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Rep. Grayson Calls For 'Corporate Death Penalty On Contractors' Who Rip Off Government

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When the House of Representatives went after federal funding for the community-organizing group ACORN last week, the bill as written also affected "any organization" that had been involved in a wide range of fraudulent activity and other bad behavior.

On Friday, Rep. Alan Grayson (D-Fla.) inserted into the "legislative history" language spelling out that including all fraudulent organizations was, in fact, the intent of the Congress.

Meanwhile, he has been asking citizens to suggest specific companies which would be targeted by the anti-fraud language and provide evidence for the claim. The list has grown several pages long. The names of those organizations will be submitted into the congressional record next week.

"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," writes Grayson. "The bill imposes, and is intended to impose, a corporate death penalty on contractors who fall within the scope of its prohibitions."

Grayson's history notes that the highest-ranking Republican on the Oversight and Government Reform Committee, Rep. Darrell Issa (R-Calif.), agrees with him. 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."

Read the full entry into the legislative record:

H.R. 3221 - LEGISLATIVE HISTORY

Madam Speaker,

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 USC 287, the terms "claim," "record" and "statement" in 31 USC 3729, and the terms "statement," "representation" and "entry" under 10 USC 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 USC 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.

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