Right before the Labor Day holiday weekend, Pay-to-Play Law Blog offered its readers a quick update on some of the latest pay-to-play regulatory happenings along the Potomac. In particular, we previewed the strict pay-to-play proposal being championed by Washington, D.C. Mayor Vincent Gray and Attorney General Irving Nathan, and promised a follow-up post in the wake of a formal legislative submission to the D.C. Council. Well… that time is upon us. And for all of our readers who bet that Gray and Nathan would offer up a bill that matched their rhetoric, it’s time to collect.
Submitted to the Council at the end of September, Gray and Nathan’s draft bill memorialized their previous verbal proposals in a written form that, if passed, would make the District’s pay-to-play regulatory scheme one of the strictest in the nation. The key provision in the draft legislation is designed to severely curb political donations from city vendors and prospective vendors who hold or seek municipal contracts valued at $250,000 or more. The proposed legislative language appears to accomplish that goal by attacking pay-to-play politics from both the government and contractor side of the equation.
First and foremost, the bill prohibits the D.C. government, its purchasing agents or agencies, and its independent authorities from entering into any agreement or otherwise contracting to procure goods, services or equipment from or sell property to any “covered contractor” if such contractor seeks or holds grants with the District with a cumulative value of $250,000 or more and has solicited or made any contribution or expenditure to a “prohibited recipient” within the prescribed time period. Simultaneously, from the contractor perspective, the legislation also prohibits any prospective or current “covered contractor” seeking or holding District grants worth $250,000 or more from soliciting or making any contribution or expenditure to a “prohibited recipient” within the same prescribed time period. Under either prohibition, the prescribed time period encompasses at least the bid/proposal solicitation and determination window, and for successful contractors, stretches for one year following the final payment date on the contract or grant at issue.
For the purposes of these legislative restrictions, the term “covered contractor” is defined to refer to any individual or sole proprietor, business, corporation, firm, partnership or association seeking or holding a contract to provide goods or services to the D.C. government, or seeking or holding a grant from the D.C. government. Meanwhile, the term “prohibited recipient” refers to a wide range of individuals and entities, including the following: any elected District official who is or could be involved in influencing the award of a government contract or grant; any candidate for elected District office who is or could be involved in influencing the award of a government contract or grant; any political committee affiliated with such officials or candidates; any constituent-service program or fund controlled by such officials or candidates; any political party; or any entity or organization controlled or owned by an official, candidate, or their immediate family.
The bill’s ban on contributions and expenditures by covered contractors also stretches to cover any “related party” of the contractor, including associated trusts, LLCs, general partners of LLCs, and political committees. If the contractor is a corporation, the ban also applies to the officers and directors of the corporation, or any principal who has a controlling interest in the corporation. The terms of the legislation even go so far as to limit contributions and expenditures to prohibited recipients by the immediate family members of covered contractors to $300 per election per person.
In sum, Gray and Nathan’s bill seeks to institute a comprehensive, but not quite universal, ban on political contributions and expenditures by major District contractors and prospective contractors, their officers, directors and principals, and any other “related parties” affiliated with such contractors or prospective contractors. In the process, the legislation also sets up a penalty structure whereby offending parties are subject to a panoply of punishments, including sizeable civil penalties, termination of existing contracts or grants, temporary debarment from District contracting (for a period of up to four years), and even criminal prosecution (in certain settings).
The language of the present bill is certain to change as it makes its way through the D.C. Council this fall, but it would be naïve to think that some components of its pay-to-play restrictions will not survive to become law. This is particularly the case in light of the bill’s early endorsement by several Democrat political organizations within the District, including the Ward 4 Democrats. Stay tuned to Pay-to-Play Law Blog for continuing coverage…
Proposal to Remove the D.C. Council’s Right of Review Over Large City Contracts
In the wake of the legislative submission by Mayor Gray and Attorney General Nathan, we have also seen other D.C. officials scrambling to hop on board the pay-to-play reform train. One of the officials leading the charge down the Union Station platform has been Councilman Jack Evans, who recently announced a legislative proposal that would revoke the District Council’s “right of review” with regard to city contracts worth over $1 million.
From Evans’ perspective, the best way to remove the D.C. Council’s incentive to engage in pay-to-play politics is to remove it entirely from the contract-approval process. Under D.C.’s current procurement procedures, both the executive and the legislative branches of District government are tasked with reviewing and approving contracts and grants. This system was initially established in the 1990s as a reaction to increasing mistrust concerning the executive branch’s handling of the procurement review process. Evans’ proposed bill, however, would effectively turn back the clock on contract review in the District and give the Mayor’s office much more sway over grant approval or rejection.
According to Evans, the dual contract review system is “supposed to serve as a check and a balance on the [M]ayor”, but instead functions as an invitation to either blind rubber-stamping or pay-to-play activities on the part of the District Council. From his point of view, the Council typically engages in the procurement process for political purposes and rarely meddles in contracts or grants because of the relative merits of the awards.
That very well may be the case, but Pay-to-Play Law Blog is not at all convinced that Evans’ proposal fully tackles pay-to-play activities in the District. In fact, in the absence of any other regulatory changes, the proposal might well be seen as a larger opportunity for pay-to-play conduct on the part of the Mayor and those in the executive branch. Not that Evans would participate in such activities if he is successful in his future mayoral run, but his proposal certainly wouldn’t decrease the temptation to play politics with District contracts among future mayors.
It remains to be seen what the ultimate outcome of Evans’ proposal will be, but it is safe to say that Mayor Gray is unlikely to turn down an opportunity to secure greater authority over the District procurement process. Commentators and other members of the D.C. Council, however, have not been so quick to offer support to Evans’s legislative idea. We’ll see how things proceed in the coming weeks and be sure to keep our readers posted as D.C. continues to reshape its campaign finance and pay-to-play regulatory structures.