Bill could turn contractors into lobbyists

As federal contracting officials begin to warm up to more interaction with industry, many government contractor employees could be redefined as lobbyists under a new bill, possibly chilling discussions on upcoming business opportunities.

Congress is now working out the final details of a bill aiming to stop insider trading by senior government officials. However, industry groups fear the bill could turn business analysts into lobbyists. The groups say it would wreak havoc on industry and government relationships.

The Acquisition Reform Working Group, a conglomeration of eight industry groups, sent letters Feb. 16 to members of Congress, urging them to rework a broad definition of “political intelligence consultants” in the Stop Trading on Congressional Knowledge (STOCK) Act (S. 2038). Under the Senate’s version, the language would require even government contractors who talk to their customer agencies to register as lobbyists under the Lobbying Disclosure Act.

“Political intelligence contact” would be any communication to or from certain officials that is intended for use “in informing investment decisions.”

Trey Hodgkins, senior vice president for national security and procurement policy at TechAmerica, a member of the working group, said a company’s employees, who talk with officials to learn about upcoming contracts that an agency may be considering, could be gathering intelligence on where it will invest its resources and time in preparing a bid on a contract.

“Applying this nebulous term could result in broad reporting requirements for federal government contractors and others simply for engaging in the regular and necessary day-to-day communications with their federal customers,” the group wrote in its letter.

To further impact the situation, a proposed rule by the Office of Government Ethics would block many industry experts from interacting with government employees, not just political appointees, Hodgkins said.

“It’s a Catch 22 for companies,” he said.

The intent of the original STOCK Act was to eliminate insider trading by legislative and executive branch officials is an understandable concern, Hodgkins said. But the definition could go beyond the intent.

“At a time when senior leaders in the Executive Branch are encouraging improved communication between industry and government, it strikes our associations as counterproductive to adopt language that discourages such communication between federal and private sector partners,” according to the letter.

In talking with congressional staff members, Hodgkins said this wasn’t the intent of the definition. They had analysts at hedge funds in mind.

Hodgkins also said the staff members would consider clarifying the definition in the Senate’s bill.

The working group urged lawmakers to let the Government Accountability Office and the Congressional Research Service report on the role of political intelligence in the financial markets before putting a definition in statute. Both the House and Senate bills would require an investigation by both GAO and CRS.

The STOCK Act passed the Senate 96 to 3 on Feb. 2. The House passed its similar version 417 to 2 Feb. 9. The two chambers are working out the differences in the bills before sending it to the White House for President Barack Obama’s signature. The administration has said it strong supports the Senate’s bill.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

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