The Obama Pay-to-Play Initiative

April 20, 2011

The White House is circulating a draft executive order to require federal government contractors to disclose contributions or expenditures made within the two years prior to submission of their offer by the bidding entity, its directors or officers, and affiliates or subsidiaries within its control. As drafted, the disclosure would also extend to contributions made to third parties “with the intention or reasonable expectation that parties would use those contributions to make independent expenditures or electioneering communications,” arguably capturing donations to IRC 501(c)(4) organizations that are not currently disclosed to the public. Certification of disclosure would be required as a condition of award. Reports suggest that the draft executive order was drafted in response to the Citizens United decision and the failure of the DISCLOSE Act to pass Congress last year. The precedent for executive action to implement pay-to-play standards was famously set by New Jersey Governor James McGreevey in 2004 after he announced his pending resignation from office. Indeed, there are striking echoes of the 2004 McGreevey EO in the draft Presidential order. For example: • McGreevey: political contributions “to obtain a contract awarded by a government agency … raise[] legitimate public concerns about whether the contract was awarded on the basis of merit” • White House: the “Federal Government must ensure that its contracting decisions are merit-based in order to deliver the best value for the taxpayer.” • McGreevey: "it has long been the public policy of this State to secure for the taxpayers the benefits of competition, to promote the public good by promoting the honesty and integrity of bidders for public contracts … and to guard against favoritism, improvidence, extravagance and corruption” • White House: “When the public lacks confidence that the contracting system works fairly, it may deter participation and deprive the government of the most robust competition and the best providers” • McGreevey: “I must … impos[e] restrictions on State agencies … to insulate the negotiation and award of State contracts from political contributions that pose the risk of improper influence, purchase of access, or the appearance thereof” • White House: “additional measures are appropriate and effective in addressing the perception that political campaign spending provides enhanced access to or favoritism in the contracting process”. When a legislature fails to act, executives may tests the limits of their constitutional authority, as current New Jersey Governor Chris Christie unsuccessfully attempted last year with an executive order limiting labor union contributions. Given that the draft EO would seemingly extend the reach of pay-to-play disclosure to encompass independent expenditures, despite the U.S. Supreme Court’s conclusion that such expenditures pose no risk of quid pro quo corruption, one might conclude the draft EO is a bit of an odd mix, such that other constitutional boundaries may also be tested.  

Tags: New JerseyFederal