Madam Chair, the U.S. House of Representatives has passed a bill including prohibitions on federal funds and other activities with respect to certain organizations. The intent of Congress with respect to those provisions is as follows: The…
Madam Chair, the U.S. House of Representatives has passed a bill including prohibitions on federal funds and other activities with respect to certain organizations. The intent of Congress with respect to those provisions is as follows:
The purpose of this bill is to cleanse federal contracting
and grant-making, completely and permanently. The purpose is
to put an end to the invidious practice of rewarding those
who steal taxpayer money by giving them more taxpayer money.
The bill imposes, and is intended to impose, a corporate
death penalty on contractors who fall within the scope of its
prohibitions. This is remedial legislation. The primary
intention is not merely to penalize such organization, since
other laws perform that function. Rather, the intention is to
protect the Government and the taxpayers from losses in the
future, and to deter misconduct on the part of federal fund
recipients. The intention of deterrence, in particular,
requires that these prohibitions be construed broadly, and
enforced strictly.
By this bill, Congress intends to exercise the full extent
of its Constitutional authority, both express and implied.
This includes, but is not limited to, Congress's express
authority under the Appropriations Clause of the
Constitution.
Notwithstanding the heading on the part of the bill
containing these provisions, it is not Congress's intent that
these prohibitions apply only to organizations that have been
indicted. Rather, Congress intends that the prohibitions
apply to all ``covered organizations,'' as defined in the
bill.
With respect to the prohibitions set forth in paragraph
(a), Congress intends that these prohibitions be automatic
and permanent. In this context, ``automatic'' means not
subject to alleviation by administrative action. Regarding
such prohibitions, Congress intends to substitute a ``per
se'' rule in place of any rule requiring a balancing of
factors, or exercise of discretion or judgment, to the full
extent permitted for Congress by the U.S. Constitution.
``Permanent'' means lasting for the entire time that the
organization remains in existence. If a principal, or
principals, of a covered organization form(s) or attempt(s)
to form a new organization, then that new organization may be
deemed, through administrative action, to be a covered
organization. ``Principal'' means an officer, a director, or
an owner of at least five percent of the shares of a covered
organization.
It is the intent of Congress that any organization seeking
or receiving a federal contract, grant, cooperative
agreement, any other form of agreement, federal funds, or
promotion by a Federal employee or contractor shall certify,
both when seeking and when receiving such a benefit, that the
organization is not a covered organization as that term is
defined in this bill. Any organization falsely making such a
certification shall be deemed a covered organization (and, in
fact, already is one), and shall be subject to prosecution
under 18 U.S.C. 1001 or any similar provision in the Criminal
Code. Any individual making such a false certification on
behalf of a covered organization shall be similarly liable.
Congress strongly recommends to federal prosecutors that
they execute their prosecutorial discretion in a manner
that holds such organizations and individuals accountable,
to the fullest extent permitted by law.
Congress intends that all covered organizations be added to
the ``Excluded Parties'' list maintained by the Federal
Government, with a prescribed duration on that list of
``permanent.'' Whenever the U.S. Department of Justice (DOJ)
learns or has reason to believe that an organization is a
covered organization, it shall be the duty of DOJ to apprise
the debarring officials of all relevant federal agencies of
such information. Congress intends that any person or
organization shall have standing to request that any
debarring official shall identify an organization as a
covered organization, and add that organization to the
``Excluded Parties'' list. Congress also intends that the
contention that any federal offeror or contractor is a
covered organization is a contention that is a valid basis
for a bid protest. Such a contention may be asserted at the
Government Accountability Office, the U.S. Court of Federal
Claims, and any other tribunal with bid protest authority.
The term ``covered organization'' includes parent
companies, subsidiaries and subsidiaries of parent companies
of a covered organization. Such affiliation is to be
determined by legal ownership of at least 50%.
The term ``organization'' in paragraph (a) means only a
covered organization. The enumerated prohibitions apply to
covered organizations only.
In subparagraph (a)(1), the term ``other form of
agreement'' includes, but is not limited to, the execution of
contract options, the award of task orders, and any other
form of action that establishes or increases the legal rights
of any federal contractor or grantee.
In subparagraph (a)(2), the term ``[n]o Federal funds in
any other form may be provided'' shall mean that all
contracts and grants that have been awarded to a covered
organization with a remaining duration of more than one year
on the date of enactment shall, within that one-year period,
be terminated for the convenience of the Government.
In subparagraph (b)(1) of the prohibitions, Congress
recognizes that the denial of liberty or property on the
basis of an indictment, without conviction, raises
Constitutional due process issues. If it is determined that
such denial is unconstitutional, or otherwise contrary to
law, then it is the intent of Congress that subparagraph
(b)(1) be held void, but that the remainder of the
prohibitions remain intact and enforceable.
In subparagraph (b)(3) of the prohibitions, it is the
intent of Congress that this subparagraph be construed
expansively. The term ``Federal or State regulatory agency''
shall include any agency authorized by law to issue
regulations, whether or not such regulations have been
issued. For instance, the term includes, but is not limited
to, the U.S. Departments of Defense, Health and Human
Services, and Labor. The term ``filed a fraudulent form''
includes, but is not limited to, actions that would establish
liability under 18 U.S.C. 1001 or 31 U.S.C. 3729. A
conviction or judgment under these laws, or any similar law,
is sufficient per se to establish that an organization is a
covered organization.
The term ``filed a fraudulent form'' is derived in part
from a report dated July 23, 2009 and issued by the Ranking
Member of the Committee on Oversight and Government Reform.
Page five of that report discusses allegations, not resulting
in a conviction or judgment, that ``ACORN has submitted false
filings to the Internal Revenue Service and the Department of
Labor.'' The report states that: ``All of these fraudulent
acts would constitute a violation of 18 U.S.C. 1001 by
presenting false documents to the United States government.''
A fortiori, any acts that actually do (not merely ``would'')
constitute such a violation, or a violation of similar
provisions such as those appearing in 31 U.S.C. 3729, as
determined by a conviction or judgment, shall per se
constitute the ``fil[ing] of a fraudulent form'' within the
meaning of these prohibitions. As the Ranking Member's report
describes, however, the term ``filed a fraudulent form''
extends to all organizations that have filed such a form,
whether or not such a filing has resulted in a conviction or
judgment. The Ranking Member issued a statement yesterday,
which said: ``For far too long, recipients of federal dollars
have been given free reign [sic] and some have acted in a
reckless and cavalier way and whether it be ACORN or anyone
else--abuse and fraud will not be tolerated.'' He added,
``frankly, I don't know how anyone can successfully argue
[that] those who actually perpetrate fraud and misuse
taxpayer dollars should not be'' subject to these
prohibitions.
The term ``form'' is to be construed broadly. It includes
all communications, in any form or format, which include any
information required by law. For instance, a request for
payment under a cost reimbursement contract that includes a
statement of incurred costs is a ``form'' within the meaning
of subparagraph (b)(3), because (among other reasons) such a
statement is required by law. Whenever the Government finds
that such a request is excessive, and reduces it, then this
means that the form that was filed was fraudulent, unless the
contractor possessed no information whatsoever that did allow
or should have allowed the contractor to know that the form
was excessive. No proof of specific intent to defraud is
required. It is the intent of Congress that the term ``form''
include, but not be limited to, the term ``claim'' under 18
U.S.C. 287, the terms ``claim,'' ``record'' and ``statement''
in 31 U.S.C. 3729, and the terms ``statement,''
``representation'' and ``entry'' under 10 U.S.C. 1001.
In all administrative or judicial proceedings regarding
whether a party has ``filed a fraudulent form,'' in cases
based on a conviction or judgment, the inquiry shall be
limited to whether there is any evidence in the record on
which the finder of fact could have determined that the
organization filed a fraudulent form. Under no circumstances
shall the burden of proof be anything beyond ``adequate
evidence'' in administrative proceedings, or ``support by any
evidence in the record'' in judicial proceedings, when such
judicial review of such administrative action is allowable at
all.
It is the intent of Congress that administrative action to
add an organization to the ``Excluded Parties'' list is
ministerial. For that reason, and otherwise, such
administrative action is committed to agency discretion under
5 U.S.C. 702(a)(1). In all judicial proceedings, it is the
intent of Congress that the prohibitions apply to an
organization that has been found to be a covered organization
unless and until a final judgment has been entered in favor
of the organization. Specifically, it is the intent of
Congress that in determining whether the organization should
be granted interim relief in such proceedings, the greatest
weight be the public interest in having the Government issue
contracts and grants only to organizations with unquestioned
integrity.
It is the intention of Congress that the term ``covered
organization'' apply to all organizations qualifying within
the definitions of subparagraphs (b)(1) through (b)(4),
without regard to when the acts establishing such
qualification occurred. Specifically, it is not the intent of
Congress that such acts be limited to acts following
enactment of these prohibitions. If, for instance, an
organization filed a fraudulent form with any Federal or
State regulatory agency in 2006, that organization is a
covered organization as of the date of enactment, and subject
to all prohibitions from the date of enactment onward.
Regarding paragraph c, if it shall be ruled or held that
this provision, or any other provision in these prohibitions,
is a bill of attainder, or constitutionally infirm for any
other reason, it is the intent of Congress that these
prohibitions nevertheless apply to all covered organizations
for which these prohibitions are not a bill of attainder, or
constitutionally infirm.
Regarding paragraph (d) of the prohibitions, the revision
of the Federal Acquisition Regulation (FAR) shall include the
revisions set forth above, including but not limited to
revision of Parts 3, 9, 15 and 33 of the FAR.