Monday, March 30, 2015

Political Contributions

It is important to know that political contributions by federal contractors to any political party or candidate for Federal office would not only be unallowable under relevant FAR cost principles but are unlawful to make in the first place. Specifically 11 CFR 115 states:
It shall be unlawful for a Federal contractor ... to make, either directly or indirectly, any contribution or expenditure of money or other thing of value, or to promise expressly or impliedly to make any such contribution or expenditure to any political party, committee, or candidate for Federal office or to any person for any political purpose or use. This prohibition does not apply to contributions or expenditures in connection with State or local elections.
This prohibition works both ways. It is also unlawful for any such person to solicit contributions from a Federal contractor.

In the context of this law, Federal contractor is a person (including legal person) who enters into any contract with the United States or any department or agency thereof either for the rendition of personal services or furnishing any material, supplies, or equipment or selling any land or buildings.The funds for these purchases must have been appropriated by Congress.

The prohibition lasts as long as the contract.The prohibition also applies to active bids.

Contracts include sole-source, negotiated or advertised procurements and contract modifications.

Individuals or sole proprietors who are Federal contractors are prohibited from making contributions or expenditures from their business, personal, or other funds under their dominion or control. The spouse of an individual or sole proprietor who is a Federal contractor is not prohibited from making a personal contribution or expenditure in his or her name.

Here's the big loophole. Stockholders, officers, or employees of a corporation can make contributions from their personal assets. There have been many allegations over the years that Federal contractors give bonuses to their executives with the implicit understanding that those funds would go to targeted candidates.

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