Government Contractor Contributions and What To Do About Them

Last month, the Obama administration drafted an executive order that would require those seeking federal government contracts to disclose their political contributions, and those of their directors, officers, affiliates, and subsidiaries, made in the two years before they bid for a contract. This draft executive order has been the subject of a great and unusual controversy.

Some state and local governments already have laws that require the disclosure of, or even prohibit, political contributions from government contractors. Why do such laws exist? All one need do is look at the list of contributions to candidates, parties, and many PACs to see that those from government contractors, current and prospective, constitute a sizeable portion of the funds that are contributed.

This is not because government contractors have the strongest feelings about the principal issues in every election, or believe more strongly than others that political parties and PACs are important parts of our democratic system.

It is because government contractors want elected officials to feel obliged to them and because government contractors feel they are expected to make sizeable contributions in order to get contracts and to keep them. In other words, they seek to influence and they feel forced to pay to play.

Ways to Handle Government Contractor Contributions
There are two best ways to prevent this sort of influence and pay to play, which costs citizens a great deal in both money and trust. One is to prohibit the contributions altogether. The other is to institute public campaign financing that allows participating candidates to have the funds necessary to compete with non-participating candidates and independent expenditures that are funded largely by those doing and seeking business with the government.

Requiring disclosure is a distant third choice, and one that Congress recently refused to pass (the DISCLOSE Act) due to strong Republican opposition.

The Republican Attack on Disclosure
The same people are attacking the executive order, and they have done what they can to undermine public campaign financing. And they strongly oppose any prohibition of political contributions.

In her Wall Street Journal column last week, Kimberley Strassel made a representative attack on the executive order. She argued that the executive order means that companies "can bid and lose out for the sin of donating to Republicans. Or they can protect their livelihoods by halting donations to the GOP altogether—which is the White House's real aim. Think of it as 'not-pay to play.'"

In other words, what Strassel is arguing is that, unlike all other contractors, whose contributions either go to both parties in relatively equal proportions, just to make sure, or if the incumbent is strong go primarily to the incumbent, federal contractors give primarily to Republicans, whether they are in power or not, and whether they are likely to win or not. If true, this means that federal contractors are different from state and local contractors and, therefore, the arguments against disclosure by federal contractors do not apply to disclosure by or restrictions on state and local contractors.

That is, this debate does not directly apply to local government ethics.

Recognizing How Corrupt the Procurement System Is
But there are very intriguing ideas that arise from what Strassel and others are saying. For example, the Senate minority leader, Mitch McConnell, is quoted as saying, "This is almost gangster politics, to shut down people who oppose them." What they say implies that the procurement system is seriously corrupt, that elected officials use political contributions to favor and disfavor contractors.

It also implies that knowing their contributions would be public, government contractors would do what they had to do to get contracts, even if it meant not giving money to candidates they truly favor, that is, Republicans. Since free speech is the most precious commodity any person owns, short of his family's lives, this means that the procurement system is deeply corrupting.

Finally, what they are arguing implies that elected officials use government contractors to win elections, in this case through a not-pay-to-play approach that effectively prevents contractors from giving to the opposition party. Something has to be done, of course, to prevent elected officials from abusing the procurement system in this way. Preventing one executive order could not possibly be enough if things are as bad as the Republicans are saying they are.

Back to Solving the Problem
What does all this mean for government ethics? It means that Republicans, if one takes them at their word, should be strong good government advocates. They oppose the use of underhanded tactics to change elections. They oppose the abuse of the procurement process for political purposes. And they oppose pay to pay.

And yet they not only fully support political contributions by government contractors, even though they are central to pay to play, but they also support having this process occur secretly, despite the greater opportunity this gives for abuse.

Therefore, since they oppose the abuse of the procurement system for political purposes, the only choice open to them is to opt for public campaign financing, so that not only are government contractors limited in the contributions they can give, but everyone is, including unions and environmental organizations (they also argue that the executive order discriminates in favor of these, when they are not government contractors).

If their attack on the draft executive order is not simply an underhanded campaign tactic itself, then these same people will come out for strong, fair, and workable public campign financing programs. I won't be holding my breath.

Robert Wechsler
Director of Research-Retired, City Ethics

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