The House Committee on Oversight and Reform on Apr. 6 passed H.R. 7185, the Federal Contracting for Peace and Security Act, which would severely curtail federal contracts for companies that continue to do business in Russia.
Committee Chairwoman Carolyn Maloney (D-N.Y.), who introduced the bill last month, said that Ukrainian President Volodymyr Zelensky had urged Congress to look for and eliminate loopholes that allow U.S. dollars to go to Russia.
“I’ve found a loophole,” Maloney said at the Apr. 6 hearing. “It’s the private contracting area, procurement for the federal government. We spend over $640 billion a year, and we traced $28 billion of it going to Russia.”
Maloney’s bill has 35 House Democrat co-sponsors.
At least two defense companies, Boeing [BA] and Raytheon Technologies [RTX], have said that they have suspended operations in Russia because of that country’s Feb. 24 invasion of Ukraine. Boeing said last month that it is no longer buying titanium from Russia. The Yale School of Management said that 600 U.S. companies have withdrawn from Russia.
Maloney said that H.R. 7185 “includes common sense exemptions for contracts that benefit or serve the Russian people or the Ukrainian people for humanitarian purposes to meet basic human needs.”
“Federal agencies would also be allowed to waive the requirements with a written certification to the president and Congress that doing so is in the national interests of the United States,” she said. “The prohibition would remain in effect until the secretary of state and secretary of treasury jointly determine that Russia has done enough to restore the safety and sovereignty of Ukraine. Americans do not want their tax dollars going to companies doing business in Russia. According to a recent poll, over 75 percent of Americans said companies should halt their business operations in Russia, and a majority said they would not support a company that refused to do so. Congress must honor the will of the American people, respond to President Zelensky’s plea and support his national security and policy goals by passing this bill.”
Maloney said that committee staff had received feedback from industry and others to fine tune the bill.
Rep James Comer (R-Ky.), the committee’s ranking member, said during the hearing that, while the U.S. should do more to counter Russian aggression, he could not support H.R. 7185.
“We have to be sure actions we take do not have the unintended consequence of hurting U.S. interests in our national security capabilities more than it does our enemies,” he said.
Comer said that the bill “could prove difficult to implement, bringing potentially severe consequences for both U.S. businesses and the federal government, including the readiness of our armed forces.”
“Fully unwinding business operations in a foreign country, particularly Russia, is a complicated and time consuming process,” he said. “It would be nearly impossible for every contractor to certify that their supply chains are completely void of any component from Russia.”
Maloney, who said that H.R. 7185 was based on state and local anti-apartheid legislation against South Africa in the 1980s, countered that the provisions in her bill are viable and that they only apply to prime contractors and major subcontractors. In addition, she said that the legislation provides flexibility for companies in shuttering their operations in Russia, requires 15-day notice to contractors continuing operations in Russia before terminating them from federal contracts and directs the White House Office of Management and Budget (OMB) to incorporate industry comments as much as possible in creating rules implementing the bill.
The bill permits OMB “to use emergency procedures to put out implementation guidance quickly,” Maloney said. “These kinds of expedited position procedures were used successfully during the [COVID-19] pandemic, and the urgency of the situation calls for them as well.”