Small Businesses Back Draft Executive Order Combating Pay-to-Play

By Craig Jennings, Center for Effective Government

Published May 12, 2011

As President Obama puts the finishing touches on a draft executive order (E.O.) that would require federal contractors to disclose their political contributions, Big Business and its allies in Congress have lined up to oppose transparency in federal contracting. And they’re throwing the kitchen sink at the E.O. in an attempt to paint it as an attempt to chill speech, a new pay-to-play contracting scheme, and a way to compile a “Nixonian-type enemies list” (yes, “enemies list”, I kid you not).

Getting out in front of the E.O.’s release, the House held a joint-committee (House Oversight and Small Business) hearing on it. Entitled “Politicizing Procurement: Would President Obama’s Proposal Curb Free Speech and Hurt Small Business?,” one would think that the committees would be hearing from a number of small businesses testifying to the extent that the draft E.O. would “hurt” them. Well, one would be wrong. The only arguable representative of small business was Lawrie Hollingsworth (invited by the minority (i.e. Democrats)), a small businesses owner, who testified on behalf of the U.S. Women’s Chamber of Commerce. House Oversight Committee Chair Darrell Issa (R-CA) was also not interested in hearing from transparency experts. Issa denied a request by ranking member Elijah Cummings (D-MD) to include Fred Wertheimer, a campaign finance expert at Democracy 21, as hearing witness. The rest of the panel included:

  • A trio of federal contracting heavyweights – the Professional Services Council, the National Defense Industrial Association, and the Aerospace Industries Association. These organizations count as members eight of the top 10 federal contractors who collected, on average, over $14 billion each in federal contracts last year (PSC and NDIA include nine of the top 10).
  • D. Mark Renaud, a lawyer who “regularly advises corporations, trade associations, their political action committees (PACs) and others on laws related to elections, political involvement, lobbying and ethics.”
  • Bradley Smith, Law Professor at Capital University Law School. According to Political Correction, Smith is a former advisor to Mitt Romney, who wrote that attempts at campaign finance reform are “misguided efforts to change the system.”

However, it turns out that small businesses do support transparency in contracting, including the president’s draft executive order. Prior to today’s hearing, three small business groups — the Main Street Alliance, theAmerican Sustainable Business Council, and the American Independent Business Alliance — held a press briefing expressing their support for transparency in federal contracting and illustrated, with owners of small businesses, instances in which federal contracts were awarded in a questionable manner. In each instance, the owner wasn’t sure if political spending by the contract winners was a factor, but they emphasized that they had no way to tell. In the accompanying press release, we read:

“Small businesses know that they can’t compete for government contracts if those contracts are being influenced by heavy hitter political spending,” said Frank Knapp, President and CEO of the South Carolina Small Business Chamber of Commerce. “We should stop this unfair and unseemly practice or at the very least let the public get information about the political contributions, both direct and indirect, that contractors are making.”

And why shouldn’t small businesses support federal contracting transparency? Seeing which businesses are throwing big bucks to politicians helps level the playing field. Operators of small businesses need to be aware if their large corporate competitors are attempting to disrupt the free market by using their deep pockets to influence federal procurement.

The idea that a disclosure E.O. would create a pay-to-play system is laughable. It’s no secret that pay-to-play already exists in federal procurement; members of Congress sure as hell know who’s giving to who. The only people who don’t are those who live outside of the small world where business and legislation meet. Bringing this system out into the sunlight will only help give businesses a better shot at winning contracts and reduce wasteful government spending.

The three small business groups sent President Obama a letter encouraging him to go forward with the executive order. Additionally, a large group of institutional investors, such as Domini, Calvert, and 30 others, sent the president a letter supporting the executive order. They noted the irony in the U.S. Chamber of Commerce opposing the disclosure executive order: many of the Chamber’s members and Board already disclose political spending, including through third parties, as proposed in the draft executive order. Moreover, the letter adds, “At least a third of the S&P 100 publicly disclose such payments.”

So what’s this all about? Seems that some deep-pocket companies and their allies in Congress simply want to keep this stuff hidden from you and me. If President Obama signs the executive order, he gets kudos from us. But he will be bucking powerful special interests.

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