Requiring federal contractors to disclose political donations could raise legal challenges

Introduction

The Obama administration is considering an executive order would require government contractors to disclose political contributions and expenditures. In the draft, President Obama cited his constitutional authority and the Federal Property and Administrative Services Act of 1949 (FPASA) to authorize policies to promote efficiency in federal contracting. But the measure has come under harsh criticism from both sides of the aisle, and now the Congressional Research Service is raising some legal cautions.

Contractor-related executive orders historically have been issued based upon the president’s powers under Article II of the Constitution or by FPASA. But if President Obama relies on Constitutional authority alone, rather than the FPASA, he may face challenges regarding separation of powers.

Sens. Joe Lieberman, I-Conn., and Claire McCaskill, D-Mo., have joined Republican criticism against the order. Sen. Mitch McConnell, R-Ky., describes it as “an outrageous and anti-Democratic abuse of executive branch authority.”

The draft executive order is similar to the Democracy is Strengthened by Casting Light on Spending in Elections (DISCLOSE) Act that the 111^th Congress failed to pass.

While federal contractors are currently required to disclose political contributions to candidates, the executive order under consideration requires disclosure of any donation.

The executive branch’s authority to place requirements on federal contractors has been challenged for a number of situations: encouraging the use of project labor agreements (when the government will only offer contracts to unionized firms), requiring contractors to post notices telling employees they are not required to join unions or pay mandatory dues, and using E-Verify to check to citizenship status of employees.

“Presidents from Franklin D. Roosevelt through Barack Obama have issued orders that seek to leverage the government’s procurement spending to promote socio-economic policies that some commentators would characterize as extraneous to contractors’ provision of goods or services to the government,” the Congressional Research Service noted. CRS reviewed 12 cases regarding presidential authority on federal contracting practices.

Executive orders on federal contracting relying on authority other than FPASA might be found invalid due to the ruling of Youngstown Sheet & Tube Company v. Sawyer. In Youngstown, the Supreme Court struck down President Truman’s executive order directing the seizure of the steel mills during the Korean War. But in AFL-CIO v. Allbaugh in 2002, an executive order regarding the use of project labor agreements in federal contracting was upheld due to the president’s constitutional authority on federal procurement requirements.

“Presidents have broad authority under FPASA to impose requirements upon federal contractors. However, this authority is not unlimited, and particular applications of presidential authority under FPASA have been found to be beyond what Congress contemplated when it granted the President authority to prescribe policies and directives that promote economy and efficiency in federal procurement,” the Congressional Research Service said.

FAST FACT: In 2010, federal contracts cost the government $541.1 billion, or about 4 percent of U.S. gross domestic product. About 22 percent of U.S. workers are employed by organizations subject to federal contractors and subcontractors requirements.