II 

110TH CONGRESS 

2D SESSION S. 3203 

To prohibit the use of funds by the Department of Defense on the KC– 

X tanker contract, and for other purposes related to that contract. 

IN THE SENATE OF THE UNITED STATES 

JUNE 26, 2008 

Mr. ROBERTS (for himself and Mr. BROWNBACK) introduced the following bill; 

which was read twice and referred to the Committee on Armed Services 

A BILL 

To prohibit the use of funds by the Department of Defense 

on the KC–X tanker contract, and for other purposes 

related to that contract. 

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; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘KC–Tanker Recompete Act’’. 

6 (b) TABLE OF CONTENTS.—The table of contents for 

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. KC–X Tanker contract. 

Sec. 3. Independent cost estimate. 

Sec. 4. Requirement to offset illegal subsidization to foreign persons participating in KC–135 replacement competition. 


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Sec. 5. Ensuring fair competition. 

Sec. 6. National security considerations. 

Sec. 7. Industrial base considerations. 

Sec. 8. Loss of employee tax revenue. 

Sec. 9. Loss of corporate tax revenue. 

Sec. 10. Regulatory burden. 

Sec. 11. Foreign Corrupt Practices Act. 

Sec. 12. Covered contractor definition. 

Sec. 13. Report. 

1 SEC. 2. KC–X TANKER CONTRACT. 

2 (a) PROHIBITION.—No funds may be used by the De3 partment of Defense on the KC–X tanker contract. In this 

4 subsection, the term ‘‘KC–X tanker contract’’ means the 

5 contract awarded by the Department of the Air Force on 

6 February 29, 2008, for the next generation air-refueling 

7 tanker aircraft. 

8 (b) REPLACEMENT.—If the Department of the Air 

9 Force chooses not to exercise its authority to award a new 

10 contract for the KC–X tanker to the bidder whose protest 

11 of the February 29, 2008, award was sustained by the 

12 Government Accountability Office on June 18, 2008, the 

13 Secretary of Defense, using competitive procedures, shall 

14 award a contract for a replacement for the KC–135 tank15 er. Such funds as may be necessary are authorized to con16 duct the competition for such contract. 

17 SEC. 3. INDEPENDENT COST ESTIMATE. 

18 As part of the acquisition process for the award of 

19 a contract for a replacement for the KC–135 tanker, as 

20 required by section 2(b), the Secretary of Defense and the 

21 source selection authority shall ensure that an indeVerDate Aug 31 2005 23:42 Jun 30, 2008 Jkt 069200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S3203.IS S3203

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1 pendent cost estimate is completed. The cost estimate 

2 shall include an estimate of— 

3 (1) all costs borne by the suppliers; 

4 (2) all costs borne by foreign governments; 

5 (3) all costs borne by domestic suppliers (if the 

6 proposal involves any domestic suppliers); and 

7 (4) all costs covered by cost accounting stand8 ards under the Federal Acquisition Regulation. 

9 SEC. 4. REQUIREMENT TO OFFSET ILLEGAL SUBSIDIZA10 TION TO FOREIGN PERSONS PARTICIPATING 

11 IN KC–135 REPLACEMENT COMPETITION. 

12 (a) REQUIREMENT.—As part of the acquisition proc13 ess for the award of a contract for a replacement of the 

14 KC–135 tanker, as required by section 2(b), the Secretary 

15 of Defense shall, in conducting the cost or price evaluation 

16 of any proposal submitted by a subsidized person, increase 

17 the cost or price of the proposal by the amount of illegal 

18 subsidization. 

19 (b) ILLEGAL SUBSIDIZATION.—For purposes of sub20 section (a), the amount of illegal subsidization with re21 spect to a proposal submitted by a subsidized person is 

22 the amount of the illegal subsidy referred to in subsection 

23 (c), as determined jointly by the Secretary of Commerce 

24 and the United States Trade Representative after receipt 


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1 of a request from the Secretary of Defense for such a de2 termination. 

3 (c) SUBSIDIZED PERSONS.—With respect to any pro4 posal submitted to the Department of Defense for a con5 tract for a replacement of the KC–135 tanker, a sub6 sidized person is any of the following: 

7 (1) FOREIGN PERSON.—A foreign person to 

8 which the government of a foreign country that is a 

9 member of the World Trade Organization has pro10 vided a subsidy for the tanker if— 

11 (A) the United States has requested con12 sultations with that foreign country under the 

13 Agreement on Subsidies and Countervailing 

14 Measures on the basis that the subsidy is an il15 legal subsidy under that Agreement; and 

16 (B) the World Trade Organization has 

17 ruled that the subsidy provided by the foreign 

18 country is an illegal subsidy under the Agree19 ment on Subsidies and Countervailing Meas20 ures. 

21 (2) JOINT VENTURES.—Any joint venture, co22 operative organization, partnership, or contracting 

23 team of which a foreign person described in para24 graph (1) is a member. 


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1 (3) SUBCONTRACTS.—Any person proposing to 

2 use a foreign person described in paragraph (1) or 

3 an entity described in paragraph (2) as a subcon4 tractor in performing the contract for which the pro5 posal is submitted. 

6 (d) DEFINITIONS.—In this section: 

7 (1) The term ‘‘Agreement on Subsidies and 

8 Countervailing Measures’’ means the agreement de9 scribed in section 101(d)(12) of the Uruguay Round 

10 Agreements Act (19 U.S.C. 3501(d)(12)). 

11 (2) The term ‘‘illegal subsidy’’ means a prohib12 ited subsidy or an actionable subsidy under the 

13 Agreement on Subsidies and Countervailing Meas14 ures. 

15 (3) The term ‘‘foreign person’’ means— 

16 (A) an individual who is not a United 

17 States person or an alien lawfully admitted for 

18 permanent residence into the United States; or 

19 (B) a corporation, partnership, or other 

20 nongovernmental entity which is not a United 

21 States person. 

22 (4) The term ‘‘United States person’’ means— 

23 (A) a natural person who is a citizen of the 

24 United States or who owes permanent alle25 giance to the United States; and 


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1 (B) a corporation or other legal entity 

2 which is organized under the laws of the United 

3 States, any State or territory thereof, or the 

4 District of Columbia, if natural persons de5 scribed in subparagraph (A) own, directly or in6 directly, more than 50 percent of the out7 standing capital stock or other beneficial inter8 est in such legal entity. 

9 (5) The term ‘‘cost or price evaluation’’ means 

10 an evaluation conducted by a source selection au11 thority pursuant to subpart 15.305(a)(1) of the Fed12 eral Acquisition Regulation. 

13 SEC. 5. ENSURING FAIR COMPETITION. 

14 As part of the acquisition process for the award of 

15 a contract for a replacement for the KC–135 tanker, as 

16 required by section 2(b), the Secretary of Defense and the 

17 source selection authority shall ensure that any covered 

18 contractor, foreign or domestic, for the contract, as part 

19 of the cost criteria, is evaluated both on the cost borne 

20 by the supplier and any cost borne by a foreign govern21 ment that is not borne by a government (local, State, or 

22 Federal) in the United States. The costs considered in the 

23 evaluation shall be consistent with the costs estimated in 

24 the independent cost estimate completed pursuant to sec25 tion 3. 


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1 SEC. 6. NATIONAL SECURITY CONSIDERATIONS. 

2 As part of the acquisition process for the award of 

3 a contract for a replacement for the KC–135 tanker, as 

4 required by section 2(b), it is the responsibility of the De5 partment of Defense to take into consideration the na6 tional security impacts, the industrial base impacts, and 

7 the economic impact to the United States of awarding con8 tracts for critical capabilities to foreign entities. 

9 SEC. 7. INDUSTRIAL BASE CONSIDERATIONS. 

10 As part of the acquisition process for the award of 

11 a contract for a replacement for the KC–135 tanker, as 

12 required by section 2(b), it is the responsibility of the De13 partment of Defense to take into consideration the indus14 trial base impacts and the economic impact to the United 

15 States of awarding contracts involving critical jobs to for16 eign entities. 

17 SEC. 8. LOSS OF EMPLOYEE TAX REVENUE. 

18 As part of the acquisition process for the award of 

19 a contract for a replacement for the KC–135 tanker, as 

20 required by section 2(b), it is the responsibility of the De21 partment of Defense to take into consideration the impact 

22 of lost personal income tax revenues to the United States, 

23 as a result of awarding defense contracts to foreign enti24 ties. 


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1 SEC. 9. LOSS OF CORPORATE TAX REVENUE. 

2 As part of the acquisition process for the award of 

3 a contract for a replacement for the KC–135 tanker, as 

4 required by section 2(b), it is the responsibility of the De5 partment of Defense to take into consideration the impact 

6 of lost corporate tax revenues to the United States, as a 

7 result of awarding defense contracts to foreign entities. 

8 SEC. 10. REGULATORY BURDEN. 

9 As part of the acquisition process for the award of 

10 a contract for a replacement for the KC–135 tanker, as 

11 required by section 2(b), it is the responsibility of the De12 partment of Defense to take into consideration the impact 

13 of all regulations waived or that are not applicable with 

14 respect to foreign entities. These regulations include cost 

15 accounting standards, Buy America provisions, specialty 

16 metal provisions, the Foreign Corrupt Practices Acts, and 

17 compliance with the International Traffic in Arms Regula18 tion. 

19 SEC. 11. FOREIGN CORRUPT PRACTICES ACT. 

20 (a) CONDITION FOR PROSPECTIVE AWARD OF CON21 TRACT.— 

22 (1) IN GENERAL.—As part of the acquisition 

23 process for the award of a contract for a replace24 ment for the KC–135 tanker, as required by section 

25 2(b), the Secretary of Defense and the source selec26 tion authority shall require that any contractor or 


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1 subcontractor described in paragraph (2) that is not 

2 already covered by the Foreign Corrupt Practices 

3 Act shall be required, as a condition of the contract, 

4 to comply with the requirements of such Act. 

5 (2) CONTRACTOR AND SUBCONTRACTORS DE6 SCRIBED.—A contractor or subcontractor described 

7 in this paragraph is any of the following: 

8 (A) A prospective defense contractor that 

9 is part of an internationally controlled group of 

10 entities. 

11 (B) A prospective subcontractor that is 

12 part of an internationally controlled group of 

13 entities, provided that the subcontractor is at 

14 the second tier or higher and is to be used by 

15 the prospective defense contractor (as described 

16 in subparagraph (A)) to perform the contract. 

17 (b) COMPLIANCE PROGRAM.— 

18 (1) IN GENERAL.—With respect to compliance 

19 with the Foreign Corrupt Practices Act, the Sec20 retary of Defense shall require that all contractors 

21 and subcontractors described in subsection (a)(2) 

22 have a compliance program and certify in writing 

23 that they have completed an audit of that compli24 ance program. 

25 (2) DEBARMENT.— 


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1 (A) IN GENERAL.—Any contractor de2 scribed in subsection (a)(2) that engages in 

3 conduct that violates the requirements of the 

4 Foreign Corrupt Practices Act or any similar 

5 applicable laws in foreign countries shall be 

6 debarred from contracting with the Department 

7 of Defense. 

8 (B) PERIOD OF DEBARMENT.—The period 

9 of debarment under subparagraph (A) shall be 

10 at least 3 years. 

11 (c) NATIONAL SECURITY WAIVER AUTHORITY.— 

12 (1) IN GENERAL.—The Secretary of Defense 

13 may waive the applicability of subsections (a) and 

14 (b) in specific instances if the Secretary determines 

15 that the waiver is necessary in the national security 

16 interests of the United States. 

17 (2) NON-DELEGATION.—The Secretary of De18 fense may not delegate the waiver authority under 

19 paragraph (1). 

20 (3) NOTIFICATION.—Upon issuing a waiver 

21 under paragraph (1), the Secretary of Defense shall 

22 notify the appropriate Congressional committees in 

23 writing not later than 30 days after issuing such 

24 waiver. 

25 (d) DEFINITIONS.—In this section: 


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1 (1) FOREIGN CORRUPT PRACTICES ACT.—The 

2 term ‘‘Foreign Corrupt Practices Act’’ means— 

3 (A) section 30A of the Securities Exchange 

4 Act of 1934 (15 U.S.C. 78dd–1); and 

5 (B) sections 104 and 104A of the Foreign 

6 Corrupt Practices Act of 1977 (15 U.S.C. 

7 78dd–2). 

8 (2) INTERNATIONALLY CONTROLLED GROUP OF

9 ENTITIES.—The term ‘‘internationally controlled 

10 group of entities’’ means a controlled group of enti11 ties the common parent of which is a company orga12 nized under the laws of a foreign government and to 

13 which the Foreign Corrupt Practices Act does not, 

14 by its jurisdictional terms, apply. 

15 (3) APPROPRIATE CONGRESSIONAL COMMIT16 TEES.—In this subsection, the term ‘‘appropriate 

17 congressional committees’’ means— 

18 (A) the Committee on Armed Services, the 

19 Committee on Appropriations, and the Perma20 nent Select Committee on Intelligence of the 

21 House of Representatives; and 

22 (B) the Committee on Armed Services, the 

23 Committee on Appropriations, and the Select 

24 Committee on Intelligence of the Senate. 


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1 SEC. 12. COVERED CONTRACTOR DEFINITION. 

2 In this Act, the term ‘‘covered contractor’’, with re3 spect to a prime contract of the Department of Defense, 

4 means any of the following: 

5 (1) CONTRACTOR AND SUBSIDIARIES AND AF6 FILIATES.— 

7 (A) Any prospective contractor making an 

8 offer for the contract. 

9 (B) The contractor awarded the contract. 

10 (C) Any subsidiary or affiliate of the con11 tractor awarded the contract. 

12 (2) SUBCONTRACTORS AND SUBSIDIARIES AND

13 AFFILIATES.— 

14 (A) Any subcontractor of a contractor de15 scribed in paragraph (1)(B) that is at the sec16 ond tier or higher and is to be used by the con17 tractor in the performance of the contract. 

18 (B) Any subsidiary or affiliate of any such 

19 subcontractor. 

20 SEC. 13. REPORT. 

21 (a) REPORT REQUIREMENT.—The Secretary of De22 fense shall submit to the congressional defense committees 

23 a report on compliance by the Department of Defense with 

24 the provisions of this Act during the acquisition process 

25 for the award of a contract for a replacement for the KC– 

26 135 tanker, as required by section 2(b). 


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1 (b) DEADLINE.—The report shall be submitted no 

2 later than the date of award of such contract. 

3 (c) CONGRESSIONAL DEFENSE COMMITTEES.—In 

4 this section, the term ‘‘congressional defense committees’’ 

5 means— 

6 (1) the Committee on Armed Services and the 

7 Committee on Appropriations of the Senate; and 

8 (2) the Committee on Armed Services and the 

9 Committee on Appropriations of the House of Rep10 resentatives. 

Æ 


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