Court ruling could spur action on greater disclosure of contractor contributions

United States Courts District of Columbia Circuit

On Monday, the U.S. Court of Appeals for the D.C. Circuit unanimously ruled in Wagner v. FEC that a 75-year-old ban on political contributions by federal contractors is constitutional. The decision comes at a time of renewed interest in executive action to require that government contractors disclose their political activity.

The statute upheld by the court prohibits government contractors from directly or indirectly contributing to any federal political candidate, committee or party (though, they are still allowed to make independent political expenditures or contribute to a PAC). The court found two compelling justifications for barring such contributions: preventing quid pro quo corruption or its appearance, and ensuring that contracting decisions are made based on merit and not political allegiance.

Although federal law currently prevents contractors from making political contributions during the negotiation or execution of a contract, it leaves open an important loophole by not addressing political activity before negotiations start. A draft executive order first circulated four years ago sought to rectify this gap — it would have required any individual or corporation submitting a bid for a federal contract to disclose all political contributions made in the preceding two years — but it was abandoned before the 2012 election cycle.

Last week, lawmakers in the House and Senate separately sent two letters calling on the president to revive this abandoned draft and once again move to require full disclosure of all political activity by contractors. According to the House lawmakers: “With public funds come public responsibilities, and any company receiving federal tax dollars should be required by executive order to fully disclose their political spending.”

While it is still possible that the Supreme Court could decide to hear Wagner v. FEC and potentially reverse Monday’s ruling, the fact that the appeals court issued its decision unanimously and en banc — meaning it came from all of the court’s judges and fortified by a court reporter, not just a panel — makes further appeal unlikely and means that the constitutional case for limiting the political activity of government contractors is strong. Hopefully, this strengthened legal foundation will bolster renewed efforts to require contractor disclosure through executive action.