I
103D CONGRESS
2D SESSION
H. R. 4220
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.
IN THE HOUSE OF REPRESENTATIVES
APRIL 14, 1994
Mr. GOODLING (for himself, Mr. CUNNINGHAM, Mr. FAWELL, and Mr.
MCKEON) introduced the following bill; which was referred to the Com-
mittee on Education and Labor
A BILL
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.
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 ‘‘Child Nutrition Protec-
tion Act of 1994’’.
SEC. 2. FINDINGS.
The Congress finds the following:
(1) In recent years, there has been a substan-
tial number of instances of price-fixing, bid-rigging,
and other fraudulent activity regarding foods pur-
chased for—
(A) the school lunch program established
under the National School Lunch Act (42
U.S.C. 1751 et seq.); and
(B) the school breakfast program estab-
lished under section 4 of the Child Nutrition
Act of 1966 (42 U.S.C. 1773).
(2) In 1986, President Reagan issued Executive
Order 12549 which was intended to curb fraud,
waste, and abuse in Federal programs, increase ac-
countability, and ensure consistency among agency
regulations concerning debarment and suspension of
participants in Federal programs.
(3) During the past several years, the Antitrust
Division of the Department of Justice has filed over
95 criminal cases against companies and individuals
accused of bid-rigging conspiracies, false statements,
mail fraud, price-fixing, and similar activities involv-
ing dairy products sold to schools or to the Depart-
ment of Defense.
(4) Over 30 grand juries in several States are
investigating similar activities.
(5) 45 corporations and 48 individuals have
been convicted by Federal courts of similar activi-
ties, and total fines and civil damages of approxi-
mately $100,000,000 have been assessed in Federal
and State court actions for similar activities.
(6) Although several companies have violated
the regulations of food and nutrition programs of
the Department of Agriculture, such companies con-
tinue to participate in such programs and monetarily
benefit from such programs.
(7) A report of the Comptroller General of the
United States noted that, as of March 1992, the
Secretary of Agriculture had neither suspended nor
debarred any of the 13 dairy companies or 28 indi-
viduals convicted of milk contract bid-rigging from
participating in the school lunch and school break-
fast programs.
(8) Effective educational and monitoring pro-
grams can greatly reduce the incidence of fraud,
price-fixing, and bid-rigging by companies that sell
food products to schools.
(9) Reducing the incidence of fraud, price-fix-
ing, and bid-rigging in connection with the school
lunch and school breakfast programs could save
school districts, parents, and taxpayers millions of
dollars per year.
(10) The Comptroller General of the United
States has noted that bid-rigging awareness training
is an effective means of deterring improper collusion
and bid-rigging.
(11) The Comptroller General of the United
States in a General Accounting Office report ad-
dressed many of the concerns described in this sec-
tion with respect to bid-rigging in the school lunch
program.
SEC. 3. DUTIES OF THE SECRETARY OF AGRICULTURE RE-
LATING TO NONPROCUREMENT DEBARMENT
UNDER CERTAIN CHILD NUTRITION PRO-
GRAMS.
(a) IN GENERAL.—The National School Lunch Act
(42 U.S.C. 1751 et seq.) is amended by adding at the end
the following new section:
‘‘SEC. 25. DUTIES OF THE SECRETARY RELATING TO
NONPROCUREMENT DEBARMENT.
‘‘(a) DEFINITIONS.—For purposes of this section, the
following definitions apply:
‘‘(1) APPROPRIATE
CONGRESSIONAL
COMMIT-
TEES.—The term ‘appropriate congressional com-
mittees’ means the Committee on Education and
Labor of the House of Representatives and the Com-
mittee on Agriculture, Nutrition, and Forestry of
the Senate.
‘‘(2) CHILD NUTRITION PROGRAM.—The term
‘child nutrition program’ means—
‘‘(A) the school lunch program established
under this Act;
‘‘(B) the school breakfast program estab-
lished under section 4 of the Child Nutrition
Act of 1966 (42 U.S.C. 1773);
‘‘(C) the special milk program established
under section 3 of such Act (42 U.S.C. 1772);
‘‘(D) the special nutrition program for
women, infants, and children authorized under
section 17 of such Act (42 U.S.C. 1786);
‘‘(E) the summer food service program for
children established under section 13 of this
Act; and
‘‘(F) the child and adult care food program
established under section 17 of this Act.
‘‘(3) 
CONTRACTOR.—The 
term 
‘contractor’
means a person that contracts with a State, an
agency of a State, or a local agency to provide goods
or services in conjunction with the participation of
a local agency in a child nutrition program.
‘‘(4) LOCAL AGENCY.—The term ‘local agency’
means a school, school food authority, child care
center, sponsoring organization, or other entity au-
thorized to operate a child nutrition program at the
local level.
‘‘(5) 
NONPROCUREMENT
DEBARMENT.—The
term ‘nonprocurement debarment’ means an action
to bar a person from programs and activities involv-
ing Federal financial and nonfinancial assistance,
but not including Federal procurement programs
and activities.
‘‘(6) PERSON.—The term ‘person’ means any
individual, corporation, partnership, association, or
other legal entity, however organized.
‘‘(b) ASSISTANCE
TO
IDENTIFY
AND
PREVENT
FRAUD AND ANTICOMPETITIVE ACTIVITIES.—The Sec-
retary shall—
‘‘(1) through the food service management in-
stitute authorized under section 21, provide advice,
training, technical assistance, and guidance (which
may include awareness training, training films, and
troubleshooting advice) to representatives of States
and local agencies regarding means of identifying
and preventing fraud and anticompetitive activities
relating to the provision of goods or services in con-
junction with the participation of a local agency in
a child nutrition program; and
‘‘(2) provide information to, and fully cooperate
with, the Attorney General and State attorneys gen-
eral regarding investigations of fraud and anti-
competitive activities relating to the provision of
goods or services in conjunction with the participa-
tion of a local agency in a child nutrition program.
‘‘(c) NONPROCUREMENT DEBARMENT.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (3), not later than 180 days after notification
of the occurrence of a cause for debarment described
in paragraph (2), the Secretary shall initiate
nonprocurement debarment proceedings against the
contractor who has committed the cause for debar-
ment.
‘‘(2) CAUSES
FOR
DEBARMENT.—Actions re-
quiring initiation of nonprocurement debarment pur-
suant to paragraph (1) shall include the following:
‘‘(A) A contractor commits an action or se-
ries of actions which constitute a substantial
and material violation of a regulation of a child
nutrition program of the Department of Agri-
culture, as determined by the Secretary.
‘‘(B) A contractor is found guilty in any
criminal, civil, or administrative proceeding, or
found liable in any civil or administrative pro-
ceeding, in connection with the supplying, pro-
viding, or selling of a product or commodity to
any local agency or to any Federal agency in
connection with the child nutrition programs,
of—
‘‘(i) an anticompetitive activity, in-
cluding bid-rigging, price-fixing, the alloca-
tion of customers between competitors, or
other violation of Federal or State anti-
trust laws;
‘‘(ii) fraud, bribery, theft, forgery or
embezzlement;
‘‘(iii) breach of contract;
‘‘(iv) making a false claim or state-
ment; or
‘‘(v) other obstruction of justice.
‘‘(3) EXCEPTION.—If the Secretary determines
that a decision on initiating nonprocurement debar-
ment proceedings cannot be made within 180 days
after notification of the occurrence of a cause for de-
barment described in paragraph (2) because of the
need to further investigate matters relating to the
possible debarment, the Secretary may have such ad-
ditional time as the Secretary considers necessary to
make a decision, but not to exceed an additional 180
days.
‘‘(4) MANDATORY CHILD NUTRITION PROGRAM
DEBARMENT PERIODS.—
‘‘(A) IN GENERAL.—Subject to the other
provisions of this paragraph and notwithstand-
ing any other provision of law except subsection
(d), 
if, 
after 
deciding 
to 
initiate 
non-
procurement debarment proceedings pursuant
to paragraph (1), the Secretary decides to
debar a contractor, the debarment shall be for
a period of not less than 3 years.
‘‘(B) PREVIOUS DEBARMENT.—If the con-
tractor has been previously debarred pursuant
to nonprocurement debarment proceedings initi-
ated pursuant to paragraph (1), and the cause
for debarment is described in paragraph (2)
based on activities that occurred subsequent to
the initial debarment, the debarment shall be
for a period of not less than 5 years.
‘‘(C) SCOPE.—At a minimum, a debarment
under this subsection shall serve to bar the con-
tractor for the specified period from contracting
to provide goods or services in conjunction with
the participation of a local agency in a child nu-
trition program.
‘‘(D) REVERSAL, REDUCTION, OR EXCEP-
TION.—Nothing in this paragraph shall restrict
the ability of the Secretary to reverse a debar-
ment decision, to reduce the period or scope of
a debarment, nor to grant an exception permit-
ting a debarred contractor to participate in a
particular contract to provide goods or services
in conjunction with the participation of a local
agency in a child nutrition program, if the Sec-
retary determines there is good cause for the
action.
‘‘(5) INFORMATION.—On request, the Secretary
shall present to the appropriate congressional com-
mittees information regarding the decisions required
by this subsection.
‘‘(6) RELATIONSHIP
TO
OTHER
AUTHORI-
TIES.—A debarment imposed under this section
shall not reduce or diminish the authority of a Fed-
eral, State, or local government agency or court to
penalize, imprison, fine, suspend, debar, or take
other adverse action against a person in a civil,
criminal, or administrative proceeding.
‘‘(7) REGULATIONS.—The Secretary shall issue
such regulations as are necessary to carry out this
subsection.
‘‘(d) MANDATORY
DEBARMENT.—Notwithstanding
any other provision of this section, the Secretary shall ini-
tiate nonprocurement debarment proceedings against the
contractor (including any cooperative) who has committed
the cause for debarment (as determined under section
(c)(2)), unless the action—
‘‘(1) is likely to have a significant adverse effect
on competition or prices in the relevant market or
nationally;
‘‘(2) will interfere with the ability of a local
agency to procure a needed product for a child nu-
trition program;
‘‘(3) is unfair to a person, subsidiary corpora-
tion, affiliate, parent company, or local division of a
corporation that is not involved in the improper ac-
tivity that would otherwise result in the debarment;
or
‘‘(4) is not in the public interest, as determined
by the Secretary.
‘‘(e) 
EXHAUSTION
OF
ADMINISTRATIVE
REM-
EDIES.—Prior to seeking judicial review in a court of com-
petent jurisdiction, a contractor against whom a
nonprocurement debarment proceeding has been initiated
shall—
‘‘(1) exhaust all administrative procedures pre-
scribed by the Secretary; and
‘‘(2) receive notice of the final determination of
the Secretary.
‘‘(f) INFORMATION RELATING TO PREVENTION AND
CONTROL
OF ANTICOMPETITIVE ACTIVITIES.—On re-
quest, the Secretary shall present to the appropriate con-
gressional committees information regarding the activities
of the Secretary relating to anticompetitive activities,
fraud, nonprocurement debarment, and any waiver grant-
ed by the Secretary under this section.’’.
(b) APPLICABILITY.—Section 25(c) of the National
School Lunch Act (as added by subsection (a)) shall not
apply to a cause for debarment as described in section
25(c)(2) of such Act that is based on an activity that took
place prior to the date of enactment of this Act.
SEC. 4. REPORT ON CONSISTENT DEBARMENT POLICY.
Not later than 120 days after the date of enactment
of this Act, the Secretary of Agriculture, in consultation
with the Director of the Office of Management and Budg-
et, the Secretary of Defense, and such other officials as
the Secretary of Agriculture determines are appropriate,
shall advise the appropriate committees of the Congress
and the Comptroller General of the United States as to
the appropriateness and usefulness of a consistent debar-
ment policy under—
(1) the Federal acquisition regulations issued
under title 48, Code of Federal Regulations; and
(2) Federal nonprocurement regulations.
SEC. 5. NO REDUCTION IN AUTHORITY TO DEBAR OR SUS-
PEND A PERSON FROM FEDERAL FINANCIAL
AND NONFINANCIAL ASSISTANCE AND BENE-
FITS.
(a) IN GENERAL.—The authority of the Secretary of
Agriculture that exists on the date of enactment of this
Act to debar or suspend a person from Federal financial
and nonfinancial assistance and benefits under Federal
programs and activities, on a government-wide basis, shall
not be diminished or reduced by this Act or the amend-
ment made by section 3 of this Act.
(b) DEBARMENT OR SUSPENSION.—The Secretary
may continue, after the date of enactment of this Act, to
debar or suspend a person on a government-wide basis,
from Federal financial and nonfinancial assistance and
benefits for any cause for debarment or suspension that
is specified in part 3017 of chapter XXX of subtitle B
of title 7, Code of Federal Regulations, or as otherwise
permitted by law, including regulations.
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