article: SECTION 1. SHORT TITLE. This Act may be cited as the ``Child Nutrition Protection Act of 1994''. SEC. 2. FINDINGS. The Congress finds the following: (1) In recent years, there has been a substantial number of instances of price-fixing, bid-rigging, and other fraudulent activity regarding foods purchased 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 established 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 accountability, 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 involving dairy products sold to schools or to the Department 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 activities, and total fines and civil damages of approximately $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 continue 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 individuals convicted of milk contract bid-rigging from participating in the school lunch and school breakfast programs. (8) Effective educational and monitoring programs 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-fixing, 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 addressed many of the concerns described in this section with respect to bid-rigging in the school lunch program. SEC. 3. DUTIES OF THE SECRETARY OF AGRICULTURE RELATING TO NONPROCUREMENT DEBARMENT UNDER CERTAIN CHILD NUTRITION PROGRAMS. (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 committees.--The term `appropriate congressional committees' means the Committee on Education and Labor of the House of Representatives and the Committee 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 established 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 authorized 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 involving 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 Secretary shall-- ``(1) through the food service management institute 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 conjunction 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 general regarding investigations of fraud and anticompetitive activities relating to the provision of goods or services in conjunction with the participation of a local agency in a child nutrition program. ``(c) Nonprocurement Debarment.-- ``(1) In general.--Except as provided in paragraph (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 debarment. ``(2) Causes for debarment.--Actions requiring initiation of nonprocurement debarment pursuant to paragraph (1) shall include the following: ``(A) A contractor commits an action or series of actions which constitute a substantial and material violation of a regulation of a child nutrition program of the Department of Agriculture, 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 proceeding, in connection with the supplying, providing, 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, including bid-rigging, price-fixing, the allocation of customers between competitors, or other violation of Federal or State antitrust laws; ``(ii) fraud, bribery, theft, forgery or embezzlement; ``(iii) breach of contract; ``(iv) making a false claim or statement; or ``(v) other obstruction of justice. ``(3) Exception.--If the Secretary determines that a decision on initiating nonprocurement debarment proceedings cannot be made within 180 days after notification of the occurrence of a cause for debarment described in paragraph (2) because of the need to further investigate matters relating to the possible debarment, the Secretary may have such additional 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 notwithstanding any other provision of law except subsection (d), if, after deciding to initiate nonprocurement 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 contractor has been previously debarred pursuant to nonprocurement debarment proceedings initiated 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 contractor for the specified period from contracting to provide goods or services in conjunction with the participation of a local agency in a child nutrition program. ``(D) Reversal, reduction, or exception.--Nothing in this paragraph shall restrict the ability of the Secretary to reverse a debarment decision, to reduce the period or scope of a debarment, nor to grant an exception permitting 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 Secretary determines there is good cause for the action. ``(5) Information.--On request, the Secretary shall present to the appropriate congressional committees information regarding the decisions required by this subsection. ``(6) Relationship to other authorities.--A debarment imposed under this section shall not reduce or diminish the authority of a Federal, 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 initiate 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 nutrition program; ``(3) is unfair to a person, subsidiary corporation, affiliate, parent company, or local division of a corporation that is not involved in the improper activity that would otherwise result in the debarment; or ``(4) is not in the public interest, as determined by the Secretary. ``(e) Exhaustion of Administrative Remedies.--Prior to seeking judicial review in a court of competent jurisdiction, a contractor against whom a nonprocurement debarment proceeding has been initiated shall-- ``(1) exhaust all administrative procedures prescribed 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 request, the Secretary shall present to the appropriate congressional committees information regarding the activities of the Secretary relating to anticompetitive activities, fraud, nonprocurement debarment, and any waiver granted 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 Budget, 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 debarment 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 SUSPEND A PERSON FROM FEDERAL FINANCIAL AND NONFINANCIAL ASSISTANCE AND BENEFITS. (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 amendment 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.
summary: Child Nutrition Protection Act of 1994 - Amends the National School Lunch Act to direct the Secretary of Agriculture (Secretary) to provide State and local agencies with training and other assistance to prevent fraud and anticompetitive activities in the school lunch, school breakfast, special milk, summer food service, WIC, and child and adult care food programs. Directs the Secretary to bar a company for at least three years (five years for a repeat conviction) from program participation upon conviction for anticompetitive or specified related activities.