A panel of the Administrative Conference of the United States has made a recommendation of ethics standards for government contractors and their employees. Under the proposed rules, a contractor would be prohibited from accepting gifts from anyone who is seeking an official action from the contract work or who has some interest substantially affected by the contract.

A contractor would also have to certify, prior to commencing work on any contract, no participating employee has a conflict. If conflicts do exist, the contractor would be required to request waivers for such conflicts, or disclose any conflicts and propose a mitigation plan.

The Conference is an independent agency of the federal government serving as an advisory organization.

Update: Kathy Kyle, Communications Director with the Administrative Conference of the United States, sent us a wonderful clarification, which we quote here:

The “recommendation” that you reference in your blog is an initial draft recommendation that was considered by the Committee at its most recent meeting, on December 3, 2010.  Over the course of the next several months, the Committee plans to hold one or more additional meetings wherein it will further discuss the issues related to the project and will revise the recommendation.  Once the Committee has produced its final recommendation, the recommendation will then be presented to the ACUS Council and then to the full Conference meeting in plenary session, set for a vote.  If approved, the final recommendation will then be published in the Federal Register.

In order for the borough of North Arlington to receive $400,000, it must implement pay-to-play laws as one of the conditions for the state’s Transitional Aid to Localities program, which awards grants to the most fiscally challenged municipalities.

Mayor Peter Massa has signed a memorandum of understanding which mandates the borough council pass ordinances limiting awarding public contracts to businesses that have made contributions. Businesses actively contracting with the borough would also be limited from making contributions.

The council has three months to pass the ordinances, in addition to implementing other financial restrictions such as staff reductions and salary freezes, in order to receive the funds.

New York State Inspector General Joseph Fisch has released a report that criticizes New York State leaders for failing to fulfill their public duty in the January 2010 selection of Aqueduct Entertainment Group (AEG) to operate video lottery terminals at Aqueduct Racetrack in Queens.  The 300-page report concludes that AEG should have been disqualified, and that the chaotic process resulting in AEG’s multi-billion dollar award was a “political free-for-all” marked by unfair advantages and more than $100,000 in campaign donations.

The report found that Governor Paterson, Senate Democratic Conference Leader Sampson, Senate President Pro Tempore Smith, and Assembly Speaker Silver each contributed to the multi-million dollar debacle. The report strongly recommends that the bidding process used to select AEG never be repeated and that New York State impose stringent procurement restrictions on all major contracts to ensure that they are competitive, transparent and fair.

The Inspector General’s Office is forwarding the report to United States Attorney and New York County District Attorney, for appropriate action and referring Senators Sampson and Smith to the Legislative Ethics Commission.

Map of New York by Huebi on Wikipedia.

The Los Angeles City Ethics Commission voted in favor of a planned ballot measure to bar city contractors from making campaign contributions to candidates running for mayor and city council. Los Angeles City Council will decide by the end of November whether to place this law on the ballot for the March 8 municipal election.

Under the proposal, those who do not abide by the new restrictions risk being barred from winning a city contract for four years. This type of ban has been under consideration several times since 2005 but has stalled at various stages of the legislative process each time.

Photo of Los Angeles City Hall by Brion VIBBER on Wikipedia.

The U.S. House of Representatives has passed the State Ethics Law Protection Act. H.R. 3427 would preclude the Federal Highway Administration from interpreting a state’s Pay-to-Play laws as conflicting with federal contract bidding requirements for federal-aid highway projects.

The measure has now passed to the Senate Committee on Environment and Public Works.

NEW YORK: A recent examination by New York City’s Campaign Finance Board shows that changes enacted before the 2009 mayoral election encouraged 34,000 New Yorkers to make campaign donations for the first time; drastically curtailed the role of businesses, political committees and lobbyists in campaigns; and caused a major drop in donations from those doing business with the city.

The Campaign Finance Board report found that New York City’s newly promulgated rules diminished the role of businesses, political committees and unions in campaign fund-raising. They now account for 7.2 percent of all funds available to candidates. In the last election for State Assembly and Senate candidates, such contributions accounted for 66.6 percent of all the money raised. New York City’s system has become a model for campaign finance reform based upon these results.

Photo of the New York City Hall by Momos on Wikipedia.

Key to the suit is the state’s prohibition on contributions by contractors until completion of the contract. The suit, filed by A-1 A-Lectrician Inc., an electrical and construction firm in Hawaii, alleges the prohibition is an unconstitutional restriction on free speech, as well as in violation of the 14th Amendment’s citizenship protection of corporations and individuals.

Citizen advocacy groups, including Common Cause Hawaii and the League of Women Voters of Hawaii, have already voiced their opposition to the suit.

Satellite photo of Hawaii by NASA, posted on Wikipedia.

In the first decision, the court affirmed the U.S. District Court’s decision upholding the CFRA’s ban on contributions by state contractors, prospective state contractors, and the principals of contractors and prospective state contractors, as well as the spouse and dependent children of these individuals. However, in a reversal of the lower court’s decision, the Second Circuit struck down the ban on contributions from lobbyists and their families.

In the second decision, the court overturned a prior U.S. District Court decision which had declared the Citizens Election Program’s public financing for qualifying candidates as unconstitutional on the basis it discriminated against minor parties and their candidates. The court, however, agreed with the earlier decision in finding the CEP to unconstitutionally infringe upon the First Amendment rights to free speech of privately funded wealthy candidates when the state’s program required extra public funds be distributed to publicly funded candidates when certain financing “triggers” had been achieved. The Connecticut State Elections Enforcement Commission is expected to meet with the attorney general to determine the next course of action.

(Image from the National Atlas of the United States)

ELEC recommends four Pay-to-Play reform steps it would like to see passed into law. First, ELEC recommends any reform of Pay-to-Play regulations should address the patchwork quilt of local Pay-to-Play laws which have developed over time. Current state law allows municipalities and counties to adopt their own ordinances provided they are consistent with the theme of “Pay-to-Play”. The lack of a standardized Pay-to-Play theme across jurisdictions has led to a myriad collection of laws which vary from place to place throughout the state.

Second, ELEC would like to see the confusing “Fair and Open” loophole as it is known, closed at the local level. “Fair and Open” allows local governments to forego the Pay-to-Play rules where bids are publicly advertised. In such a case, the $300 campaign contribution limit imposed by state law does not apply if a local jurisdiction has its own procedures for bidding and awarding contracts.

Third, ELEC asks for every public contract over $17,500 to be subject to disclosure requirements which are now reserved for vendors whose contracts exceed $50,000 statewide. Finally, ELEC would like to see the campaign contribution limit raised above $300. Citing the high cost of media advertising in New Jersey, ELEC states that the present limits provided by law are comparatively low.

The commission explains it is mindful of public concerns regarding the presence of money in politics. That said, ELEC feels its recommendations regarding contribution limits would be offset by corresponding enhancements to disclosure requirements. The ELEC newsletter may be found at: www.elec.state.nj.us .

The Securities and Exchange Commission (SEC) is poised to consider new regulations prohibiting hedge funds and private equity firms from making political contributions to public officials who award public pension fund management contracts. The SEC initially considered an outright ban on what had become known as placement agents: middlemen who solicited government pension funds on behalf of securities firms looking to tap into the $2.4 trillion public retirement fund industry.

After pushback from industry and Congress over the proposed elimination of placement agents, the SEC is instead considering rules regulating improper pay-to-play practices connected to public pension funds. One proposed rule will limit direct and indirect political contributions by investment advisers seeking pension fund contracts.

New penalties for violators for pay-to-play violators are also under consideration. For instance, advisers who make political contributions to an elected official in a position to influence the selection of the adviser would face a two year bar from providing advisory services to a fund. The SEC is expected to vote on the proposed rules June 30, 2010.