMATION.—On request, the Secretary shall

25 present to the appropriate committees of Congress infor26 mation regarding the administration of sections 12A and
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1 25 and this section, any waiver granted under section

2 12A(c), and efforts to reduce the incidence of anticompeti3 tive activity (such as price-fixing and bid-rigging), in con4 nection with the programs referred to in subsection (a).

5 ‘‘(c) AUTHORIZATION OF APPROPRIATIONS.—There

6 are authorized to be appropriated to carry out subsection

7 (a) $4,000,000 for each fiscal year.’’.

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