Legislative Lobbying Costs

Last year, the DoD-IG (Office of the Inspector General) conducted an audit to determine whether DoD contractors that lobbied for and were the recipients of earmarks complied with the requirements of the United States Code and the Federal Acquisition Regulations (FAR) and properly classified lobbying costs as unallowable expenses.

The audit report was issued last December and was not released to the public as it was considered "For Official Use Only". A brief of the report was made available on the IG's website and can be viewed here.

In the audit, the IG reviewed the accounts of 24 contractors that were the recipients of 50 earmarks, valued at $115 million and found that eighteen of the 24 contractors properly accounted for lobbying costs. The IG found a few minor issues at the remaining six contractors, consisting of $84 thousand where policies were not followed and $258 thousand where the support lacked sufficient detail to determine whether the costs were for lobbying or for some other purpose.

As a result of these minor deficiencies, the IG stated that DoD "may" have reimbursed contractors for unallowable lobbying costs but did not come right and state that it in fact happened. Even if all the "suspect" costs were ultimately unallowable, the impact on the Government would have to be factored for the Government's participation percentage in the indirect pools where the costs were booked.  Bottom line, contractors are doing a pretty good job in following contracting regulations.

The DoD-IG is not the only agency looking for lobbying costs related to earmarks. We've alerted you to DCAA's emphasis a couple of times, most recently here. DCAA has the list of contract awards based on earmarks and has alerted its auditors to specifically look for lobbying costs that are or have been allocated to Government contracts.

The procurement policies and procedures of 31.U.S.C. 1352, limitation on use of appropriated funds to influence certain Federal contracting and financial transactions, as implemented in FAR Subpart 3.8, restricts the use of appropriated funds to pay any person to influence or attempt to influence an officer or employee of any agency, a Member of Contress, an officer or employee of Congress, or an emplolyee of a Member of Congress. The FAR requires offerors to furnish a declaration consisting of both a certificatin and a disclosure (see FAR 3.8 and 52.203-11 and -12).