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 expatri-
ated corporations and any companies that do business 
with, or own foreign subsidiaries that do business with, 
state sponsors of terrorism or foreign terrorist organiza-
tions. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Accountability and Re-
sponsibility in Contracting Act’’.
SEC. 2. INELIGIBILITY OF EXPATRIATED CORPORATIONS 
FOR FEDERAL CONTRACT AWARDS. 
(a) IN GENERAL.—No acquiring corporation or any 
subsidiary of such a corporation that enters into a cor-
porate expatriation transaction shall be eligible to be 
awarded a Federal contract. 
(b) PERIOD OF INELIGIBILITY.—The period of ineli-
gibility under subsection (a) shall be 3 years, beginning 
on the date of completion of the corporate expatriation 
transaction. 
(c) 
EXCEPTION
FOR
REPATRIATED
CORPORA-
TIONS.—If an acquiring corporation reorganizes as a do-
mestic corporation within one year after the date of the 
enactment of this Act under the applicable incorporation 
laws of a State, subsection (a) shall not apply. 
(d) DEFINITIONS.—In this Act: 
(1) 
CORPORATE
EXPATRIATION
TRANS-
ACTION.—(A) The term ‘‘corporate expatriation 
transaction’’— 
(i) means any transaction if— 
(I) a foreign corporation (referred to 
in this section as the ‘‘acquiring corpora-
tion’’) acquires, as a result of such trans-
action, directly or indirectly substantially 
all of the properties held directly or indi-
rectly by a domestic corporation; and
(B) Subclause (II) of subparagraph (A)(i) shall 
be applied by substituting ‘‘50 percent’’ for ‘‘80 per-
cent’’ with respect to any foreign corporation if— 
(i) such corporation does not have substan-
tial business activities (when compared to the 
total business activities of the expanded affili-
ated group) in the foreign country in which or 
under the law of which the corporation is cre-
ated or organized; and 
(ii) the stock of the corporation is publicly 
traded and the principal market for the public 
trading of such stock is in the United States. 
(C) For purposes of this paragraph— 
(i) a series of related transactions shall be 
treated as 1 transaction; and 
(ii) stock held by members of the expanded 
affiliated group which includes the acquiring 
corporation shall not be taken into account in 
determining ownership. 
(2) DOMESTIC.—The term ‘‘domestic’’ means 
created or organized in the United States or under 
the law of the United States or of any State. 
(3) EXPANDED AFFILIATED GROUP.—The term 
‘‘expanded affiliated group’’ means an affiliated 
group as defined in section 1504(a) of the Internal
Revenue Code of 1986, without regard to section 
1504(b) of such Code. 
(e) APPLICABILITY.—This section shall apply with re-
spect to a corporate expatriation transaction occurring be-
fore, on, or after the date of the enactment of this Act. 
(f) WAIVER.— 
(1) IN GENERAL.—Subject to paragraph (2), 
the President may waive this section with respect to 
any specific contract if the President certifies to 
Congress that the waiver is required in the interest 
of national security. 
(2) REPORT.—The President may not carry out 
a waiver under paragraph (1) until a period of 30 
days has expired after the President submits to Con-
gress a report containing the certification described 
in paragraph (1) and setting forth the rationale for 
the waiver. 
SEC. 3. INELIGIBILITY FOR FEDERAL CONTRACT AWARDS 
OF COMPANIES DOING BUSINESS WITH, AND 
COMPANIES WITH FOREIGN SUBSIDIARIES 
DOING BUSINESS WITH, STATE SPONSORS OF 
TERRORISM OR FOREIGN TERRORIST ORGA-
NIZATIONS. 
(a) IN GENERAL.—No entity doing business with a 
state sponsor of terrorism or foreign terrorist organiza-
tion, and no entity with a foreign subsidiary doing busi-
ness with a state sponsor of terrorism or foreign terrorist 
organization, shall be eligible to be awarded a Federal con-
tract. 
(b) PERIOD OF INELIGIBILITY.—The period of ineli-
gibility under subsection (a), as determined by the head 
of the executive agency entering into the contract con-
cerned, in cooperation with the Secretary of State, shall 
be— 
(1) 3 years for a first offense; 
(2) 10 years for a second offense; and 
(3) 15 years for any offense after a second of-
fense, 
beginning on the date of certification under subsection (c) 
or (d). 
(c) CERTIFICATION
FOR CURRENT CONTRACTS.— 
Each executive agency shall require, for each contract with 
the agency that is in effect on the date of the enactment 
of this Act, that the contractor certify in writing that the 
contractor, the contractor’s domestic parent company, and 
all other domestic subsidiaries of the domestic parent com-
pany did not do business, and did not own a foreign sub-
sidiary that did business, during the 10-year period ending 
on the date of the enactment of this Act, with a state spon-
sor of terrorism or a foreign terrorist organization. A cer-
tification that the contractor, the parent, or other subsidi-
aries did do such business, or did own one or more foreign 
subsidiaries that did such business, shall be considered a 
first offense under subsection (b). 
(d) CERTIFICATION
FOR FUTURE CONTRACTS.— 
Each executive agency shall require, as a condition of en-
tering into a contract after the date of the enactment of 
this Act, that a potential contractor certify in writing that 
the potential contractor, the potential contractor’s domes-
tic parent company, and all other domestic subsidiaries of 
the domestic parent company is not doing business, and 
does not own a foreign subsidiary that is doing business, 
or has done business within the last ten years, with a state 
sponsor of terrorism or a foreign terrorist organization. 
Each certification that the potential contractor, the par-
ent, or other subsidiaries is doing such business, or owned 
one or more foreign subsidiaries doing such business cur-
rently or in the last ten years, shall be considered a sepa-
rate offense under subsection (b). 
(e) COMPLAINTS.— 
(1) IN GENERAL.—Citizens may file complaints 
with executive agencies regarding Federal contrac-
tors. 
(2) REPORT.—The head of each executive agen-
cy shall submit to Congress an annual report on the
complaints received by citizens under this sub-
section, including the nature of the complaint and 
the manner in which the agency handled the com-
plaint. 
(f) DEFINITIONS.—In this section: 
(1) EXECUTIVE AGENCY.—The term ‘‘executive 
agency’’ has the meaning provided in section 102 of 
title 31, United States Code. 
(2) FOREIGN SUBSIDIARY.—The term ‘‘foreign 
subsidiary’’ means any foreign entity owned or con-
trolled (directly or indirectly) by a potential con-
tractor. 
(3) STATE SPONSOR OF TERRORISM.—The term 
‘‘state sponsor of terrorism’’ means any government 
which the Secretary of State has determined, for 
purposes of section 6(j) of the Export Administra-
tion Act of 1979, section 620A of the Foreign As-
sistance Act of 1961, section 40 of the Arms Export 
Control Act, or other provision of law, is a govern-
ment that has provided support for acts of inter-
national terrorism. 
(4) FOREIGN TERRORIST ORGANIZATION.—The 
term ‘‘foreign terrorist organization’’ means a for-
eign terrorist organization designated under section
219 of the Immigration and Nationality Act (8 
U.S.C. 1189). 
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