Federal government contractors (2024)

The FEC often receives questions regarding the prohibition on contributionsand expendituresby federal government contractors. While this article responds to some of the most common questions, it does not cover all aspects of federal government contractor activity. Readers should consult the Federal Election Campaign Act (the Act) and Commission regulations, advisory opinions, and relevant case law for additional information.

Prohibition

Under the Act and Commission regulations, federal government contractors may not make any contribution or expenditure, or promise to make any contribution or expenditure, to any political party, political committee, or candidate for federal office, or to any person for any political purpose or use; and no person may solicit contributions from federal contractors. A federal government contractor is a person who enters into a contract, or is bidding on such a contract, with any agency or department of the United States government and is paid, or is to be paid, for services, material, equipment, supplies, land or buildings with funds appropriated by Congress. The basic contractual relationship must be with the United States or any department or agency of the United States. A person who contracts with a State or local jurisdiction or other entity is not subject to the prohibition even if that entity is funded in whole or in part from funds appropriated by Congress.

For the prohibition to apply, the contractual relationship must be with the United States or any department or agency of the United States

The federal government contractor ban applies to contributions and expenditures by corporations, partnerships and limited liability companies with a government contract. It also applies to the personal and business funds of:

• Individuals under contract to the federal government; and
• Sole proprietors of businesses with federal contracts.

Note that spouses of such individuals are not prohibited from making a personal contribution in their own name (as long as they are not otherwise prohibited from making contributions in connection with a federal election).

Prohibition applies during negotiations

The prohibition on contributions and expenditures begins at the date negotiations commence or when Requests for Proposals (RFPs) are sent out, whichever comes first. The prohibition ends on the latter of:

• The completion of performance under; or
• The termination of negotiations for, the contract or furnishing of material, supplies, equipment, land, or buildings, or the rendition of personal services.

Prohibition does not apply to employees

The prohibition on contributions by federal contractors does not prohibit the stockholders, officers, or employees of a corporation, the employees, officers, or members of an unincorporated association, cooperative, membership organization, labor organization, or other group or organization which is a federal contractor from making contributions or expenditures from their personal assets.

An individual partner in a partnership or limited liability company (LLC) may also make contributions and expenditures from their personal funds (rather than from funds drawn on the partnership's account).

Contributions to independent expenditure-only political committees (Super PACs)

The prohibition on contributions by federal contractors applies to contributions to independent expenditure-only political committees (Super PACs) and hybrid PACs.

Independent expenditures

Federal contractors are prohibited from making expenditures. An independent expenditureis an expenditure for a communication, such as an advertisement through a website, digital device, application, advertising platform, newspaper, TV or direct mail that:

• Expressly advocates the election or defeat of a clearly identified candidate; and
• Is not made in consultation or cooperation with, or at the request or suggestion of any candidate, or his or her authorized committees or agents, or a political party committee or its agents.

Indian tribe with federal government contracts

In previous advisory opinions, the Commission determined that subordinate commercial enterprises that are federal contractors and are owned or operated by Indian tribes can be treated as separate entities from the tribe and its political activities.

State or local elections

The Act's federal government contractor prohibition does not apply to donations or disbursements in connection with state or local elections.

Citations

Regulations

11 CFR 115
Federal contractors

Statutes

52 U.S.C. 30119
Contributions by Government contractors

Federal Register notices

41 FR 35963 (August 25, 1976)

45 FR 21210 (April 1, 1980)

Advisory opinions

2011-11
Application of media exemption (also clarifies that Super PACs may not receive contributions from federal contractors)

2008-11
Applicability of federal contractor contribution prohibition to personal service contractor

2005-20
Use of federal contractor partnership's automated payroll system to allow partners to designate funds from their electronic payroll distributions as contributions to the partnership's nonconnected PAC

2005-01
Indian tribe not a federal contractor

1999-32
Indian tribe's utility authority treated as separate from the tribe

1991-01
Credit card contributions to PAC of federal contractor partnership

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