Simone Lawson
Defense contractors are prohibited by federal law from making contributions or expenditures to any political party, committee, or candidate for federal office. This includes federal, state, and local elections. However, individuals who are federal contractors may make personal contributions, and spouses of federal contractors are not prohibited from making personal contributions or expenditures. Despite this, some federal contractors continue to flout the law, and watchdog groups like the Campaign Legal Center (CLC) have filed complaints against companies in a variety of industries for violating the law by making political contributions while performing on federal contracts.
| Characteristics | Values |
|---|---|
| Federal government contractors allowed to make political donations | Federally recognized Indian tribes with tribally chartered unincorporated entities |
| Federal government contractors prohibited from making political donations | Corporations, partnerships, and LLCs |
| Individuals allowed to make political donations | Spouses of individuals and sole proprietors who are federal government contractors and employees of federal government contractors |
| Individuals prohibited from making political donations | Individuals who are federal government contractors or negotiating a contract with the federal government |
| Political committees allowed to accept contributions from | Corporate or labor PACs registered with the FEC |
| Political committees prohibited from accepting contributions from | Foreign nationals, corporations, and labor organizations |
| Examples of federal contractors that violated the law by making political contributions | Detroit International Bridge, LLC, multiple gun manufacturers, a medical device company, and a health care staffing company |
| Largest defense contractors that have made political donations | Boeing, Lockheed Martin, General Dynamics, Raytheon Technologies |
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What You'll Learn
- Federal law prohibits federal contractors from making political contributions
- Spouses of federal contractors can make political contributions from personal funds
- Domestic subsidiaries of foreign corporations can donate to state and local elections
- Federal contractors can contribute to independent expenditure-only committees (Super PACs)
- Federal contractors can contribute to non-contribution accounts maintained by Hybrid PACs
Federal law prohibits federal contractors from making political contributions
The purpose of the ban is to protect against the appearance or reality that taxpayer-funded contracts are for sale. It ensures that voters know that taxpayer-funded contracts are not influenced by political donations. Despite this longstanding prohibition, some federal contractors continue to flout the law. Over the past two years, there have been complaints against companies in various industries, including gun manufacturers, a medical device company, and a healthcare staffing company, that violated the law by making political contributions while performing on federal contracts.
The Federal Election Commission (FEC) is responsible for enforcing the ban and has issued advisory opinions on the matter. For example, the FEC has determined that a federally recognized Indian tribe with a tribally chartered unincorporated entity that operates as a federal contractor can be treated as a separate entity from the tribe and its political activities. Additionally, the FEC has clarified that spouses of individuals who are federal contractors are not prohibited from making personal contributions or expenditures in their own name, as long as they are not otherwise prohibited from doing so.
It is important to note that the ban on political contributions by federal contractors only applies to federal elections. Domestic subsidiaries of foreign corporations, for example, are allowed to donate to state and local elections. However, there are still some prohibitions on contributions to state and local elections, such as the prohibition on contributions and expenditures by foreign nationals.
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Spouses of federal contractors can make political contributions from personal funds
Federal government contractors are prohibited from making contributions or expenditures to any political party, committee, or candidate for federal office. This includes any funds under their control, whether business or personal. However, this prohibition does not extend to the spouses of federal contractors, who are permitted to make contributions from their personal funds.
The Federal Election Campaign Act prohibits corporations and labor organizations from making contributions in connection with federal elections. This includes contributions made indirectly, such as through bonuses or other methods of reimbursing employees for their contributions. The law also prohibits foreign nationals from making contributions or expenditures in connection with any federal, state, or local election.
While federal contractors are prohibited from contributing to federal elections, they can contribute to state or local elections. Additionally, individuals may make contributions to party committees, subject to certain limits. For example, minors under 18 years old may contribute to party committees if they voluntarily decide to do so and use their own funds.
Spouses of federal contractors fall outside the scope of these restrictions. They are allowed to make personal contributions or expenditures in their own name, provided they are not otherwise prohibited from doing so in connection with a federal election. This means that the spouses can contribute to political campaigns using their personal funds, as long as those contributions comply with other applicable laws and regulations.
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Domestic subsidiaries of foreign corporations can donate to state and local elections
Federal government contractors are prohibited from making contributions or expenditures to any political party, committee, or candidate for federal office. This includes promising to make any such contributions or expenditures. The prohibition also applies to partnerships or LLCs bidding on or negotiating a federal contract. However, spouses of individuals and sole proprietors who are federal contractors may contribute from their personal funds.
Now, regarding domestic subsidiaries of foreign corporations, they may donate to state and local elections, subject to state law. However, it is crucial to ensure that no foreign national participates in decision-making, and the funds do not originate from a foreign national. The definition of a "foreign national" includes "foreign principals" and individuals who are neither US citizens nor lawful permanent residents. To comply, subsidiaries can establish a board of directors composed of US citizens or permanent residents to make political donation decisions, ensuring that only funds raised by the US corporations are used.
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Federal contractors can contribute to independent expenditure-only committees (Super PACs)
Federal contractors are prohibited from making contributions or expenditures to any political party, committee, or candidate for federal office. This includes independent expenditure-only committees, more commonly known as Super PACs. The Federal Election Campaign Act prohibits corporations and labor organizations from making contributions in connection with federal elections.
Super PACs are independent expenditure-only political committees that can accept contributions in unlimited amounts from individuals, corporations, and other political committees. However, they are prohibited from accepting contributions from federal contractors, foreign nationals, national banks, or federally-chartered corporations.
While Super PACs cannot contribute directly to candidates or political parties, they can spend unlimited amounts of their funds on independent expenditures in federal races. These expenditures are typically ads that advocate for or against a specific federal candidate's election.
It is important to note that spouses of individuals who are federal government contractors are not prohibited from making personal contributions or expenditures in their own name, as long as they are not otherwise prohibited from doing so.
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Federal contractors can contribute to non-contribution accounts maintained by Hybrid PACs
Federal contractors are prohibited from making contributions or expenditures to any political party, committee, or candidate for federal office. This includes any person for any political purpose or use. The Federal Election Campaign Act prohibits corporations and labor organizations from making contributions in connection with federal elections. However, corporations and labor organizations can contribute to independent expenditure-only committees (Super PACs) and non-contribution accounts maintained by Hybrid PACs.
Hybrid PACs are political committees that can make independent expenditures and accept unlimited contributions from individuals, corporations, labor organizations, and other political committees. They are prohibited from accepting contributions from foreign nationals, federal contractors, national banks, or federally chartered corporations.
It is important to note that while federal contractors cannot contribute to political campaigns, their spouses may make contributions from personal funds. Additionally, an individual partner in a firm negotiating a contract with the federal government may make contributions and expenditures from personal funds rather than from the partnership's account.
In summary, federal contractors are prohibited from contributing to political campaigns, but there are specific exceptions, such as contributions to non-contribution accounts maintained by Hybrid PACs. These Hybrid PACs can accept unlimited contributions from corporations and labor organizations but not from federal contractors or foreign nationals.
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Frequently asked questions
Federal law prohibits federal contractors from making contributions or expenditures to any political party, committee, or candidate for federal office. However, spouses of individuals and sole proprietors who are federal government contractors and employees of federal government contractors may make contributions from personal funds.
A federal government contractor is a person or entity that enters into a contract or bids on a contract with any agency or department of the United States government and is paid or will be paid for services, materials, equipment, supplies, land, or buildings with funds appropriated by Congress.
Some of the top defense contractors, including Boeing, Lockheed Martin, General Dynamics, and Raytheon Technologies, have made campaign donations to lawmakers and leaders from both major parties. For example, Boeing donated at least $455,000 to Republicans who voted against certifying the 2020 election results, while the top three House Democrats received at least $50,000, $91,000, and $64,500 in direct contributions and PAC donations from the top five defense contractors.
While the FEC has generally enforced the contractor contribution ban, it does not actively review campaign finance reports for illegal contractor contributions. Instead, it relies on independent watchdogs like the CLC to identify illegal contributions and file complaints. In recent years, the CLC has filed complaints against companies in various industries, including defense contractors, for violating the law by making political contributions while performing on federal contracts.
