Pay-to-Play Disclosure For Government Contractors - UPDATE Strong Reactions and a Not-Too Transparent White House
Our last post focused on the trial balloon being floated by the White House to impose corporate political disclosure obligations on government contractors. At the time of that post, all we had was a White House press secretary description. Subsequently, draft orders have been floating around the internet including here.
If I do say so myself, I thought our firm’s government contracts department provided a pretty comprehensive analysis of the issue for our clients in a recent client alert.
Notably, that alert observed:
The proposed executive order would require every federal contracting department and agency to require all entities submitting offers for federal contracts to disclose certain political contributions and expenditures made within two years of the submission date of the offer. The disclosures would include all contributions to or on behalf of federal candidates, parties or party committees by the bidding entity, its directors or officers, or by any affiliates or subsidiaries. Any contributions to third party entities (such as trade associations or industry groups) made with the expectation or intention that the parties would use those contributions to make independent expenditures or electioneering communications would have to be disclosed. The FAR Council would be directed to adopt rules and regulations that would, among other things, require bidders to certify that the accuracy of the information disclosed as a condition of award.
Reaction from all ends of the political spectrum has been immediate and prolific with objections to the proposal being found from Senator Collins in today’s Washington Post,others in the Senate, and the US Chamber of Commerce. Most concerns surrounding the proposed executive order track those raised by the Chamber (and, of course, this blog which raised them first - wink) in observing that the order is of dubious constitutionality and a relatively clear effort to circumvent political challenges in getting Congress to pass the DISCLOSE ACT in the wake of Citizens United v. FEC:
The executive order would make every company that tries to contract with the federal government disclose spending that is confidential and used to fund core, First Amendment-protected political speech. Also troubling is the executive order’s reach beyond companies to their individual officers and directors, who would be forced by the executive order to disclose personal political spending undertaken with their own assets. This aspect of the order will both impair individuals’ First Amendment freedoms and interfere with the relationships between companies and their employees.
On the other hand, public interest groups such as Democracy21 rose in defense of the proposed order and against the Chamber’s efforts to stifle it. Groups like Care2 have pointed out:
Its [sic] easy to see why the Chamber of Commerce would want to stop the order; it would effect a large number of their big business clients. Corporations often want to keep their political spending quiet, hoping to avoid the negative press and boycotts like the one Target was hit with after their donation to an openly anti-gay candidate was leaked to the public.
From a process standpoint, there is a delicious irony in the fact that the White House is currently unwilling to discuss publicly its internal discussions concerning the need for an Executive Order imposing political transparency on government contractors. The nature of trial balloons in politics is that one does not want one’s fingerprints on something until one is willing to take ownership of it. This political phenomenon resulted in the following exchange during a May 12 joint Oversight and Small Business Committee hearing on the proposed Order:
"Does it strike you at all as being ironic to invoke confidentiality and not answering questions when we're having a hearing about transparency?" – Rep. Trey Gowdy (R-SC)
"It does not, sir. I think there are discussions, even about transparency and developing rules about transparency that we need to be able to have quietly and behind closed doors." – Hon. Daniel Gordon, Administrator of the Office of Federal Procurement Policy, Office of Management and Budget, Executive Office of the President
Let’s go to the videotape!