Scores Tell FEC: Ban on Political Contributions by Government Contractors Should Apply to All Entities of the Contractor

May 29, 2015

Scores Tell FEC: Ban on Political Contributions by Government Contractors Should Apply to All Entities of the Contractor

Philadelphia Mayor, Connecticut and New York Elections Officials Are Among Those Urging the Agency to Close the ‘Many Faces of Chevron’ Loophole

WASHINGTON, D.C. – A federal contractor should not be able to evade the law by making campaign contributions through one corporate entity while handing over ownership of government contracts to another entity in the same corporate family, Public Citizen and scores of other experts told the Federal Election Commission (FEC) today.

Academics, civic organizations, activists and even governmental agencies submitted comments (PDF) to the FEC in response to its rulemaking on how to enforce the federal “pay-to-play” law that bans campaign contributions from federal contractors.

Comments came from the Connecticut State Elections Enforcement Commission, the New York City Campaign Finance Board and Philadelphia Mayor Michael Nutter, to name a few. A coalition comment from Public Citizen and more than 30 civic organizations and academics was submitted. And at least 23,000 additional email comments from the public urged the commission to act. The comment period closes today.

The federal government, 15 states and the U.S. Securities and Exchange Commission protect the integrity of the government contracting process by preventing those who seek government contracts from trying to buy special consideration through campaign contributions. But the FEC has weakened the federal law.

The issue stems from a complaint Public Citizen and others filed with the FEC in 2012 regarding Chevron. In 2012, Chevron made a $2.5 million campaign contribution to House Speaker John Boehner’s super PAC, the Congressional Leadership Fund. Yet, 52 USC §30119 – the federal pay-to-play law – prohibits federal contractors from making campaign contributions to candidates, parties or PACs.

The FEC accepted Chevron’s legal defense, which was that Chevron has at least two incorporated divisions, Chevron Corporation (which made the contribution) and Chevron USA (which holds the government contracts). Despite the fact these two incorporated divisions are in the same corporate family, with the same CEO and the same mailing address, the FEC dismissed the complaint.

“The FEC has created a new ‘many faces of Chevron’ loophole in the pay-to-play law,” said Craig Holman, government affairs lobbyist for Public Citizen’s Congress Watch division. “If left to stand, any major company can easily sidestep the law by creating one entity for making campaign contributions to curry favor for government contracts, and another entity for receiving the lucrative contracts.”

In their comments, state and local governmental officials and agencies, with years of experience in enforcing their own pay-to-play laws, explained to the FEC that they would never allow such a loophole in their own jurisdictions and urged the FEC to revisit the issue.

“The FEC should follow suit and close the loophole created by an artificial distinction between entities of the same corporate family,” said Lisa Gilbert, director of Public Citizen’s Congress Watch division. “Otherwise the very integrity of the government contracting process is at risk – and so, too, our taxpayer dollars.”

Read the coalition comment (PDF) from Public Citizen and more than 30 academics and civic organizations.

View the original petition for rulemaking and public comments submitted to the FEC.

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