New Spending Bill Makes Lawbreaking Easy for Government Contractors

Posted by Dale Eisman on May 3, 2017

Six hundred twelve pages into the 1,665-page bill that will keep our government open until September lurks a sentence that will make Congress and the president – assuming he signs it – partners in corrupting our elections and the government's contracting process.

The legislation bars the president and all federal agencies from requiring government contractors to disclose payments made by such contractors, their officers or their directors to individuals or groups “with the intent or the reasonable expectation” that the money ultimately will be contributed to a political candidate or committee.

That’s a mouthful, I know. So I turned to a lawyer, Common Cause Vice President for Policy and Litigation Paul Seamus Ryan, for help in breaking it down. Here’s what I learned.

Federal contractors are barred by law from making direct contributions to candidates for president or Congress or to political parties. It’s also illegal for anyone to use a “straw donor” to make a contribution. That is, it’s illegal to have someone else use your money to make a political contribution and say the contribution is theirs instead of yours. Individuals or companies that break these laws can be fined and – in the case of federal contractors – lose their right to do business with the government.

The thinking behind the rules is simple. Government contracts should go to the contractors whose bids provide the best value for taxpayers; one way to ensure that they do is to bar contractors from influencing politicians through campaign contributions.

The law already gives companies a way around the contractor contribution ban. They can create political action committees (PACs) to solicit donations from company employees, officers and directors and use the PAC funds to make contributions to candidates. No funds from the corporation itself can be used however, except to cover things like the rent and utility service for the PAC’s offices.

The obscure sentence in the new spending bill doesn’t change any of that. But it tells government contractors who might be tempted to break the law by making straw contributions that the federal government won’t lift a finger to catch them.

“From a public policy standpoint, it makes absolutely no sense,” Ryan observed. Straw contributions by federal contractors are still illegal, but the government will not impose disclosure requirements that would expose the offenders.

The sad truth is that corporations, associations and individuals already have plenty of legal ways to corrupt our politics. The Supreme Court’s infamous Citizens United decision gave companies permission to use their funds to support or oppose candidates through “independent expenditures.” Congress has made it easy for companies to keep that spending under wraps by refusing to pass the DISCLOSE Act.

Now, with President Trump’s signature on the spending bill this week, another loophole will be open, another way for big money interests to use their resources to get the inside track on special favors from the government – in this case contracts often worth millions, even billions of dollars.

As Ryan said, it makes no sense as public policy. But it fits an unfortunate pattern. A powerful group of senators and representatives, usually led by Senate Majority Leader Mitch McConnell, has been focused for years on chipping away at what’s left of our campaign finance laws. They’ve made considerable progress, if you can call it that, by slipping provisions that look suspiciously like the new contractor loophole into the annual must-pass appropriation bills. With Trump’s signature, they’ll be another step closer to their ultimate objective.


Office: Common Cause National

Issues: Money in Politics

Tags: Disclosure, Fighting Big Money, Citizens United

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