Should the federal government require prospective government contractors to disclose their political contributions? The Obama administration weighed in on this issue in April with a draft executive order entitled "Disclosure of Political Spending by Government Contractors." As the title suggests, the draft order would require a contractor submitting an offer to performa a federal contract to disclose political contributions exceeding $5,000 made within two years preceding the offer. The order has generated significant controversy. Many have expressed fear that the information would be used inappropriately as a new factor in awarding federal contracts. The controversy intensified last month when Senator Susan Collins (R-ME) and Representative Darrell Issa (R-CA) proposed the Keeping Politics Out of Federal Contracting Act of 2011, which would prohibit the disclosures called for in the draft executive order.
The Draft Executive Order
Motivated by a desire to curb any "pay-to-play" perceptions in federal contracting, the order reasons that additional measures are needed to maintain "the integrity of the federal contracting system" and to ensure that contracting decisions are based on merit alone. The order would require that offerors disclose all contributions to or on behalf of federal candidates which are made by the offeror, its directors or officers, as well as those of any affiliates or subsidiaries within its control. The order would also require disclosure of any contributions to third parties with the intent or reasonable expectation that the contributions will be used in election advertisements to support or oppose political candidates. Contractor political contributions would also be available on the internet "in a centralized, searchable, sortable, downloadable and machine readable format."
The order drew criticism on a number of fronts. Many felt that the order infringed the First Amendment right recognized in the Supreme Court's landmark decision in Citizens United v. FEC, 130 S. Ct. 876, 913 (2010), which permits corporations to make unlimited expenditures to third party groups in order fund advertisements supporting or opposing political candidates. Critics also argued that the order unnecessarily politicized an apolitical process. Pointing out that the draft order does not specify how, if at all, the information regarding political contributions is to be used by contracting officers, critics argued that the order created the risk that information on contractors' political contributions would inappropriately influence source selection decisions.
Keeping Politics Out of Federal Contracting Act of 2011
Congress responded to the draft executive order with proposed legislation. Both the House and Senate versions of the bill (S. 1100 and HR 2008) would essentially foreclose any disclosure of contractor political contributions. Agencies would be prohibited from requiring contractors to provide "political information" regarding the contractor or subcontractor at any tier in connection with a solicitation or during performance of a government contract. Regardless of how political information is acquired, the legislation would prohibit its use a factor in a decision regarding source selection, contract modification, or the exercise of an option.
If passed, the bill would also prohibit the inclusion of any political information in the past performance database or any other database "designed to provide information to a contracting officer for purposes of supporting the responsibility determination by such officer." This may be necessary to address the fact that FAPIIS—the Federal Awardee Performance and Integrity Information System—is now available to the public. More on that issue here.
The bill is currently in committee with the Senate Committee on Homeland Security and Governmental Affairs and the House Committee on Oversight and Government Reform. We will continue to monitor activity on both the bill and the draft order, as this issue poses significant implications for politically active contractors and the upcoming 2012 election.