I 

108TH CONGRESS 

2D SESSION H. R. 4394 

To make ineligible for Federal contract awards any expatriated corporations 

and any companies that do business with, or own foreign subsidiaries 

that do business with, state sponsors of terrorism or foreign terrorist 

organizations. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 19, 2004 

Mr. BROWN of Ohio (for himself, Mr. NEAL of Massachusetts, Ms. DELAURO, 

and Mr. WAXMAN) introduced the following bill; which was referred to 

the Committee on Government Reform 

A BILL 

To make ineligible for Federal contract awards any expatriated corporations and any companies that do business 

with, or own foreign subsidiaries that do business with, 

state sponsors of terrorism or foreign terrorist organizations. 

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 ‘‘Accountability and Re5 sponsibility in Contracting Act’’. 
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1 SEC. 2. INELIGIBILITY OF EXPATRIATED CORPORATIONS 

2 FOR FEDERAL CONTRACT AWARDS. 

3 (a) IN GENERAL.—No acquiring corporation or any 

4 subsidiary of such a corporation that enters into a cor5 porate expatriation transaction shall be eligible to be 

6 awarded a Federal contract. 

7 (b) PERIOD OF INELIGIBILITY.—The period of ineli8 gibility under subsection (a) shall be 3 years, beginning 

9 on the date of completion of the corporate expatriation 

10 transaction. 

11 (c) EXCEPTION FOR REPATRIATED CORPORA12 TIONS.—If an acquiring corporation reorganizes as a do13 mestic corporation within one year after the date of the 

14 enactment of this Act under the applicable incorporation 

15 laws of a State, subsection (a) shall not apply. 

16 (d) DEFINITIONS.—In this Act: 

17 (1) CORPORATE EXPATRIATION TRANS18 ACTION.—(A) The term ‘‘corporate expatriation 

19 transaction’’— 

20 (i) means any transaction if— 

21 (I) a foreign corporation (referred to 

22 in this section as the ‘‘acquiring corpora23 tion’’) acquires, as a result of such trans24 action, directly or indirectly substantially 

25 all of the properties held directly or indi26 rectly by a domestic corporation; and 
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1 (II) immediately after the transaction, 

2 more than 80 percent of the stock (by vote 

3 or value) of the acquiring corporation is 

4 held by former shareholders of the domes5 tic corporation by reason of holding stock 

6 in the domestic corporation; and 

7 (ii) includes any transaction if— 

8 (I) a foreign corporation acquires, as 

9 a result of such transaction, directly or in10 directly properties constituting a trade or 

11 business of a domestic partnership; 

12 (II) immediately after the transaction, 

13 more than 80 percent of the stock (by vote 

14 or value) of the acquiring corporation is 

15 held by former partners of the domestic 

16 partnership or related foreign partnership 

17 (determined without regard to stock of the 

18 acquiring corporation which is sold in a 

19 public offering related to the transaction); 

20 and 

21 (III) the acquiring corporation meets 

22 the requirements of clauses (i) and (ii) of 

23 subparagraph (B). 
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1 (B) Subclause (II) of subparagraph (A)(i) shall 

2 be applied by substituting ‘‘50 percent’’ for ‘‘80 per3 cent’’ with respect to any foreign corporation if— 

4 (i) such corporation does not have substan5 tial business activities (when compared to the 

6 total business activities of the expanded affili7 ated group) in the foreign country in which or 

8 under the law of which the corporation is cre9 ated or organized; and 

10 (ii) the stock of the corporation is publicly 

11 traded and the principal market for the public 

12 trading of such stock is in the United States. 

13 (C) For purposes of this paragraph— 

14 (i) a series of related transactions shall be 

15 treated as 1 transaction; and 

16 (ii) stock held by members of the expanded 

17 affiliated group which includes the acquiring 

18 corporation shall not be taken into account in 

19 determining ownership. 

20 (2) DOMESTIC.—The term ‘‘domestic’’ means 

21 created or organized in the United States or under 

22 the law of the United States or of any State. 

23 (3) EXPANDED AFFILIATED GROUP.—The term 

24 ‘‘expanded affiliated group’’ means an affiliated 

25 group as defined in section 1504(a) of the Internal 
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1 Revenue Code of 1986, without regard to section 

2 1504(b) of such Code. 

3 (e) APPLICABILITY.—This section shall apply with re4 spect to a corporate expatriation transaction occurring be5 fore, on, or after the date of the enactment of this Act. 

6 (f) WAIVER.— 

7 (1) IN GENERAL.—Subject to paragraph (2), 

8 the President may waive this section with respect to 

9 any specific contract if the President certifies to 

10 Congress that the waiver is required in the interest 

11 of national security. 

12 (2) REPORT.—The President may not carry out 

13 a waiver under paragraph (1) until a period of 30 

14 days has expired after the President submits to Con15 gress a report containing the certification described 

16 in paragraph (1) and setting forth the rationale for 

17 the waiver. 

18 SEC. 3. INELIGIBILITY FOR FEDERAL CONTRACT AWARDS 

19 OF COMPANIES DOING BUSINESS WITH, AND 

20 COMPANIES WITH FOREIGN SUBSIDIARIES 

21 DOING BUSINESS WITH, STATE SPONSORS OF 

22 TERRORISM OR FOREIGN TERRORIST ORGA23 NIZATIONS. 

24 (a) IN GENERAL.—No entity doing business with a 

25 state sponsor of terrorism or foreign terrorist organiza-
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1 tion, and no entity with a foreign subsidiary doing busi2 ness with a state sponsor of terrorism or foreign terrorist 

3 organization, shall be eligible to be awarded a Federal con4 tract. 

5 (b) PERIOD OF INELIGIBILITY.—The period of ineli6 gibility under subsection (a), as determined by the head 

7 of the executive agency entering into the contract con8 cerned, in cooperation with the Secretary of State, shall 

9 be— 

10 (1) 3 years for a first offense; 

11 (2) 10 years for a second offense; and 

12 (3) 15 years for any offense after a second of13 fense, 

14 beginning on the date of certification under subsection (c) 

15 or (d). 

16 (c) CERTIFICATION FOR CURRENT CONTRACTS.— 

17 Each executive agency shall require, for each contract with 

18 the agency that is in effect on the date of the enactment 

19 of this Act, that the contractor certify in writing that the 

20 contractor, the contractor’s domestic parent company, and 

21 all other domestic subsidiaries of the domestic parent com22 pany did not do business, and did not own a foreign sub23 sidiary that did business, during the 10-year period ending 

24 on the date of the enactment of this Act, with a state spon25 sor of terrorism or a foreign terrorist organization. A cer-
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1 tification that the contractor, the parent, or other subsidi2 aries did do such business, or did own one or more foreign 

3 subsidiaries that did such business, shall be considered a 

4 first offense under subsection (b). 

5 (d) CERTIFICATION FOR FUTURE CONTRACTS.— 

6 Each executive agency shall require, as a condition of en7 tering into a contract after the date of the enactment of 

8 this Act, that a potential contractor certify in writing that 

9 the potential contractor, the potential contractor’s domes10 tic parent company, and all other domestic subsidiaries of 

11 the domestic parent company is not doing business, and 

12 does not own a foreign subsidiary that is doing business, 

13 or has done business within the last ten years, with a state 

14 sponsor of terrorism or a foreign terrorist organization. 

15 Each certification that the potential contractor, the par16 ent, or other subsidiaries is doing such business, or owned 

17 one or more foreign subsidiaries doing such business cur18 rently or in the last ten years, shall be considered a sepa19 rate offense under subsection (b). 

20 (e) COMPLAINTS.— 

21 (1) IN GENERAL.—Citizens may file complaints 

22 with executive agencies regarding Federal contrac23 tors. 

24 (2) REPORT.—The head of each executive agen25 cy shall submit to Congress an annual report on the 
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1 complaints received by citizens under this sub2 section, including the nature of the complaint and 

3 the manner in which the agency handled the com4 plaint. 

5 (f) DEFINITIONS.—In this section: 

6 (1) EXECUTIVE AGENCY.—The term ‘‘executive 

7 agency’’ has the meaning provided in section 102 of 

8 title 31, United States Code. 

9 (2) FOREIGN SUBSIDIARY.—The term ‘‘foreign 

10 subsidiary’’ means any foreign entity owned or con11 trolled (directly or indirectly) by a potential con12 tractor. 

13 (3) STATE SPONSOR OF TERRORISM.—The term 

14 ‘‘state sponsor of terrorism’’ means any government 

15 which the Secretary of State has determined, for 

16 purposes of section 6(j) of the Export Administra17 tion Act of 1979, section 620A of the Foreign As18 sistance Act of 1961, section 40 of the Arms Export 

19 Control Act, or other provision of law, is a govern20 ment that has provided support for acts of inter21 national terrorism. 

22 (4) FOREIGN TERRORIST ORGANIZATION.—The 

23 term ‘‘foreign terrorist organization’’ means a for24 eign terrorist organization designated under section 
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1 219 of the Immigration and Nationality Act (8 

2 U.S.C. 1189). 

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