Bill places limits on contractor spending

The House on Thursday passed far-reaching campaign reform legislation that would prevent many government contractors and other recipients of federal funds from spending freely on election-year advertisements.

In a politically charged vote, the chamber passed the 2010 Democracy is Strengthened by Casting Light on Spending in Elections (DISCLOSE) Act by a vote of 219-206. All but two Republicans opposed the bill, while 36 Democrats voted against it.

The legislation would affect government contractors holding at least one $10 million award, recipients of bailout funds from the Troubled Asset Relief Program and corporations with at least a 20 percent foreign ownership. Rep. Dennis Kucinich, D-Ohio, also successfully added a provision banning political activity by BP or any other corporation with a federal lease to drill for oil off the outer continental shelf.

The threshold on the contractor provision has changed considerably in recent weeks. The provision originally applied to a company's holding contracts exceeding $50,000. That figure was then raised to $7 million before lawmakers finally settled on $10 million.

The bill was crafted in response to January's U.S. Supreme Court decision in Citizens United v. Federal Election Commission. The court ruled that corporations, trade associations and labor unions are entitled to the same freedom of speech afforded to individual citizens and should be allowed to make unlimited "independent expenditures" on advertisements supporting candidates. The DISCLOSE Act would blunt the impact of the ruling by placing restrictions on the campaign spending of several groups that receive federal funding.

Government contracting is particularly susceptible to the appearance of improper influences and the integrity of the procurement process must be protected, according to the legislation.

"Independent expenditures and electioneering communications that benefit particular candidates or elected officials, or disfavor their opponents can lead to apparent and actual ingratiation, access, influence, and quid pro quo arrangements," the legislation stated. "Government contracts should be awarded based on an objective application of statutory criteria, not based on other forms of inappropriate or corrupting influence."

The measure argues that government officials could be influenced, consciously or otherwise, by a company's political advertisements. Likewise, the contractor could feel compelled to make expenditures and to fund advertisements to maximize their chances of receiving a contract or to match similar spending by a competitor, the bill stated.

"The public's confidence in government is undermined when corporations that make significant expenditures during federal election campaigns later receive government funds," the legislation noted. "Prohibiting independent expenditures and electioneering communications by persons negotiating for or performing government contracts will prevent any appearance that government contracts were awarded based in whole or in part on such expenditures or communications, or based on the inappropriate or corrupting influence."

It is unclear, however, if contractors want to become more deeply involved in the political process. Procurement observers have suggested contractors prefer to contribute money to members of both parties and to lobby Congress on specific issues. Becoming tied to an individual politician or party, some have argued, can damage a company's long-term interest in doing business with the government.

The bill also would require companies to disclose political advertisements to corporate shareholders and to the Federal Election Commission, prohibit coordination between a firm and a candidate, and mandates the company's chief executive officer or other top official appears on camera approving the message.

"The DISCLOSE Act will shine a light on political expenditures and ensure that shadowy special interests, sham organizations and dummy corporations cannot mislead voters," said the bill's lead sponsor, Rep. Chris Van Hollen, D-Md.

In an effort to lure conservative members, Democrats agreed to exempt from the disclosure requirement any group that has been in existence for a decade, has at least 500,000 members from all 50 states and receives less than 15 percent of their funding from corporations. The provision, which prompted backlash from the political left and right, applies most prominently to the National Rifle Association, the Humane Society of the United States and AARP.

"The purpose of this bill, plain and simple, is to allow Democrats to use their majority in this House to silence their political opponents," said House Minority Leader Rep. John Boehner, R-Ohio. "This is a backroom deal to shred our Constitution for raw, ugly partisan gain."

The White House expressed support for the bill. "The House bill is not perfect. I would have preferred that it include no exemptions," President Obama said on Thursday. "But it mandates unprecedented transparency in campaign spending, and it ensures that corporations who spend money on American elections are accountable first and foremost to the American people."

The bill now moves to the Senate, where it faces an uncertain future. Companion legislation has 50 co-sponsors, all Democrats or Independents. It is not clear if the measure has enough support to survive an expected Republican filibuster. And, even if Obama signs the bill, legal experts suspect it will be challenged in court.

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