Government Contractor Update

As noted in our January 17, 2012 Political Law Compliance and Risk Management alert, the Federal Election Campaign Act (FECA) prohibits any individual or entity that is a government contractor from making campaign contributions in connection with federal elections (2 U.S.C. § 441c, 11 C.F.R. § 115). On October 19, the American Civil Liberties Union (on behalf of three individuals) filed a lawsuit challenging this prohibition as it applies to individuals with personal services contracts with federal agencies (Wagner v. FEC). The ACLU hopes that this lawsuit will be heard on a fast-track basis so that any court decision overturning the ban will enable federal government contractors to make campaign contributions impacting the 2012 elections. The US District Court for the District of Columbia will hold a March 22 hearing on a motion by the ACLU for a preliminary injunction preventing the FEC from enforcing the FECA ban.

In April 2011, the Obama Administration released a draft Executive Order (EO) that would have required any entity that submits an offer for a federal contract to disclose federal campaign contributions made by such entity, its officers, directors, affiliates, and subsidiaries. After substantial scrutiny of the EO from business interests and Republicans, Congress included a provision in the Consolidated Appropriations Act, 2012 (Pub. L. No. 112-74) that prohibits the Administration from requiring any entity that submits an offer for a federal contract to disclose federal campaign contributions made by such entity, its officers, directors, affiliates, and subsidiaries. In support of the disclosure requirement, two campaign finance reform groups, Public Citizen and, submitted petitions with over 100,000 signatures urging President Obama to sign the draft EO. While Congress prohibited such disclosure during the bidding process, the Administration may still require disclosure of contributions by entities once they have been awarded a contract from the federal government.

Grassroots Campaigns

Campaign reform advocates commemorated the two-year anniversary of the decision in Citizens United by launching a grassroots campaign to overturn the ruling. The objective is to have Congress pass a constitutional amendment that would reverse the US Supreme Court's holding, though the campaign does not target any Members of the United States Congress. A coalition named "United by the People," backed by Common Cause, with support and leadership from Public Citizen, Free Speech for People, and Move to Amend, outlined a strategy aimed at having states adopt measures that would urge Congress to adopt a constitutional amendment overturning Citizens United. These measures are not legally binding, though the hope is that the pressure on Congress will result in legislative action. The group will focus efforts on Colorado, Massachusetts, and Montana in the 2012 elections. The campaign is called Amend 2012, although the group has acknowledged that the efforts will likely extend into 2013 and beyond.

Other events marking the two-year anniversary include a press conference by Public Citizen and the Corporate Reform Coalition to outline a petition that calls for the Securities and Exchange Commission to regulate political expenditures by corporations. The Corporate Reform Coalition is comprised of a large group of national pro-reform groups and unions, academics, attorneys, shareholder activists and institutional investors. Several shareholder resolutions were filed, as well, by Common Cause, USPIRG and two investment firms in which Bank of America, 3M and Target Corp. were asked to cease political spending. Another 700 businesses received a similar request from Common Cause and USPIRG.