Opposition builds against Obama on disclosing contractor campaign gifts

House lawmakers are at odds with the Obama administration over whether requiring contractors to disclose campaign contributions would increase transparency in the procurement process while insulating companies from charges that awards are politically motivated.

During a joint committee oversight hearing Thursday, lawmakers criticized a draft executive order, released in April, that would require companies bidding on agency contracts to release a list of contributions or political expenditures that total in excess of $5,000 made on behalf of federal candidates, parties or political action committees. Contractors also would be required to disclose contributions to third-party nonprofit groups -- known as a 501(c)(4) organizations -- in which the company has the "reasonable expectation" that the funds would be used to pay for electioneering communications such as paid advertisements. The proposal is "shameful" and could have a negative impact on federal procurement, several lawmakers said.

Daniel Gordon, administrator for the Office of Federal Procurement Policy at the Office of Management and Budget, declined at the hearing to discuss the details of draft order, but said the administration is committed to ensuring that acquisition in government is transparent and based solely on the requirements listed in contract solicitations.

"There simply is no place for politics in federal acquisition," Gordon said. "The process must ensure … that no political considerations are allowed to bear on federal contracting at any point during the acquisition process."

According to Gordon, contributions that are disclosed would not be a factor in contract awards, and such information actually is unnecessary to the procurement process. The idea is to increase public trust in the federal procurement system, which in turn would increase participation, boost competition and lower prices, he said.

Many lawmakers say the draft order is politically motivated and requires businesses to submit unneeded information that could negatively affect the awarding of contracts. "It is not necessary for you to do your job, and your office will not look at it," said House Oversight and Government Reform Chairman Darrell Issa, R-Calif. "It's very clear this executive order is outside the procurement process."

"The agency doesn't need that information, so I still fail to see what purpose it serves in that determination," said Rep. Sam Graves, R-Mo., chairman of the Small Business Committee. "Can the public get that information after you've awarded the contract? It is fully available. The simple idea that you want that information ahead of time disturbs me in a big way."

Industry officials also oppose the proposal, arguing that it does not address the realities of the federal procurement system and increases the burden on contractors to collect and submit contribution data.

"This type of political information has been intentionally kept out of source selection to ensure a merit-based evaluation and award process, but the order would make disclosure a condition of award," said Alan Chvotkin, executive vice president and counsel of the Professional Services Council, a contractor trade group, in written testimony to the joint committee. "The result will be to create the very 'pay-to-play' environment on the federal level where none exists."

The draft order also has drawn ire in the Senate. A bipartisan group of senators Thursday sent a letter to Obama expressing concern that the directive would politicize the award process and place an unnecessary burden on the federal acquisition workforce that oversees the contracting process. Twenty-seven Republican senators in April sent a similar letter asking the president to drop the proposal.

Small business owners, however, have applauded the transparency that would be required by the draft order. In a call with reporters on Thursday, representatives of small business groups said the directive would prevent the awards process from tipping in favor of heavy hitters at the expense of smaller organizations and taxpayers.

"If a new disclosure rule is enacted, it won't be small businesses that are burdened," said Frank Knapp, chief executive officer of the South Carolina Small Business Chamber of Commerce and steering committee member of the American Sustainable Business Council. "We aren't writing big checks, so we won't have much to disclose . . . The only ones that do are those that have something to hide."