,,ii #aafth ,,congress #ast ,session ,s4 #baci ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,july #ag1 #bjai,mr4 ,durbin 7for himself1 ,mr4 ,reed1 ,mr4 ,whitehouse1 ,ms4 ,duckworth1 and ,mr4 ,sanders7 introduced the following bill2 which was read twice and referred to the ,committee on ,homeland ,security and ,governmental ,affairs ,a ,,bill ,to prohibit the award of ,federal ,government contracts to inverted domestic corporations1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,american ,business for ,american ,companies ,act of #bjai4 #b4 ,prohibition on awarding contracts to inverted domestic corporations 7a7 ,civilian contracts 7#a7 ,in general ,chapter #dg of title #da1 ,united ,states ,code1 is amended by adding at the end the following new section3 #dgad4 ,prohibition on awarding contracts to inverted domestic corporations 7a7 ,prohibition 7#a7 ,in general ,the head of an executive agency may not award a contract for the procurement of property or services to-- 7,a7 any foreign incorporated entity that such head has determined is an inverted domestic corporation or any subsidiary of such entity2 or 7,b7 any joint venture if more than #aj percent of the joint venture 7by vote or value7 is held by a foreign incorporated entity that such head has determined is an inverted domestic corporation or any subsidiary of such entity4 7#b7 ,subcontracts 7,a7 ,in general ,the head of an executive agency shall include in each contract for the procurement of property or services awarded by the executive agency with a value in excess of #aj1jjj1jjj1 other than a contract for exclusively commercial items1 a clause that prohibits the prime contractor on such contract from-- 7i7 awarding a first-tier subcontract with a value greater than #aj percent of the total value of the prime contract to an entity or joint venture described in paragraph 7#a72 or 7ii7 structuring subcontract tiers in a manner designed to avoid the limitation in paragraph 7#a7 by enabling an entity or joint venture described in paragraph 7#a7 to perform more than #aj percent of the total value of the prime contract as a lower-tier subcontractor4 7,b7 ,penalties ,the contract clause included in contracts pursuant to subparagraph 7,a7 shall provide that1 in the event that the prime contractor violates the contract clause-- 7i7 the prime contract may be terminated for default2 and 7ii7 the matter may be referred to the suspension or debarment official for the appropriate agency and may be a basis for suspension or debarment of the prime contractor4 7b7 ,inverted domestic corporation 7#a7 ,in general ,for purposes of this section1 a foreign incorporated entity shall be treated as an inverted domestic corporation if1 pursuant to a plan 7or a series of related transactions7-- 7,a7 the entity completes on or after ,may #h1 #bjad1 the direct or indirect acquisition of-- 7i7 substantially all of the properties held directly or indirectly by a domestic corporation2 or 7ii7 substantially all of the assets of1 or substantially all of the properties constituting a trade or business of1 a domestic partnership2 and 7,b7 after the acquisition1 either-- 7i7 more than #ej percent of the stock 7by vote or value7 of the entity is held-- 7,i7 in the case of an acquisition with respect to a domestic corporation1 by former shareholders of the domestic corporation by reason of holding stock in the domestic corporation2 or 7,,ii7 in the case of an acquisition with respect to a domestic partnership1 by former partners of the domestic partnership by reason of holding a capital or profits interest in the domestic partnership2 or 7ii7 the management and control of the expanded affiliated group which includes the entity occurs1 directly or indirectly1 primarily within the ,united ,states1 as determined pursuant to regulations prescribed by the ,secretary of the ,treasury1 and such expanded affiliated group has significant domestic business activities4 7#b7 ,exception for corporations with substantial business activities in foreign country of organization 7,a7 ,in general ,a foreign incorporated entity described in paragraph 7#a7 shall not be treated as an inverted domestic corporation if after the acquisition the expanded affiliated group which includes the entity has substantial business activities in the foreign country in which or under the law of which the entity is created or organized when compared to the total business activities of such expanded affiliated group4 7,b7 ,substantial business activities ,the ,secretary of the ,treasury 7or the ,secretary's delegate7 shall establish regulations for determining whether an affiliated group has substantial business activities for purposes of subparagraph 7,a71 except that such regulations may not treat any group as having substantial business activities if such group would not be considered to have substantial business activities under the regulations prescribed under section #ghgd of the ,internal ,revenue ,code of #aihf1 as in effect on ,january #ah1 #bjag4 7#c7 ,significant domestic business activities 7,a7 ,in general ,for purposes of paragraph 7#a77;,b77ii71 an expanded affiliated group has significant domestic business activities if at least #be percent of-- 7i7 the employees of the group are based in the ,united ,states2 7ii7 the employee compensation incurred by the group is incurred with respect to employees based in the ,united ,states2 7iii7 the assets of the group are located in the ,united ,states2 or 7iv7 the income of the group is derived in the ,united ,states4 7,b7 ,determination ,determinations pursuant to subparagraph 7,a7 shall be made in the same manner as such determinations are made for purposes of determining substantial business activities under regulations referred to in paragraph 7#b7 as in effect on ,january #ah1 #bjag1 but applied by treating all references in such regulations to foreign country and relevant foreign country as references to the ,united ,states4 ,the ,secretary of the ,treasury 7or the ,secretary's delegate7 may issue regulations decreasing the threshold percent in any of the tests under such regulations for determining if business activities constitute significant domestic business activities for purposes of this paragraph4 7c7 ,waiver 7#a7 ,in general ,the head of an executive agency may waive subsection 7a7 with respect to any ,federal ,government contract under the authority of such head if the head determines that the waiver is-- 7,a7 required in the interest of national security2 or 7,b7 necessary for the efficient or effective administration of ,federal or federally funded-- 7i7 programs that provide health benefits to individuals2 or 7ii7 public health programs4 7#b7 ,report to ,congress ,the head of an executive agency issuing a waiver under paragraph 7#a7 shall1 not later than #ad days after issuing such waiver1 submit a written notification of the waiver to the relevant authorizing committees of ,congress and the ,committees on ,appropriations of the ,senate and the ,house of ,representatives4 7d7 ,applicability 7#a7 ,in general ,except as provided in paragraph 7#b71 this section shall not apply to any contract entered into before the date of the enactment of this section4 7#b7 ,task and delivery orders ,this section shall apply to any task or delivery order issued after the date of the enactment of this section pursuant to a contract entered into before1 on1 or after such date of enactment4 7#c7 ,scope ,this section applies only to contracts subject to regulation under the ,federal ,acquisition ,regulation4 7e7 ,definitions and special rules 7#a7 ,definitions ,in this section1 the terms expanded affiliated group1 foreign incorporated entity1 person1 domestic1 and foreign have the meaning given those terms in section #hce7;c7 of the ,homeland ,security ,act of #bjjb 7#f ,u4,s4,c4 #cie7;c774 7#b7 ,special rules ,in applying subsection 7b7 of this section for purposes of subsection 7a7 of this section1 the rules described under #hce7;c77#a7 of the ,homeland ,security ,act of #bjjb 7#f ,u4,s4,c4 #cie7;c77#a77 shall apply4 4 7#b7 ,clerical amendment ,the table of sections at the beginning of chapter #dg of title #da1 ,united ,states ,code1 is amended by inserting after the item relating to section #dgac the following new item3 #dgad4 ,prohibition on awarding contracts to inverted domestic corporations44 7b7 ,defense contracts 7#a7 ,in general ,chapter #acg of title #aj1 ,united ,states ,code1 is amended by adding at the end the following new section3 #bcci4 ,prohibition on awarding contracts to inverted domestic corporations 7a7 ,prohibition 7#a7 ,in general ,the head of an agency may not award a contract for the procurement of property or services to-- 7,a7 any foreign incorporated entity that such head has determined is an inverted domestic corporation or any subsidiary of such entity2 or 7,b7 any joint venture if more than #aj percent of the joint venture 7by vote or value7 is owned by a foreign incorporated entity that such head has determined is an inverted domestic corporation or any subsidiary of such entity4 7#b7 ,subcontracts 7,a7 ,in general ,the head of an executive agency shall include in each contract for the procurement of property or services awarded by the executive agency with a value in excess of #aj1jjj1jjj1 other than a contract for exclusively commercial items1 a clause that prohibits the prime contractor on such contract from-- 7i7 awarding a first-tier subcontract with a value greater than #aj percent of the total value of the prime contract to an entity or joint venture described in paragraph 7#a72 or 7ii7 structuring subcontract tiers in a manner designed to avoid the limitation in paragraph 7#a7 by enabling an entity or joint venture described in paragraph 7#a7 to perform more than #aj percent of the total value of the prime contract as a lower-tier subcontractor4 7,b7 ,penalties ,the contract clause included in contracts pursuant to subparagraph 7,a7 shall provide that1 in the event that the prime contractor violates the contract clause-- 7i7 the prime contract may be terminated for default2 and 7ii7 the matter may be referred to the suspension or debarment official for the appropriate agency and may be a basis for suspension or debarment of the prime contractor4 7b7 ,inverted domestic corporation 7#a7 ,in general ,for purposes of this section1 a foreign incorporated entity shall be treated as an inverted domestic corporation if1 pursuant to a plan 7or a series of related transactions7-- 7,a7 the entity completes on or after ,may #h1 #bjad1 the direct or indirect acquisition of-- 7i7 substantially all of the properties held directly or indirectly by a domestic corporation2 or 7ii7 substantially all of the assets of1 or substantially all of the properties constituting a trade or business of1 a domestic partnership2 and 7,b7 after the acquisition1 either-- 7i7 more than #ej percent of the stock 7by vote or value7 of the entity is held-- 7,i7 in the case of an acquisition with respect to a domestic corporation1 by former shareholders of the domestic corporation by reason of holding stock in the domestic corporation2 or 7,,ii7 in the case of an acquisition with respect to a domestic partnership1 by former partners of the domestic partnership by reason of holding a capital or profits interest in the domestic partnership2 or 7ii7 the management and control of the expanded affiliated group which includes the entity occurs1 directly or indirectly1 primarily within the ,united ,states1 as determined pursuant to regulations prescribed by the ,secretary of the ,treasury1 and such expanded affiliated group has significant domestic business activities4 7#b7 ,exception for corporations with substantial business activities in foreign country of organization 7,a7 ,in general ,a foreign incorporated entity described in paragraph 7#a7 shall not be treated as an inverted domestic corporation if after the acquisition the expanded affiliated group which includes the entity has substantial business activities in the foreign country in which or under the law of which the entity is created or organized when compared to the total business activities of such expanded affiliated group4 7,b7 ,substantial business activities ,the ,secretary of the ,treasury 7or the ,secretary's delegate7 shall establish regulations for determining whether an affiliated group has substantial business activities for purposes of subparagraph 7,a71 except that such regulations may not treat any group as having substantial business activities if such group would not be considered to have substantial business activities under the regulations prescribed under section #ghgd of the ,internal ,revenue ,code of #aihf1 as in effect on ,january #ah1 #bjag4 7#c7 ,significant domestic business activities 7,a7 ,in general ,for purposes of paragraph 7#a77;,b77ii71 an expanded affiliated group has significant domestic business activities if at least #be percent of-- 7i7 the employees of the group are based in the ,united ,states2 7ii7 the employee compensation incurred by the group is incurred with respect to employees based in the ,united ,states2 7iii7 the assets of the group are located in the ,united ,states2 or 7iv7 the income of the group is derived in the ,united ,states4 7,b7 ,determination ,determinations pursuant to subparagraph 7,a7 shall be made in the same manner as such determinations are made for purposes of determining substantial business activities under regulations referred to in paragraph 7#b7 as in effect on ,january #ah1 #bjag1 but applied by treating all references in such regulations to foreign country and relevant foreign country as references to the ,united ,states4 ,the ,secretary of the ,treasury 7or the ,secretary's delegate7 may issue regulations decreasing the threshold percent in any of the tests under such regulations for determining if business activities constitute significant domestic business activities for purposes of this paragraph4 7c7 ,waiver 7#a7 ,in general ,the head of an agency may waive subsection 7a7 with respect to any ,federal ,government contract under the authority of such head if the head determines that the waiver is required in the interest of national security or is necessary for the efficient or effective administration of ,federal or federally funded programs that provide health benefits to individuals4 7#b7 ,report to ,congress ,the head of an agency issuing a waiver under paragraph 7#a7 shall1 not later than #ad days after issuing such waiver1 submit a written notification of the waiver to the congressional defense committees4 7d7 ,applicability 7#a7 ,in general ,except as provided in paragraph 7#b71 this section shall not apply to any contract entered into before the date of the enactment of this section4 7#b7 ,task and delivery orders ,this section shall apply to any task or delivery order issued after the date of the enactment of this section pursuant to a contract entered into before1 on1 or after such date of enactment4 7#c7 ,scope ,this section applies only to contracts subject to regulation under the ,federal ,acquisition ,regulation and the ,defense ,supplement to the ,federal ,acquisition ,regulation4 7e7 ,definitions and special rules 7#a7 ,definitions ,in this section1 the terms expanded affiliated group1 foreign incorporated entity1 person1 domestic1 and foreign have the meaning given those terms in section #hce7;c7 of the ,homeland ,security ,act of #bjjb 7#f ,u4,s4,c4 #cie7;c774 7#b7 ,special rules ,in applying subsection 7b7 of this section for purposes of subsection 7a7 of this section1 the rules described under #hce7;c77#a7 of the ,homeland ,security ,act of #bjjb 7#f ,u4,s4,c4 #cie7;c77#a77 shall apply4 4 7#b7 ,clerical amendment ,the table of sections at the beginning of chapter #acg of title #aj1 ,united ,states ,code1 is amended by inserting after the item relating to section #bcch the following new item3 #bcci4 ,prohibition on awarding contracts to inverted domestic corporations44 7c7 ,regulations regarding management and control 7#a7 ,in general ,the ,secretary of the ,treasury 7or the ,secretary's delegate7 shall1 for purposes of section #dgad7;b77#a77;,b77ii7 of title #da1 ,united ,states ,code1 and section #bcci7;b77#a77;,b77ii7 of title #aj1 ,united ,states ,code1 as added by subsections 7a7 and 7b71 respectively1 prescribe regulations for purposes of determining cases in which the management and control of an expanded affiliated group is to be treated as occurring1 directly or indirectly1 primarily within the ,united ,states4 ,the regulations prescribed under the preceding sentence shall apply to periods after ,may #h1 #bjad4 7#b7 ,executive officers and senior management ,the regulations prescribed under paragraph 7#a7 shall provide that the management and control of an expanded affiliated group shall be treated as occurring1 directly or indirectly1 primarily within the ,united ,states if substantially all of the executive officers and senior management of the expanded affiliated group who exercise day-to-day responsibility for making decisions involving strategic1 financial1 and operational policies of the expanded affiliated group are based or primarily located within the ,united ,states4 ,individuals who in fact exercise such day-to-day responsibilities shall be treated as executive officers and senior management regardless of their title4