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Leaked Executive Order Requires Disclosure of Political Spending

April 29, 2011 Written by: Written by Kevin Frankovich, CGR Associates

There are reports that President Obama has circulated a draft Executive Order which mandates corporate political disclosure for federal government contractors, their directors and officers. The Executive Order is said to be thought necessary by the White House to “increase transparency and accountability” and to “ensure integrity in the federal contracting process.” 

If issued, the Executive Order would require corporations who do business with the federal government to disclose to the Federal Acquisition Regulatory Council:

(1) all contributions or expenditures to or on behalf of federal candidates or party committees for the two years prior to submitting a bid for a government contract

(2) all personal political contributions of their officers and directors, even if they work for a subsidiary, for two years prior to submitting an offer; and

(3) all contributions to a third party, where there is a “reasonable expectation” that the third party may use the contribution for independent expenditures or electioneering communications for two years prior to bid submission. 

These proposed requirements were explicitly defeated when Congress failed to pass the DISCLOSE Act last year.  The proposed Executive Order focuses entirely on corporate disclosure, and includes no requirements for labor union political activity. 

Corporations that contract with the federal government, and their directors and officers, should be prepared to comply with these potential new disclosure requirements if they intend to secure future federal government contracts.  Corporations should implement political compliance plans that enable them to report all personal political contributions of their officers and directors, and ensure that all contributions to third parties that may reasonably be used for independent political advertising are accounted for.