Exposing Corruption and Preventing Abuse of Power

Will the President Sign an EO to Increase Disclosure of Political Spending by Contractors?

President Obama is considering issuing an executive order that will require the disclosure of and online public access to federal contractor spending on elections. The draft EO that POGO has seen (dated April 13) is intended to shine a light on contractors influencing the contracting process via political spending. Contractors submitting bids on federal contracts will have to disclose contributions to candidates, parties, and party committees, as well as independent expenditures on elections, as will their directors, officers, affiliates, and subsidiaries.

POGO supports the EO and hopes that its implementation isn’t derailed by reluctant government officials (please, not another FAPIIS), or by contractors or Members of Congress who aren’t too happy that all of this “protected speech” will be available for all to see. I guess you could say that opponents of the EO believe in anonymous protected speech.

Contractor political action committees (PACs) and individuals already report contributions to candidates, PACs, Leadership PACs, and party committees. Contractors are prohibited from contributing directly to campaigns, but their PACs are permitted to do so. But since the Supreme Court’s recent Citizens United decision, these prohibitions are meaningless. Now contractors can spend unlimited amounts to elect or defeat candidates with no disclosure and no oversight. The draft EO will create some much-needed transparency in political spending by contractors by requiring reporting of independent expenditures and the consolidation of relevant contributions into one database. The EO will at least ensure that all political contributions by federal contractors are publicly disclosed.

Additionally, contributions of directors and officers will be included in the database. Employer of donor is already mandated, so this disclosure isn’t new, but when combined with comprehensive disclosure of contractor contributions and expenditures, the public will have access to the full picture about those bidding on federal contracts.

The Supreme Court’s decision in Citizens United held that corporations or unions funding electioneering communications that expressly advocate the election or defeat of a candidate is protected speech. Remember the hours of TV ads that ran during election season where we couldn’t tell who was behind them? The EO will now allow the public to match the entities running those ads with the deep pockets supporting those entities, if those deep pockets are also trying to do business with the government.

The government will be tasked with creating a streamlined process through which contractors and their directors, officers, affiliates, and subsidiaries will have to disclose election spending exceeding $5,000 in the aggregate. That data will be made publicly available through Data.gov.

Questions and concerns have already been raised by contractors and some lawmakers suggesting the data would be provided to contracting officers who make contract award decisions. In POGO’s view, those issues are a red herring. The EO outlines the collection and disclosure of political spending data by all entities submitting offers, (including unions despite claims—at the 3:30 mark—to the contrary) and the certification that those offerors made the proper disclosures. The EO does not specify that the political spending information be provided to and considered by contracting officials.

Despite the heated debate that the draft EO is creating, it is a commonsense improvement to the integrity of the contracting system. In fact, it doesn’t really go far enough. The administration should consider expanding the scope of the EO to include grantees as well, because grantees received $558 billion in FY 2010. Also, POGO would like to see the EO broadly interpreted so that disclosure is triggered every time a contract is renegotiated, renewed, or extended, and we would like to see specifically how the money was spent, not just the amounts of money contributed. Bidders for government contracts should be able to enter the spending information directly into a database that feeds into Data.gov to streamline reporting. The contracting officer should only be tasked with verifying that certification of disclosure was made, not concerned with what the content of that disclosure was. There also must be adequate enforcement so that non-compliance or misrepresentation is subject to remedies, including cancellation of an awarded contract and suspension or debarment of the contractor.

But let’s not stop at this EO! POGO would also like to see enhanced disclosure of all lobbying activities (especially of the executive branch by non-registered lobbyists, which would include POGO). We would also like to see more revolving door information made public. POGO documented the extent of the pay-to-play system in 2004 with our Politics of Contracting report, which starkly illustrated the revolving door between the government and large private contractors and the insidious effect lobbying expenditures and campaign contributions have on the contracting process. POGO recommended that Congress restore the comprehensive prohibition on contractor campaign contributions.

A joint hearing on the draft EO will be held before the House Committee on Oversight & Government Reform and the House Committee on Small Business on Thursday.

It will be interesting to see how all of these issues are resolved, but the Obama administration deserves a lot of credit for bolstering the integrity of the federal government and trying to prevent federal political spending from influencing government policies, missions, and programs.