With Another $45 Billion in Transportation Construction Projects at Stake, Public Citizen Calls on Transportation Secretary LaHood to Allow States to End “Pay-to-Play” in Government Contracts

Feb. 25, 2009

With Another $45 Billion in Transportation Construction Projects at Stake, Public Citizen Calls on Transportation Secretary LaHood to Allow States to End “Pay-to-Play” in Government Contracts

WASHINGTON, D.C. – Public Citizen today sent a second letter urging Secretary of Transportation Ray LaHood to end the Federal Highway Administration’s (FHWA) practice of withholding highway funds from states that attempt to curb corruption by enacting “pay-to-play” reforms.

With an additional $45 billion allocated to transportation projects from the stimulus package, much of it to be awarded to private contractors by the states, Public Citizen is calling on LaHood to rescind the previous administration’s policy and allow states to ban the practice of exchanging cash for contracts.

“Pay-to-play” is the all-too-common practice in which businesses make campaign contributions to public officials in the hopes of winning lucrative government contracts. Illinois is the most recent state caught up in sensational pay-to-play scandals; Gov. Rod Blagojevich allegedly sold government contracts (and nearly a Senate seat) in exchange for campaign contributions. The Illinois Legislature responded by joining eight other states, dozens of local jurisdictions and the Securities and Exchange Commission in restricting campaign contributions from government contractors.

But FHWA under the Bush administration attempted to force states, even those with an unfortunate history of doling out government contracts to major campaign contributors, to abandon their efforts to clean up government contracting procedures.

On two occasions – once in New Jersey in 2004 and last year in Illinois – the agency threatened to withhold billions of dollars in desperately needed highway construction funds because of state pay-to-play laws. FHWA officials under the Bush administration deemed pay-to-play laws not “cost effective” and found that they fail to conform to federal contracting standards.

“Pay-to-play corruption has destroyed the careers of two Illinois governors and wasted countless taxpayer dollars, but President Bush’s highway officials insisted there was no problem,” said David Arkush, director of Public Citizen’s Congress Watch division. “We expect the new administration to recognize that pay-to-play corruption is a serious problem and stop blocking attempts to fix it.”

The FHWA under the Bush administration claimed that pay-to-play laws restrict the pool of bidders for government contracts. FHWA Division Administrator Norman Stoner on Dec. 2, 2008, wrote to the Illinois Department of Transportation that “(f)ederal regulations expressly prohibit many kinds of requirements that undermine the competitive contracting requirements.”

“Awarding government contracts on the basis of campaign contributions rather than merit is not ‘cost effective,’ not even for the highway department,” said Craig Holman, government affairs lobbyist with Public Citizen. “One of the deals smack dab in the middle of Blagojevich’s corruption investigation involves a lucrative contract offered to a highway contractor allegedly in exchange for campaign cash.”

Public Citizen has not yet received a response to its first letter, sent to LaHood on Jan. 27.

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