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February 01, 2022

The State of Pay-to-Play: D.C. Announces Long-Awaited Implementation of Law; Disclosure Deadlines in States Approach

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Key Takeaways

  • The law bans political contributions to officials responsible for awarding contracts by entities holding or seeking contracts worth $250,000 or more with the D.C. government.

The nation's capital will begin to enforce its long-delayed pay-to-play law on November 9, 2022. Although it was originally set to go into effect on November 4, 2020, Washington, D.C., delayed enforcement of the Campaign Finance Reform Amendment Act of 2018 due to a lack of funding.

The law bans political contributions to officials responsible for awarding contracts by entities holding or seeking contracts worth $250,000 or more with the D.C. government. The law applies the same prohibition to any Political Action Committee affiliated with the official. The ban also applies to political contributions from senior officers of the business.

Several states have upcoming reporting requirements related to pay-to-play regulations:

Pennsylvania requires business entities subject to pay-to-play disclosure requirements to file an annual report with the Secretary of State by February 15.

New Jersey requires businesses that have received more than $50,000 in a calendar year in government contracts to file a report on March 30 disclosing contracts and contributions. Businesses must file these reports even if they made no contributions in the past year.

Maryland has semiannual reporting deadlines on May 31 and November 30. The disclosure requirements apply to businesses possessing any contract worth $200,000 or more or employing a lobbyist who receives more than $500 in compensation during the reporting period.

Rhode Island allows businesses possessing multiple contracts worth more than $5,000 to file disclosure reports on a semiannual basis, on January 31 and July 31. The report must disclose contributions over $250 in the last 24 months.

Currently, 15 states and the District of Columbia have pay-to-play laws of general jurisdiction, and several other states have industry-specific pay-to-play laws. Notably, state pay-to-play laws pertain not only to corporate and PAC contributions, but also to the personal political contributions of certain executives, shareholders, and employees. The consequences for violating these laws may include monetary penalties, rescission of contracts, and debarment. It is imperative for any company with state contracts to have an appropriately tailored pay-to-play compliance program in place.

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