Home » Watch Out for Traps in Evolving State Pay-to-Play Rules
There’s no such thing any more as just grabbing a sandwich, sipping some wine or smacking some golf balls—at least not with a state official or employee.
Even if you split the check, dining with a government client or potential client runs the risk of falling within prohibited forms of procurement or goodwill lobbying—comparatively new terms in the regulatory language. Anything that could be construed as influencing content in a request for proposals (RFP), the contract selection process or even a future legislative appropriations vote.
These were among the cautions outlined by James A. Kahl, a Washington, D.C.-based attorney who specializes in government regulation, to the members of Construction Industry Round Table at its spring conference May 2 in Washington, D.C. The group is made up of about 100 CEOs of leading design firms and contractors doing business in the U.S.
The essence of Kahl’s briefing was that the difference between a legal and an illegal gift or contact under state laws can be as thin as the wing of a paper airplane.
Kahl urged caution to avoid running afoul of rules limiting goodwill and procurement lobbying.
Procurement lobbying covers some activities that are intuitively understood as attempts to influence purchasing decisions by state agencies. Such rules cover attempts to convince agency personnel of the need for a product, legislators of the need to make an appropriation that may yield contracts.
Since 2005, eight more states have added procurement lobbying rules, bringing the total up to 26, says Kahl.
In some instances violations can cause state officials to reject bids and sometimes debar a contractor, he says.
“Unfortunately, the definition of what lobbying is has expanded greatly with dynamic change in recent years. You almost can’t help it to stumble into these areas some time."
Goodwill lobbying, in Kahl’s explanation, may cover what “used to be called going to lunch, getting to know a legislator so they understand your industry and you understand them.”
The thread in states with goodwill lobbying rules is the contractor or vendor’s attempt to "get to know" or curry favor for future activities. “When you look at definitions in some states, it’s tough to say whether I am doing that or not,” says Kahl.
In North Carolina, for example, Kahl says the language of the law covers building a relationship “with intent to influence current or future action.
Hawaii’s rule covers getting “to know or establish rapport.”
In the past, that was considered “what sales people do,” says Kahl. “More and more people in your organization who you never thought were lobbyists may be, and your organization may be a lobbying organization.”
Kahl offers a few solutions.
Know who your employees are and what they are doing.
Keep separate government relations, sales and compliance activities.
Periodically review your activities and enact company policies to serve as a shield to show potential regulators you have done all you could to comply.
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