The 2010 Overseas Contractor Reform Act that Rep. Peter Welch, D-Vt., sponsored would require agencies to debar companies and individuals found in violation of the 1977 Foreign Corrupt Practices Act, and sever their existing government contracts and grants.
An agency head could issue a waiver to avoid debarring the contractor or grantee, after notifying Congress and justifying the decision.
"Contractors that bribe foreign governments have absolutely no business profiting off the American taxpayer," Welch said. "Those who violate the rule of law undermine not only our nation's mission and values, but also the safety of our troops."
The legislation was prompted by media reports last year that private security contractor Blackwater Worldwide, now known as Xe Services LLC, had authorized secret payments to Iraqi officials to prevent Iraq from revoking its license to operate in the country. Blackwater was under heavy scrutiny by the Iraqi government after guards reportedly opened fire three years ago in a crowded square, killing 17 civilians and injuring dozens more.
"This law puts contractors like Blackwater on notice that bribery and corruption simply will not be tolerated," Welch said. Xe has not been charged with violating the FCPA.
The language of the bill, however, could offer some wiggle room for contractors charged with bribing international officials.
During the past few years some of the largest federal contractors, including BAE Systems and Halliburton, have paid multimillion-dollar settlements to resolve FCPA allegations, and they have not faced suspension or debarment, in part because of carefully crafted settlement agreements with the Justice Department that allowed them to admit wrongdoing, but not necessarily confess to bribery.
BAE, for example, admitted to conspiring to defraud the United States and making false statements about its FCPA compliance program.
The Federal Acquisition Regulation states companies can be suspended or debarred for an "offense indicating a lack of business integrity or business honesty that seriously and directly affects the present responsibility of a government contractor or subcontractor." The FAR does not specifically mention FCPA breaches, but federal guidelines state a person or firm found in violation -- or even indicted -- for an FCPA offense can be banned from doing business with the government.
The bill now moves to the Senate, where there is no companion measure.