I
105TH CONGRESS
1ST SESSION
H. R. 925
To prohibit the Department of Defense from allowing defense contractors
to recoup merger-related restructuring costs from the taxpayers.
IN THE HOUSE OF REPRESENTATIVES
MARCH 5, 1997
Mr. SMITH of New Jersey (for himself, Mr. SANDERS, Mr. DEFAZIO, Mr.
KLUG, Mr. DICKEY, Mr. NEUMANN, Mr. ACKERMAN, Mr. BARRETT of
Nebraska, Mr. LIPINSKI, Mr. FRANKS of New Jersey, Mrs. MALONEY of
New York, Mr. CHABOT, Mrs. KENNELLY of Connecticut, Mr. WATTS of
Oklahoma, Mr. STARK, Mr. HOEKSTRA, Ms. JACKSON-LEE of Texas, Mr.
LOBIONDO, Mr. EVANS, Ms. NORTON, Mr. FRANK of Massachusetts, Ms.
STABENOW, 
Mr. 
LEWIS
of 
Georgia, 
Mrs. 
CARSON, 
and 
Mr.
BLUMENAUER) introduced the following bill; which was referred to the
Committee on National Security
A BILL
To prohibit the Department of Defense from allowing defense
contractors to recoup merger-related restructuring costs
from the taxpayers.
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 ‘‘Payoffs-for-Layoffs
Corporate Welfare Elimination Act of 1997’’.
SEC. 2. PROHIBITION ON PAYMENTS UNDER DEFENSE CON-
TRACTS FOR RESTRUCTURING COSTS OF A
DEFENSE CONTRACTOR MERGER OR ACQUI-
SITION.
(a) PROHIBITION.—No funds appropriated or other-
wise made available to the Department of Defense may
be obligated or expended under section 2324 of title 10,
United States Code, for payment of any restructuring cost
associated with a merger or acquisition that is incurred
by a contractor under contract with the Department of
Defense.
(b) APPLICABILITY.—(1) The prohibition in sub-
section (a) applies with respect to any merger or acquisi-
tion occurring on or after the date of the enactment of
this Act.
(2) In the case of a merger or acquisition that oc-
curred before the date of the enactment of this Act, funds
appropriated or otherwise made available to the Depart-
ment of Defense may be used to process or pay a claim
for restructuring costs associated with the merger or ac-
quisition only if the relevant contract or advance agree-
ment specifies that payment for such costs may be made
under the contract or agreement using funds appropriated
or otherwise made available to the Department of Defense.
(c) CONFORMING REPEAL.—Subsection (a) of section
818 of the National Defense Authorization Act for Fiscal
Year 1995 (Public Law 103–337; 10 U.S.C. 2324 note)
is repealed.
(d) REPORTS BY SECRETARY OF DEFENSE.—Sub-
section (e) of such section is amended—
(1) in the matter preceding paragraph (1), by
striking out ‘‘and 1997’’ and inserting in lieu there-
of ‘‘1997, 1998, 1999, and 2000’’; and
(2) by adding at the end of paragraph (3) the
following:
‘‘(F) An analysis of the dollar amount of
any windfalls achieved by the combining defense
contractors which results from the reduction of
overhead on fixed-price type contracts from the
Department of Defense that existed before the
business combination.
‘‘(G) A list of each major weapons system
purchased by the Department of Defense since
July 21, 1993, for which actual prices have ac-
tually been reduced that are attributable to the
contractors’ restructuring efforts.
‘‘(H) The total number of pending restruc-
turing proposals submitted to the Department
of Defense as of the date of the report and the
total dollar amount of the requests for restruc-
turing costs contained in those proposals.’’.
(e) COMPTROLLER GENERAL REPORT.—Subsection
(g)(3) of such section is amended by adding at the end
the following: ‘‘The report shall include an estimate and
detailed description of the net effect on the Federal budget
of reimbursing defense contractors for their merger-relat-
ed restructuring costs, including the following:
‘‘(A) The payment by the Department of De-
fense of restructuring costs resulting from business
combinations of defense contractors.
‘‘(B) The reduction of Federal tax revenues
from unemployment resulting from business com-
binations of defense contractors who have been reim-
bursed for their merger-related restructuring costs.
‘‘(C) The increase in Federal expenditures in
other Federal adjustment programs from unemploy-
ment resulting from business combinations of de-
fense contractors who have been reimbursed for
their merger-related restructuring costs, including
food stamps, housing and energy assistance, and any
other programs the Comptroller General determines
that unemployed persons are likely to use at a rate
higher than employed persons.
‘‘(D) The increase in Federal grants of cash
and in-kind assistance to States and local commu-
nities that have experienced significant layoffs or fa-
cility relocation (or both) resulting from the business
combination, that are attributable to losses in the
State and local tax base and increased the use of
State and local government services similar to those
described in subparagraph (C).
‘‘(E) The effect of reduced competition result-
ing from business combinations on the prices the
Department of Defense pays for military equipment
and services.’’.
(f) DEFINITIONS.—Such section is further amended
by adding at the end the following new subsection:
‘‘(h) DEFINITIONS.—For purposes of this section:
‘‘(1) The term ‘windfall’ means the savings, ei-
ther actually realized or anticipated, by the combin-
ing defense contractors as a result of reducing over-
head through merger-related restructuring which are
foregone by the Government because certain defense
contracts are fixed-price type contracts that existed
before the business combination and cannot be ad-
justed to reflect the contractor’s reduced overhead.
‘‘(2) The term ‘significant layoffs’ means a situ-
ation in which the number of layoffs exceed 500 full-
time equivalent employees or in which one of the
combining defense contractors previously represented
the fifth largest employer or greater in the relevant
State or local community.’’.
Æ