Following up on last week’s post, we wanted to highlight the “pay-to-play” provisions in D.C. Mayor Vincent Gray’s proposal to amend the District’s campaign finance laws.  The legislation is undergoing a public comment period until September 17th, and will then be sent to the D.C. Council. 

In its simplest form, the proposal is hard to oppose: companies and groups with contracts or grants with the District in excess of $250,000 a year should not make contributions to politicians who can influence the award of contracts or grants.  Contractors should swear at the time they win a contract that they have not violated the law, and have an ongoing obligation to report violations if they occur.  Sounds good so far. 

The problem with the legislation, as with many pay-to-play laws, is that the effort to block real and imagined paths of circumvention leave well-meaning companies (and in this case, grant recipients) and the officers, directors, and their immediate family members, in a compliance minefield.  For example, how many companies could imagine a charitable contribution to a D.C. based children’s group might result in debarment from contracting with the District of Columbia for four years?  It could if the Mayor’s wife ran the group.  So here are some of the details of the proposal.

Who will not be able to contribute or solicit contributions?  Entities that contract with the District to provide goods, services or equipment or to sell property, and entities that receive grants from the District, if the contracts or grants exceed $250,000 a year.  It also covers contributions from “related entities” (subsidiaries, PACs, trusts, etc.), persons (officers and directors and persons who hold equivalent positions) and those who “control” the contractor.  “Immediate family members” of covered persons may make contributions of up to$300 per election. 

Who will not be able to receive covered contributions?  The list is long.  Officeholders and candidates who are or “could be involved in influencing the award” of the contract or grant, and political committees associated with them.  Does any elected city official not meet the “could be involved in influencing” test?  Exploratory committees, inaugural committees, legal defense funds, constituent service funds, transition committees and any other organization “controlled, operated or managed by an elected official” are covered.  So are party committees.  Organizations controlled by immediate family members of a city politician who can influence contracting are also prohibited recipients. 

Penalties are stiff.  The District can deem violations a breach of an existing contract or grant.  There is also the risk of debarment for up to four years, as well as civil and criminal penalties. 

If adopted, those who do business with the District will need to adjust their compliance programs to protect against some of the sweeping language in the current bill.  We will continue to follow this proposal.