LobbyComply Blog

The Senate passed a bill related to pay-to-play disclosure. Senate Bill 1186 requires companies responding to a request for proposal, applying for a grant, or under contract with a state agency to disclose having provided anything of value to the governor and any entity that advocates for the election of the governor or defeat of an electoral opponent of the governor within the prior five years. Last year, Gov. Katie Hobbs vetoed a bill containing similar language, calling it a political stunt. This February, Hobbs unveiled a forward-looking ethics reform proposal focused on a state contractor database, a contribution cap during bid consideration, and a lobbyist gift ban. The competing visions on ethics reform come against the backdrop of lawmakers and the governor’s office trading scrutiny over past transparency.

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Make sure you understand pay-to-play regulations in your state. See all 50 states and nearly 300 jurisdictions in our online guidebooks. Check them out here.

Q: My company is a government contractor. What do I need to know about pay-to-play laws?

A: “Pay-to-play” laws are a set of laws that can restrict contributions from, or require disclosures of contributions made by, current and prospective government contractors. The purpose of such laws is to remove the appearance of quid pro quo between contractors and government officials.

The most common type of pay-to-play laws are those restricting contributions. Such laws will typically ban current and prospective contractors from making political contributions during a period which begins with the government putting the contract out for bid and ending when a bidder either fails to be awarded the contract, for a set time after the contract is awarded to the successful bidder, or when the contract ends. The ban on contributions may apply to the contractor and to employees and political action committees associated with the contractor. 

Some jurisdictions also require the extra step of submitting a certification or a disclosure during the bidding process. Contractors or prospective contractors may be required to certify they have not made contributions in violation of the pay-to-play restrictions prior to the bid award. Disclosures of contributions made may also be required. Updates of these certifications or disclosures may be required on a set schedule based on when the bid was awarded.

The restrictions and disclosures may apply to all contractors or they may be specific to certain industries. For example, Georgia’s law includes provisions specific to electric membership corporations, while Indiana’s law only applies to those who contract with the State Lottery Commission. 

Maryland, New Jersey, and Pennsylvania require disclosure of contributions made by state contractors or their employees on set dates, regardless of when the contracts were awarded. Each state is unique in what contractors are required to disclose, but for each state it is important to know which contracts trigger the disclosure requirements, what the reporting threshold is, and what contributions need to be disclosed. Reportable contributions can include those made by the corporation itself, by political action committees associated with the corporation, by executives and directors of the corporation, or by employees. Maryland’s pay-to-play law is unique in that it requires a registration to be filed as well as a disclosure. It also extends the list of who must file reports to include corporations with registered lobbyists in the state, regardless of the contracting status of the entity. 

Penalties for violations of the pay-to-play laws can be severe. Fines for missed reports may be imposed. More importantly, contracts can be voided at the discretion of the government, and a ban on future contracting may follow. You can learn more about these pay-to-play provisions and avoid the many pitfalls by consulting State & Federal Communication’s Procurement Lobbying Compliance Guidebook.

Frequently Asked Questions About Pay-to-Play Laws for Government Contractors

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What are pay-to-play laws for government contractors?

Pay-to-play laws are federal, state, and local regulations that restrict or regulate political contributions made by companies seeking or holding government contracts. These laws are designed to prevent the appearance of a quid pro quo relationship between contractors and public officials responsible for awarding contracts.

Depending on the jurisdiction, pay-to-play requirements may include contribution bans, disclosure obligations, bid certifications, or post-award reporting. Because these rules vary significantly by state and sometimes by agency or industry, contractors must evaluate compliance obligations on a jurisdiction-by-jurisdiction basis.

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Do pay-to-play laws apply only to the company, or also to executives and employees?

In many jurisdictions, pay-to-play laws extend beyond the corporate entity itself. Coverage may include executives, directors, board members, certain employees, political action committees affiliated with the company, and in some cases subsidiaries or related entities.

This broad scope means individual political contributions can trigger corporate consequences. For that reason, contractors must understand how “covered individuals” are defined in each jurisdiction and how those definitions affect disclosure or contribution restrictions tied to public contracts.

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When do pay-to-play restrictions begin and end?

The timing of pay-to-play restrictions varies by state and locality. In some jurisdictions, restrictions begin when a request for proposal is issued or when negotiations for a public contract start. Other laws trigger compliance obligations upon bid submission or contract award.

Restrictions may continue through the evaluation process and extend into a defined post-award period. Because timing provisions differ significantly, contractors should carefully assess when restrictions apply in each jurisdiction where they pursue public business.

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What happens if a contractor violates pay-to-play laws?

Consequences for violations can be substantial. Depending on the jurisdiction, penalties may include monetary fines, late reporting penalties, voided contracts, disqualification from a pending procurement, or temporary or permanent bans on future contracting.

In some cases, awarding authorities retain discretion to cancel contracts if a violation is discovered after award. Beyond financial and legal exposure, enforcement actions can create reputational risk that affects future government opportunities. Given the potential impact, proactive compliance oversight is critical.

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Are pay-to-play laws the same in every state?

No. There is no uniform national pay-to-play framework. Each state designs its own regulatory structure, enforcement mechanisms, reporting thresholds, and definitions of covered individuals.

Some states require ongoing disclosure of contributions by contractors regardless of when a contract was awarded. Others impose industry-specific restrictions or apply additional rules to entities with registered lobbyists. This fragmented regulatory environment makes multi-state compliance particularly complex for contractors operating across jurisdictions.

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What types of contracts trigger pay-to-play requirements?

Triggering contracts vary by jurisdiction. Some states apply pay-to-play rules broadly to most state-level contracts above a specified monetary threshold. Others limit coverage to contracts with particular agencies or within designated industries.

Certain laws may apply only to executive branch contracts, while others extend to local government entities or public authorities. Understanding which contracts activate disclosure or contribution restrictions is an essential first step in evaluating compliance exposure.

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How can government contractors stay compliant with pay-to-play requirements?

Effective compliance typically involves understanding jurisdiction-specific rules, identifying covered individuals, monitoring political contribution activity, and ensuring required disclosures and certifications are submitted accurately and on time.

Because pay-to-play laws change frequently and vary significantly between states, contractors often rely on regulatory monitoring, compliance resources, and advisory support to stay informed of evolving requirements. A structured compliance approach helps reduce risk while preserving eligibility for public contracting opportunities.

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How often do pay-to-play laws change?

State and local jurisdictions regularly amend campaign finance and procurement-related statutes, including pay-to-play provisions. Changes may affect contribution thresholds, reporting deadlines, covered officials, or certification requirements.

In addition, enforcement interpretations and agency guidance can evolve over time. For contractors engaged in ongoing public business, continuous monitoring of regulatory developments is essential to maintaining compliance.

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Is pay-to-play compliance the same as procurement lobbying?

While related, pay-to-play compliance and procurement lobbying compliance are distinct regulatory areas. Pay-to-play laws generally focus on political contributions tied to public contracting, whereas procurement lobbying laws regulate registration and reporting obligations related to sales-oriented communications with public officials.

However, Maryland expanded pay-to-play reporting to include entities with registered lobbyists, creating overlap between the two areas. Contractors should evaluate both regulatory frameworks when assessing overall government relations compliance risk.

Question: Every six months we survey our officers and directors asking whether they have made personal political contributions. Is this sufficient for purposes of pay-to-play reporting?

Answer: Unfortunately, an after-the-fact survey is insufficient in protecting your company from running afoul of pay-to-play laws.
Surveys provide information about personal contributions after the contribution has already been made. When you sit down to complete a pay-to-play report and you consult the survey responses, the damage has already been done if the contribution was made in violation of the pay-to-play law. Furthermore, the time for corrective measures (seeking reimbursement of the contribution) has more than likely passed.
Developing an internal program whereby employees (and in some instances their immediate family members) must seek pre-approval before making a personal political contribution is the gold standard. It is the best practice to ensure compliance with the varied pay-to-play laws.
The most compelling reasons to implement a pre-clearance program are to avoid debarment, fines, and negative publicity. Moreover, having a contract rescinded because of a pay-to-play violation can result in the loss of millions of dollars in revenue.
The success of any program is directly proportional to the education provided to employees. Educating them on the need for a pre-clearance strategy results in increased participation, which in turn results in decreased risk to the company.
At its core, a thorough program must let employees know the company is not prying into their personal spending habits and requiring permission is not an attempt to invade their privacy. The message must be conveyed that the company has legitimate business reasons for requiring pre-approval. Such reasons include: maintaining the company’s ability to effectively conduct business with states and municipalities; ensuring the conduct of the company’s employees does not jeopardize the company’s reputation; and shielding the company’s employees and their family members from personal liability.
There is no one-size-fits-all compliance program, but if a pre-clearance strategy is not used, a violation of a jurisdiction’s pay-to-play law is more likely to occur.

For more information, be sure to check out the “Pay-to-Play” section for each state and local jurisdiction in the U.S. Procurement Lobbying Compliance Laws online publication. Please feel free to contact us if you have any questions. – https://stateandfed.com/contact-us/

Gov. Newsom signed bills into law this week dealing with pay-to-play provisions contained in the Levine act.

Senate Bill 1181 and 1243 increase the permissible campaign contribution threshold from $250 to $500 regarding contributions to state and local agency officials from certain entities such as corporations and individuals with business before the agency.

The bills also expand the definition of participant and license, permit, or other entitlement for use to exempt certain types of proceedings from being subject to the requirements of the Levine Act.

Other changes include an increase in the period an official may cure a violation from 14 to 30 days.

A section of the bill also clarifies a contribution of an agent will not be aggregated with contributions from a party or participant when determining whether a contribution has exceeded $500.

The bills become effective January 1, 2025.

Senate Bill 1243 was recently passed by the Legislature and will be sent to the governor for approval or veto.

The bill raises the threshold of contributions governed under the pay-to-play Levine Act from $250 to $500.

A section of the bill also clarifies a contribution from an agent which exceeds $500 will not be aggregated with contributions from a party or participant.

The period for which an officer may cure a violation is increased from 14 to 30 days.

Additional definitions are added for pending and agent, while definitions are amended for participant and license, permit, or other entitlement for use.

Senate Bill 1243 is effective January 1, 2025, dependent upon changes proposed in Senate Bill 1181 being enacted first.

A proposed amendment to the city’s ethics ordinance introduced at City Council would extend the existing $1,500 per-year campaign contribution limit on individuals and entities doing business with the City of Chicago to include officers, directors, partners, or owners of 1% or more of those companies and their spouses or domestic partners.

Reaching the $1,500 limit by a corporate entity or any combination of its officers, leadership, and their spouses, would block all further contributions from any of those sources.

The ordinance also amends the ethics ordinance to create an affirmative duty for every city contractor or lobbyist to report any information concerning conduct by any person which the contractor or lobbyist knows to involve corrupt activity.

A failure to report would constitute an event of default for the contractor and suspension of the lobbyist’s registration for two years in addition to other penalties.

If passed, the ordinance would become effective 10 days after passage.

Gov. Phil Murphy appointed four new commissioners to the state’s campaign finance watchdog agency.

The Election Law Enforcement Commission (ELEC) oversees campaign spending, lobbying, and pay-to-play in the state. 

In addition to providing Murphey with the power to appoint these commissioners, Senate Bill 2866 made a number of substantial changes to ethics laws.

These changes included increasing spending and contribution limits; overhauling pay-to-play laws; and shortening how long the state’s election watchdog commission can investigate campaign finance violations. 

A coalition of business groups have filed a lawsuit against the Fair Political Practices Commission, seeking to stop enforcement of new pay-to-play restrictions in Senate Bill 1439.

The new law removed the exception for locally elected officials and extended the restricted period from three to 12 months.

The lawsuit seeks to throw out the new law, claiming the bill is unconstitutional, both in the manner it altered the Political Reform Act and in practice.

Plaintiffs allege Senate Bill 1439 does not further the original purpose of the Political Reform Act, but directly conflicts with the original provisions regulating certain financial conflicts of interest of public officials.

Additionally, the plaintiffs claim the bill is unconstitutional on freedom of speech grounds, stating the bill significantly restricts the making and receiving of campaign contributions to local elected officials throughout the state.

No trial date has been set at this time.

On January 13, the U.S. Supreme Court issued an order denying review of an appeal concerning the legality of a Securities and Exchange Commission (SEC) pay-to-play rule, allowing that rule to stand.

Previously, on June 18, 2020, a federal appellate court had affirmed a lower court’s finding that the pay-to-play rule was legal.

In New York Republican State Committee v. SEC, the U.S. Court of Appeals for the District of Columbia Circuit found the SEC’s Financial Industry Regulatory Authority (FINRA) Rule 2030 constitutional.

The rule prohibits a placement agent from accepting compensation for soliciting government business from certain candidates and elected officials within two years of having contributed to such an official’s electoral campaign or to the transition or inaugural expenses of a successful candidate.

The New York Republican State Committee and the Tennessee Republican Party had argued the SEC did not have authority to enact the rule, the order adopting the rule was arbitrary and capricious because there was insufficient evidence it was needed, and the rule violated the First Amendment of the Constitution of the United States.

Voters will have a chance in November to increase the restrictions on political contributions in the latest campaign finance proposal aimed at pay-to-play.

The Sunlight on Dark Money ballot initiative requires greater disclosure of who is behind campaign advertisements paid for by PACs.

The measure requires the top three largest donors of the committee paying for the advertisement to disclose the name and amount contributed to the committee.

If any of the three belong to another committee, they must disclose the top two donors of that committee as well.

The measure would also prohibit top executives in development companies from contributing to candidates or current office holders of the Board of Supervisors, mayor, and city attorney.

The prohibition will be in effect while a project they have financial interest in is pending approval, or for 12 months after the city makes a final decision on the project.

The measure will also close a loophole allowing LLCs and LLPs to contribute to candidates despite an existing ban on those donations from corporations.

The measure would take effect 10 days after the election results are certified.

On June 18, a federal appellate court affirmed the legality of a Securities and Exchange Commission (SEC) pay-to-play rule.

In New York Republican State Committee v. SEC, the U.S. Court of Appeals for the District of Columbia Circuit found the SEC’s Financial Industry Regulatory Authority (FINRA) Rule 2030 constitutional.

The rule prohibits a placement agent from accepting compensation for soliciting government business from certain candidates and elected officials within two years of having contributed to such an official’s electoral campaign or to the transition or inaugural expenses of a successful candidate.

The New York Republican State Committee and the Tennessee Republican Party had argued the SEC did not have authority to enact the rule, the order adopting the rule was arbitrary and capricious because there was insufficient evidence it was needed, and the rule violated the First Amendment of the Constitution of the United States.

While the court found the plaintiffs had standing, it ruled against all their arguments and upheld the rule.

Allen Superior Court Judge Jennifer DeGroote blocked the city of Fort Wayne from enforcing a pay-to-play ordinance.

The ordinance restricts how much money the owners of companies could give elected officials and still bid on city contracts.

Under the ordinance companies are forbidden from bidding on a city contract if any owner, partner, or principal who owns more than 10% of the company gave more than $2,000 to the political campaign of a person with the responsibility of awarding contracts.

Judge DeGroote’s ruling stated the ordinance was superseded by state law, specifically the Home Rule Act.

The Home Rule Act grants municipalities the ability to self-govern in areas not covered by the state.

Under state law, elections are the domain of the Indiana Election Commission.

Allen Superior Court Judge Jennifer DeGroote heard arguments on Wednesday in a case focused on a 2018 Fort Wayne City Council ordinance.

The ordinance limits financial contributions of contractors and their family members to political campaigns in Fort Wayne.

The measure prohibits business entities from bidding on city contracts if any officer, partner, or principal with more than 10% ownership has donated more than $2,000 to a campaign of someone with ultimate responsibility for awarding city contracts.

Kyle and Kimberly Suzanne Witwer filed the suit in April challenging the ordinance and requesting a judge block it’s implementation.

While no ruling was made on Wednesday, both sides must submit proposed findings of fact and conclusions of law by Friday.

There could be a potential ruling next week.

The main issue being considered at this time is whether state contribution laws make this ordinance unnecessary.

District of Columbia Act 22-578 passed Congressional review and is now effective.

The Campaign Finance Reform Amendment Act of 2018 removes the Office of Campaign Finance from the Board of Elections and establishes an independent five-member Campaign Finance Board (CFB).

The Act restricts political contributions by contractors doing business with the district and addresses improper coordination between campaigns, political action committees, and independent expenditure committees.

The pay-to-play component of the bill bans campaign contributions by businesses seeking contracts of $250,000 or more.

The pay-to-play provisions take effect after the November 2020 general election.