Alerts

Election Season Highlights Contractor Contribution Prohibitions

Alerts / September 15, 2016

As this 2016 election season swings into its final months, federal government contractors should continue to be aware of the laws and regulations regarding political contributions.

The Federal Election Campaign Act prohibits federal government contractors from making contributions to influence federal elections. 52 U.S.C. § 30119(a). The prohibition applies to contributions to federal candidates, political parties, political action committees (PACs), Super PACs and other political committees. The sole proprietor of a business with a federal contract may not contribute from personal or business funds. However, employees who work for a company or partnership with a federal government contract may still make contributions from personal funds. It is important to remember that the ban on contributions is in place before the contract award. Specifically, the prohibition applies from “commencement of negotiations” until the end of negotiations or performance of the contract. 11 C.F.R. § 115.2. The contribution ban remains in place until completion of contract performance.

The Federal Acquisition Regulation contains a more extensive prohibition that applies to federal, state and local elections, as well as referendums and ballot initiatives, and disallows  the costs of contributions in connection with cost-type contracts. FAR 31.205-22. Not only are in-kind and cash contributions prohibited, but endorsements, publicity and payments for the expenses of political parties or PACs also are banned.

It does not appear that the contribution ban will be lifted anytime soon. In 2015, the U.S. Court of Appeals for the D.C. Circuit unanimously upheld the individual contractor contribution ban against free speech and equal protection challenges in the case Wagner v. Federal Election Commission. The en banc opinion was written by Judge Merrick Garland, the current U.S. Supreme Court nominee.

As the election season continues through the next months, federal contractors should pay close attention to their obligations and the restrictions imposed upon them under federal law. Specifically, contractors should pay close attention to

Types of contributions banned;

The relevant time the ban applies; and

How the ban applies to business and personal funds.

BakerHostetler’s Government Contracts and Political Law teams are well-versed in the application of the contribution limitations. Questions regarding how the contractor prohibitions may apply to contractors can be directed to Barron Avery, bavery@bakerlaw.com, with the Government Contracts team, or Trevor Stanley, tstanley@bakerlaw.com, with the Political Law team.

Authorship credit: W. Barron A. Avery and Trevor M. Stanley


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