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POLITICIZING PROCUREMENT: WILL PRESIDENT

OBAMA’S PROPOSAL CURB FREE SPEECH AND

HURT SMALL BUSINESS?

JOINT HEARING

BEFORE THE

COMMITTEE ON OVERSIGHT

AND GOVERNMENT REFORM

AND THE

COMMITTEE ON SMALL BUSINESS

HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

MAY 12, 2011

Serial No. 112–47

Printed for the use of the Committees on Oversight and Government Reform

and Small Business

(

Available via the World Wide Web: http://www.fdsys.gov

http://www.house.gov/reform
(II)

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

DARRELL E. ISSA, California, Chairman

DAN BURTON, Indiana

JOHN L. MICA, Florida

TODD RUSSELL PLATTS, Pennsylvania

MICHAEL R. TURNER, Ohio

PATRICK T. MCHENRY, North Carolina

JIM JORDAN, Ohio

JASON CHAFFETZ, Utah

CONNIE MACK, Florida

TIM WALBERG, Michigan

JAMES LANKFORD, Oklahoma

JUSTIN AMASH, Michigan

ANN MARIE BUERKLE, New York

PAUL A. GOSAR, Arizona

RAU ́ L R. LABRADOR, Idaho

PATRICK MEEHAN, Pennsylvania

SCOTT DESJARLAIS, Tennessee

JOE WALSH, Illinois

TREY GOWDY, South Carolina

DENNIS A. ROSS, Florida

FRANK C. GUINTA, New Hampshire

BLAKE FARENTHOLD, Texas

MIKE KELLY, Pennsylvania

ELIJAH E. CUMMINGS, Maryland, Ranking

Minority Member

EDOLPHUS TOWNS, New York

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, District of

Columbia

DENNIS J. KUCINICH, Ohio

JOHN F. TIERNEY, Massachusetts

WM. LACY CLAY, Missouri

STEPHEN F. LYNCH, Massachusetts

JIM COOPER, Tennessee

GERALD E. CONNOLLY, Virginia

MIKE QUIGLEY, Illinois

DANNY K. DAVIS, Illinois

BRUCE L. BRALEY, Iowa

PETER WELCH, Vermont

JOHN A. YARMUTH, Kentucky

CHRISTOPHER S. MURPHY, Connecticut

JACKIE SPEIER, California

LAWRENCE J. BRADY, Staff Director

JOHN D. CUADERES, Deputy Staff Director

ROBERT BORDEN, General Counsel

LINDA A. GOOD, Chief Clerk

DAVID RAPALLO, Minority Staff Director
(III)

COMMITTEE ON SMALL BUSINESS

SAM GRAVES, Missouri, chairman

ROSCOE G. BARTLETT, Maryland

STEVE CHABOT, Ohio

STEVE KING, Iowa

MIKE COFFMAN, Colorado

MICK MULVANEY, South Carolina

SCOTT R. TIPTON, Colorado

JEFFREY M. LANDRY, Louisiana

JAIME HERRERA BEUTLER, Washington

ALLEN B. WEST, Florida

RENEE L. ELLMERS, North Carolina

JOE WALSH, Illinois

LOU BARLETTA, Pennsylvania

RICHARD L. HANNA, New York

ROBERT T. SCHILLING, Illinois

NYDIA VELA ́ ZQUEZ, New York, Ranking

Member

KURT SCHRADER, Oregon

MARK S. CRITZ, Pennsylvania

JASON ALTMIRE, Pennsylvania

YVETTE D. CLARKE, New York

JUDY CHU, California

DAVID N. CICILLINE, Rhode Island

CEDRIC L. RICHMOND, Louisiana

GARY C. PETERS, Michigan

WILLIAM L. OWENS, New York

WILLIAM R. KEATING, Massachusetts

JANICE HAHN, California

LORI SALLEY, Staff Director

PAUL SASS, deputy Staff Director

BARRY PINELES, Chief Counsel

MICHAEL DAY, Minority Staff Director

(V)

C O N T E N T S

Page

Hearing held on May 12, 2011 ............................................................................... 1

Statement of:

Chvotkin, Alan, senior vice president, Professional Services Council;

Mark Renaud, partner, Wiley Rein LLP; M.L. Mackey, CEO, Beacon

Interactive Systems; Lawrie Hollingsworth, president, Asset Recovery

Technologies, Inc.; Marion Blakey, president and CEO, Aerospace Industries Association; and Brad Smith, professor, Capital University

Law School ..................................................................................................... 135

Blakey, Marion .......................................................................................... 173

Chvotkin, Alan ........................................................................................... 135

Hollingsworth, Lawrie .............................................................................. 169

Mackey, M.L. ............................................................................................. 165

Renaud, Mark ............................................................................................ 145

Smith, Brad ............................................................................................... 178

Gordon, Daniel, Administrator for Office of Federal Procurement Policy,

Office of Management and Budget .............................................................. 99

Letters, statements, etc., submitted for the record by:

Blakey, Marion, president and CEO, Aerospace Industries Association,

prepared statement of ................................................................................... 175

Chvotkin, Alan, senior vice president, Professional Services Council, prepared statement of ........................................................................................ 138

Cummings, Hon. Elijah E., a Representative in Congress from the State

of Maryland, prepared statement of ............................................................ 8

Gordon, Daniel, Administrator for Office of Federal Procurement Policy,

Office of Management and Budget, prepared statement of ....................... 102

Gosar, Hon. Paul A., a Representative in Congress from the State of

Arizona, prepared statement of ................................................................... 70

Hollingsworth, Lawrie, president, Asset Recovery Technologies, Inc., prepared statement of ........................................................................................ 171

Issa, Hon. Darrell E., a Representative in Congress from the State of

California:

Letter dated May 12, 2011 ....................................................................... 35

Prepared statement of ............................................................................... 4

Mackey, M.L., CEO, Beacon Interactive Systems, prepared statement

of ..................................................................................................................... 167

Renaud, Mark, partner, Wiley Rein LLP; M.L. Mackey, CEO, Beacon

Interactive Systems, prepared statement of ............................................... 147

Smith, Brad, professor, Capital University Law School, prepared statement of ........................................................................................................... 180

(1)

POLITICIZING PROCUREMENT: WILL PRESIDENT OBAMA’S PROPOSAL CURB FREE

SPEECH AND HURT SMALL BUSINESS?

THURSDAY, MAY 12, 2011

HOUSE OF REPRESENTATIVES, COMMITTEE ON OVERSIGHT

AND GOVERNMENT REFORM, JOINT WITH THE COMMITTEE ON SMALL BUSINESS,

Washington, DC.

The committees met, pursuant to notice, at 2:40 p.m., in room

2154, Rayburn House Office Building, Hon. Darrell E. Issa (chairman of the Committee on Oversight and Government Reform) presiding.

Present from the Committee on Oversight and Government Reform: Representatives Issa, McHenry, Jordan, Walberg, Lankford,

Amash, Buerkle, Gosar, Labrador, DesJarlais, Gowdy, Guinto,

Farenthold, Kelly, Cummings, Kucinich, Connolly, Quigley, Braley,

Welch, and Murphy.

Present from the Committee on Small Business: Representatives

Graves, Chabot, Mulvaney, West, Ellmers, Hanna, and Vela ́zquez.

Staff present from the Committee on Oversight and Government

Reform: Richard A. Beutel, senior counsel; Robert Borden, general

counsel; Will L. Boyington and Drew Colliatie, staff assistants;

Molly Boyl, parliamentarian; Lawrence J. Brady, staff director;

Benjamin Stroud Cole, policy advisor and investigative analyst;

John Cuaderes, deputy staff director; Gwen D’Luzansky, assistant

clerk; Adam P. Fromm, director of Member liaison and floor operations; Linda Good, chief clerk; Frederick Hill, director of communications and senior policy advisor; Christopher Hixon, deputy chief

counsel, oversight; Justin LoFranco, press assistant; Mark D.

Marin, senior professional staff member; Laura L. Rush, deputy

chief clerk; Jeff Solsby, senior communications director; Becca Watkins, deputy press secretary; Daniel Epstein, professional staff

member; Kevin Corbin, minority staff assistant; Ashley Etienne,

minority director of communications; Jennifer Hoffman, minority

press secretary; Carla Hultberg, minority chief clerk; Lucinda

Lessley, minority policy director; Adam Miles and Any Miller, minority professional staff members; Dave Rapallo, minority staff director; and Mark Stephenson, minority senior policy advisor/legislative director.

Chairman ISSA. Since we have a quorum for a hearing, I am

going to go forward. We won’t go past the first opening statement

until or unless the—one of the ranking members arrives. Today we
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have a joint hearing on the politicizing procurement: Will President

Obama’s proposal curb free speech and hurt small business?

The Oversight Committee’s mission statement is we exist to secure two fundamental principles. First, Americans have a right to

know that the money Washington takes from them is well spent.

And second, Americans deserve an efficient, effective government

that works for them.

Our duty on the Oversight and Government Reform Committee

is to protect these rights. Our solemn responsibility is to hold government accountable to taxpayers, because taxpayers have a right

to know what they get from their government. We will work tirelessly in partnership with citizen watchdogs to deliver the facts to

the American people and bring genuine reform to the Federal bureaucracy.

Today’s hearing is about the Federal Government and its honest

contracting proposals. I am glad to see that the administration has

agreed to testify before this joint hearing. There are many questions to be answered, and I have been concerned about the indifference, and perhaps disdain, of the administration as shown at times

toward congressional oversight.

There is clear concern about a now well-circulated Executive

order that may have a chilling effect on political participation, free

speech, based on partisan issues. The American people have a right

to know what the government is doing and to impact, through this

Congress, proposed rules, regulations, and statutes in this country.

There is now bipartisan and bicameral alarm on Capitol Hill regarding the proposed Executive order and its potential effects on

politics in procurement.

The concern about injecting politics into procurement is not new.

It is not a Republican concern. It is not a Democratic concern. The

acquisition and procurement laws and regulations are designed to

preserve impartiality. We hold our very dedicated contractors to a

high standard of seeking to get a level playing field, maintained

fairness, and in fact obtain goods and services from the best

sources on a decision made on price and quality.

To protect the interest of U.S. taxpayers, contracts must be

awarded on the merits of the proposed bid and not on political affiliations or political donations of the prospective contractors. Yet,

under the President’s proposed Executive order, contractors would

be required to disclose information about political contributions of

some employees, and the information would be readily available to

political appointees who are intimately involved in the decisions to

award contracts. The risk that politics could play a role in the outcome of contracting and award decisions is too high.

I believe the United States has some of the finest public servants

in the Federal contracting officers. Day after day, they do the hard

work of examining proposed bids, crunching the numbers, always

seeking to get the best for the U.S. taxpayer. Notwithstanding an

attempt to always do an analytical assessment, we will always

have some contracts that are awarded on a no-bid or cost-plus

basis. Particularly in these contracts, there is a high risk that the

whim of a political appointee could in fact be swayed one way or

the other based on a public record of contributions.
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During the Bush administration, when my friends on the other

side of the aisle were in the majority, the committee spared no expense to hurl accusations of political bias in contracting process,

and in the process the names and reputations of some very good

people were smeared. This committee is not going to take that approach, precisely because we want to protect procurement officers

and contractors alike from the charge of political bias when we

have this and other hearings. Meanwhile, I believe it is telling that

the President’s proposal says nothing about requiring similar disclosures from labor unions and liberal advocacy groups.

Is the President not concerned about transparency on grantees,

many of them trade unions, trade unions themselves or other

groups that serve the country but do not fall under the general umbrella of Corporate America?

Nevertheless, we are here to examine what effects this proposed

order will have on the contracting community. We must determine

the cost both to contractors and the U.S. taxpayers if this proposal

or one similar goes into effect.

We must consider the efficiency of such a requirement. Will the

President’s political disclosure rule serve to delay the delivery of

goods and services to the Federal Government? We have to ask if

it is appropriate for government to require businesses to ask for information from employees that may be deeply personal and potentially detrimental to their career. Imagine your employer demanding to know, have you made donations to an organization that supports or opposes abortion? Do you have or have you given money

to a group that advocates gay rights—gay and lesbian rights, or

those that may have a religious objection? Can you imagine the effect of having to disclose that and then questioning whether your

career is in jeopardy.

Further, you could ask, are you supporting organizations that

seek to expand union representatives of workers or seek to implement rights related to work laws.

And finally, we must consider the constitutionality of this proposal. In fact, it appears that the order currently is not narrowly

tailored to a compelling government interest. Although we will not

ask questions as to deliberative process here today, we do feel that,

as drafted, it is legitimate to ask what the effects might be on Federal work force, on employees that would be covered under this,

and ultimately whether or not, constitutionally, this is ground we

should go into.

And with that, I recognize the distinguished ranking member for

his opening statement, Mr. Cummings.

[The prepared statement of Hon. Darrell E. Issa follows:]
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Mr. CUMMINGS. Thank you very much, Mr. Chairman.

The Committee on Oversight and Government Reform is supposed to enhance transparency and shine light on waste, fraud, and

abuse. I have been a member of this committee for 15 years and

I never thought I would see the day when our committee would

view transparency as the enemy.

The draft Executive order being developed by the administration

would require Federal contractors to disclose more information

about their political contributions than they currently provide, particularly those given to a third-party entity.

Chairman Issa said this week that he opposes this effort because

additional information could be used nefariously to create, ‘‘a

Nixonian-type enemy list.’’ In other words, companies should not

disclose more information, because people in power could misuse

the information to retaliate against them.

I have a fundamental problem with this premise. Under this

logic, all campaign disclosures would be bad, not just new ones.

Government contractors already disclose contributions and expenditures by their PACs and those who contribute to them. Contributions by the officers and directors of government contractors are

also required to be disclosed. Should we eliminate those provisions,

too? Of course not.

A second argument made by the opponents is that contracting officers might review political contributions in order to reward allies

or punish foes by awarding or withholding government contracts.

Again, this can happen now under current law, under current disclosure rules, but Federal procurement laws prohibit it.

The draft Executive order also reiterates that, ‘‘every stage of the

contracting process,’’ must be free from the undue influence of factors extraneous to the underlying merits of contracting decisionmaking such as political activity or political favoritism.

A third argument that the draft Executive order violates the

First Amendment is also misplaced. Even in the recent Citizens

United case, eight of nine justices agreed that campaign disclosure

rules are consistent with the First Amendment because they do not

prohibit contributions and do not prevent anyone from speaking.

For all of these reasons, a broad coalition of dozens of open government groups and other organizations strongly supports the administration’s draft Executive order. More than 30 groups, including nonpartisan, nonprofit organizations like Democracy 21, the

Project on Government Oversight, Public Citizens, and many others have concluded that the draft Executive order would enhance

transparency and decrease corruption.

Unfortunately, we will not be hearing from these groups today

because Chairman Issa refused my request to invite Fred

Wertheimer, the president of Democracy 21, to testify on behalf of

this coalition.

Although I was encouraged when Chairman Graves agreed to to

request from his ranking member, Ms. Vela ́zquez, to invite a small

business owner to today’s joint hearing, Chairman Issa chose not

to follow this example.

These are not the only groups that support the draft Executive

order. On Tuesday, a coalition of institutional investors and investor coalitions, collectively managing more than $130 billion, also
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wrote to express their support. In their letter they explained that

corporate political activity presents significant risk to shareholder

value, and transparency allows investors to put together a more

complete picture of the various risks to our investments.

For these reasons, I ask unanimous consent to place the following documents into the official record of today’s hearing.

First, I would like to submit the testimony that Mr. Wertheimer

prepared for today’s hearing but was not allowed to deliver.

Second, I would like to submit a letter written on May 4th by

more than 30 open government organizations and others expressing their, ‘‘strong support,’’ for the Executive order and its transparency goals.

And third, I would like to submit a letter written on May 10th

from the Coalition of Institutional Investors who support the draft

Executive order to protect the interest of corporate shareholders.

And I would ask that they be admitted into the record, Mr.

Chairman.

Chairman ISSA. Without objection so ordered.

[The prepared statement of Hon. Elijah E. Cummings follows:]
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Mr. CUMMINGS. Thank you very much and with that I yield back.

Chairman ISSA. I thank the gentleman. And we now recognize

the chairman of the Committee on Small Business, Mr. Graves.

Chairman GRAVES. Good afternoon. I want to thank Chairman

Issa for working with me on this joint hearing and look forward to

hearing all of our witnesses today and their testimony.

All Americans should be concerned by a policy that directly and

purposefully injects political giving into the contracting process, the

integrity of which every single person here has worked so hard to

maintain. Ensuring that contracts are awarded based on the merits

to be offered, free of political and other inappropriate bias, is a fundamental responsibility of the procurement system of committees

and Congress.

As chairman of the Small Business Committee, I would like to

address the impact of this proposal to small businesses. Small businesses play a vital role in the U.S. economy in general and in the

government contracting process in particular. There are over

360,000 small businesses seeking to do business with the Federal

Government. Small businesses received over a $100 billion in Federal contracts in fiscal year 2010. That is over 20 percent of all

Federal contracts. Previous statements from the President have

recognized that small businesses have the capability, the flexibility,

and innovation needed by Federal agencies, and that small business participation keeps Federal contracting costs down.

Why then has he not publicly rejected an Executive order that

will force small businesses out of this market where they are clearly needed?

Make no mistake, the compliance burden of this Executive order

will force small businesses out of the market and keep them from

entering, since small business—some small businesses will be illprepared to comply with the proposed Executive orders, recordkeeping requirements, reporting regimes, potential criminal liability.

Small businesses already bear a disproportionate share of the

regulatory burdens. Businesses with fewer than 20 employees annually spend 45 percent more per employee in larger firms to comply with the Federal regulations. Given that small businesses create 64 percent of net new jobs, I want these businesses growing,

not stifled by unnecessarily duplicative and punitive regulations.

Any small business brave enough to face the compliance burden

of the Executive order will need to worry about their contributions

being used against them by competitors alleging the improper disclosure by politically motivated appointees, which will again deter

small business participation.

Contracting officers under pressure from political appointees may

choose not to award any contract to small businesses who may

have been unable to donate to a political entity, but who nonetheless may have the appropriate winner.

Even if this hypothetical never materializes, the fear of improper

scheming will remain and will have a chilling effect on small businesses and their willingness to compete in the Federal marketplace.

The Obama administration is already failing to meet the congressionally mandated small business goals, and the President should
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be focused on bringing small businesses into the Federal marketplace. Instead, this proposed Executive order will drive small businesses away. While this would be harmful at any time, it is especially ill-conceived now when our economy needs vibrant, small

business participation at every level. And I hope this hearing is

going to convince the President to disavow this proposal.

You know, the way I see it, this is a very simple argument and

has already been pointed out. After the fact, after the contract has

been awarded, anybody can find out which small businesses gave

to whom, and that process is completely open. But doing this ahead

of the fact, doing this ahead of the contract award and having that

information out there, can serve no other purpose than to be politically motivated or politically charged or preventing somebody from

getting a contract just based on who they are giving to and why

they are giving it.

I think it is a very simple argument. Again, I want to thank all

of our witnesses for their participation and the Government and

Oversight Committee for hosting the hearing today. I thank the

chairman.

Chairman ISSA. I thank the chairman.

We now recognize the ranking member of the Small Business

Committee, the gentlelady from New York, Ms. Vela ́zquez, for her

opening statement.

Ms. VELA ́ ZQUEZ. Thank you, Chairman Graves and Chairman

Issa.

Contracting with the Federal Government represents an unparalleled opportunity for small businesses. In fact, the Federal Government is the world’s largest purchaser of goods and services. For

many of this, government contracts provides reliable, sustainable

growth. Last year alone, Federal contracting accounted for $540

billion in taxpayers’ dollars and small businesses received over

$100 billion of those funds.

Given the importance and enormity of the fairer procurement

process, the American taxpayer deserves to know that when contracts are awarded, it is on the merits, not because of political contributions. While contracts should be awarded without such interference, recent court rulings on political spending and current campaign finance laws making their validity of the procurement process to remain insulated from improper political influence.

Under the current campaign finance system, much of the contractors’ political spending may be undisclosed and unknown to the

public. And because of the Supreme Court’s recent ruling, big corporations can now contribute unlimited sums to influence Federal

campaigns. These undisclosed sums have great potential to improperly influence Federal procurement and disadvantage persons that

play by the rules.

In 2010, there was nearly $300 million in spending on elections

by organizations not directly affiliated with political campaigns.

Nearly 50 percent of that total was spent by organizations that did

not disclose their donors. This type of spending is increasing rapidly, outpacing spending by political parties on congressional campaigns by nearly $100 million in 2010.

As undisclosed spending increases, so does the potential for improper influence in fair procurements. The Obama administration
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draft Executive order increases taxpayer transparency regarding

fairer contracts and levels the playing field by publicly disclosing

campaign contributions. Yet while it is important to reform the system to prevent potential improper influence and to engender public

trust, it is paramount that small business concerns be put first.

This is particularly important because small businesses are at the

forefront of the economic recovery, generating nearly two out of

every three new jobs.

Historically, small businesses have faced many challenges in entering the Federal marketplace. Therefore, as we look to work to

level the playing field for businesses, we must also work carefully

to minimize the burden of disclosure requirements on small businesses. There are a number of sensible policy options to reduce the

burden of disclosure on small businesses. To this end, as the administration’s rulemaking moves forward, this committee will be

certain to carefully review and comment on this process so that

commonsense disclosure requirements are adopted and burden is

minimized.

In closing, companies that do business with the government, and

thus with taxpayers, should be transparent in their political giving.

However, as we seek to increase accountability in the Federal marketplace, the needs of small businesses must be a priority and we

must take great care not to discourage their participation in small

businesses.

I look forward to today’s testimony and thank the witnesses for

their participation.

I yield back.

Chairman ISSA. I thank the gentlelady.

Without objection, I would like to submit for the record a letter

signed by Senators McCaskill and Lieberman, expressing concern

about this Executive order; comments made to the Associated Press

by Minority Whip Steny Hoyer expressing his concerns; comments

made by Mr. Connolly of this committee reported in the Washington Post.

Additionally, I would like to submit the following statements for

the record: a statement from the chair of the Federal Election Commission; a statement from the vice chair of the Federal Election

Commission; a statement from the president of the Business Coalition for Fair Competition; a statement of Paul Miller on behalf of

the Virginia Small Business Partnership; and a statement by Joel

Gora, professor at Brooklyn Law School.

Without objection, so ordered.

[The information referred to follows:]
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Chairman ISSA. All Members may have 7 legislative days within

which to insert opening statements and insert extraneous material

in the record.

[The prepared statement of Hon. Paul A. Gosar follows:]
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Chairman ISSA. The chair would now like to recognize our first

panel witness. The Honorable Dan Gordon is the Administrator for

Federal procurement policy.

Mr. Gordon, pursuant to committee rules all witnesses will be

sworn. Would you please rise and take the oath?

[Witness sworn.]

Chairman ISSA. Let the record indicate the witness answered in

the affirmative. Please be seated.

It is customary, as you know, to have a 5-minute opening statement. Your entire opening statement will be placed in the record.

If you go past the 5 minutes, we’re not going to cut you off, but

please feel free to go off message at the greatest amount—or on

message, but off of your opening statement, and then we will round

of questions. Thank you.

Mr. Gordon.

STATEMENT OF DANIEL GORDON, ADMINISTRATOR FOR OFFICE OF FEDERAL PROCUREMENT POLICY, OFFICE OF MANAGEMENT AND BUDGET

Mr. GORDON. Thank you Mr. Chairman. I’ll try not to go off message.

Chairman ISSA. Actually, that was a Freudian slip, I am sure.

Mr. GORDON. Chairman Issa, Chairman Graves, Ranking Member Cummings, Ranking Member Vela ́zquez, I appreciate the opportunity to appear before you and all of the members of the committee this afternoon. As the administrator for Federal procurement policy, I am responsible for overseeing the development of

governmentwide acquisition policies and regulations and ensuring

that they promote economy, efficiency, and effectiveness and the increased participation of small businesses in our Federal marketplace.

As you know, our President has made contracting reform a top

priority, and he has called on agencies to expand opportunities for

our small businesses. I am pleased to say that we are making

progress on both fronts although, as we say in my former employer,

GAO, much work remains to be done.

I understand that the committee had requested testimony from

OMB about a draft Executive order regarding disclosure of political

contributions by Federal contractors. As you know, no such Executive order has been issued and it would be inappropriate for me or

for any executive branch official to testify about matters that are

still undergoing comment and review and do not yet reflect final

administration policy.

As a result, I appreciate the committees’ recognition that my testimony today will be limited to addressing our efforts to enhance

integrity, efficiency, and transparency in Federal procurement and

will not address the draft Executive order.

That said, I can unequivocally state that this administration has

always been and remains fully committed, 100 percent committed,

to a merit-based contracting process that meets the highest standards of integrity and transparency. There simply is no place for politics in Federal acquisition. Accordingly, our process must ensure,

and the public must have confidence that it ensures, that no polit-
100

ical considerations are allowed to bear on Federal contracting decisions at any point during the acquisition process.

In that regard, one of the bedrock principles in the evaluation of

proposals and the award of contracts in our Federal procurement

system is that agencies may consider only the factors that are set

out in the solicitation. Nothing more, nothing less.

If a company that competes for a contract unsuccessfully believes

that it lost because the agency has taken into account some factor

that is not set out in the solicitation, it has available an established

accountability mechanism, the bid protest process.

I had the honor, as some of you know, of working at GAO for 17

years, most of that time in the bid protest process. It is a process

I am intimately familiar with, and I can tell you that it works well

in providing disappointed bidders with an opportunity to get independent review if they believe that the award of a contract has

been tainted by an improper factor or any other factor not set out

in a solicitation.

With respect to improving efficiency in our system, we are

strengthening tools to increase competition, to decrease the use of

sole-source or no-bid contracts. And I am pleased to tell you that

many of the successes we have had in that regard in increasing

competition have rebounded to the benefit of small businesses. We

are working to help small businesses more easily navigate the Federal market space to find business opportunities.

For example, earlier this spring, the General Services Administration [GSA], unveiled a new Web-based tool that now allows

small businesses to access from one Web site all information about

agency outreach, business development opportunities, and training

events across the entire Federal Government.

With respect to transparency, a very high priority for this administration, we are shining a brighter light and a stronger light on

our acquisition processes to help protect the public from wasteful

spending practices and inspire public confidence in the integrity of

the contracting process. We have significantly improved the content

and the functionality of USA Spending dot-gov, which is a one-stop

source for information on Federal contract spending, so that the

public will have unprecedented access to information about how

their tax dollars are being spent.

In addition, spending data on subcontracts is now posted on that

site so that taxpayers can see how much work is subcontracted,

and to whom, and for what purpose. In addition, the public now

has access to salary information for the top executives of many of

our Federal prime contractors and subcontractors.

And finally, let me say a few words about the Federal acquisition

work force mentioned by several of the opening speakers, a very

important factor for me personally. The Federal acquisition work

force is our most important resource, and it is the key to preserving

the integrity of the acquisition process. This administration has

taken unparalleled steps to increase the capability and the capacity

of the acquisition work force, as evidenced by the President’s budget request for both fiscal year 2011 and 2012, and it has been and

it remains my top priority to make sure that the good women and

men of our acquisition work force have access to the training and

to the development opportunities that they need, to be the best pos-
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sible stewards of our Federal taxpayer dollars. Their professionalism is one of our greatest assets, and among my core responsibilities as Administrator is to be their champion.

Finally, let me reiterate this administration’s unwavering commitment to protecting the integrity of the Federal contracting process and ensuring that our taxpayer dollars continue to be spent appropriately and that taxpayers see that they can have confidence

in our procurement system.

There is much left to be done. And we welcome the opportunity

to work with both of these committees and with other Members of

Congress to make meaningful and sustained improvements to our

procurement system, to ensure that it remains merit-based and

meets the highest standards of integrity, efficiency, and transparency.

This concludes my prepared remarks, and I am happy to answer

questions from either of the committees.

Chairman ISSA. Thank you.

[The prepared statement of Mr. Gordon follows:]
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Chairman ISSA. Could we go ahead and run that quick video to

set the theme for questioning?

[Video shown.]

Chairman ISSA. The chair now recognizes himself for 5 minutes.

You undoubtedly saw that clip when it was fresher, I suspect. It

is clear that the President believes that the unlimited right of free

speech is not appropriately decided. He made that clear.

Do you believe that free speech is in fact a right that relies to

a certain extent on privacy of how money is spent?

Mr. GORDON. Mr. Chairman, I am going to get a bit out of my

depth when I go beyond the procurement system.

Chairman ISSA. Let’s put it another way. Do you believe the government has a legitimate right to know whether I gave to the prolife movement, whether I gave to United Gays and Lesbians, or

whether I gave to the Democratic Party, if I am a vendor of the

government submitting a bid?

Mr. GORDON. I don’t feel comfortable addressing the issue of

campaign—of campaign finance disclosure.

Chairman ISSA. It is not campaign finance disclosure. It is political activity, not currently covered by the disclosure, which ultimately we are not going to be endlessly asking you questions about

the specifics of that. But the broad question is, do you believe that

is necessary information in order for a nonpartisan or a partisan

appointee to participate fairly in the procurement?

In your opening statement you made it very clear. You said it is

supposed to be only in the structured requirement. Have you ever

sent one out? Have you ever sent out a bid request that asked how

much you gave to United Gay and Lesbian organizations or to the

National Right to Life or any of these? Has that ever been part of

the procurement process?

Mr. GORDON. No, sir. I would not expect that to be an evaluation

criterion at any point in the future, just as it has not been in the

past.

Chairman ISSA. So if I read you correctly—and I want to be very

careful—you don’t see that as necessary information in the procurement process?

Mr. GORDON. In the selection of a contractor, a contractor can

only be selected based on the factors that are set out in the solicitation. If the question is would the public like to know what contributions are made, that is separate from the procurement process

itself.

Chairman ISSA. OK. So in looking at the draft Executive order,

we found that it would be a requirement in order to participate in

the contracting process.

Do you believe—not talking to the Executive order—but do you

believe that we have a right to ask for information completely unrelated to the fitness of a vendor in order to give information to the

public that would not otherwise be available, simply because somebody wants to be a vendor to the government?

Mr. GORDON. There are many sorts of information that we require vendors to submit; information about lobbying, for example.

It is not taken into account in the selection of contractors. But it

is required to be submitted and it is publicly available. There are

other examples I could give you of information that we believe the
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public should have access to, even though they are not taken into

account in the award of a contract.

Chairman ISSA. So where is the constitutional charge of the

President, without an act of Congress, to in fact require private

citizens to turn over information in order to enter into the flow of

commerce? I don’t want to know about historic things that nobody

argued about. We’re now talking about Chicago hardball politics

that clearly could lead to a chilling effect on contributions by those

required to participate. Clearly, unions are exempt from this draft

order, while corporations generally are not and their key employees. Where is the authority, in your opinion, or the need? You’ve

already said there isn’t a need. Where is the authority, in your

opinion?

Mr. GORDON. Mr. Chairman, you won’t be surprised to hear that

I am not a constitutional lawyer, and I won’t be citing to the Constitution.

Chairman ISSA. So you head up the procurement. You are the responsible party at OMB. You see no need. So therefore if this Executive order, or one substantially similar, were to happen, it would

not be based on need. It would probably be based on the President’s

statement at the State of the Union and his opinion that follows

that, obviously?

Mr. GORDON. I don’t understand your reference to ‘‘need.’’ Let me

be clear. What I was saying was in the selection of the contractor,

the winning competitor for the contract, the information about political contributions is not needed.

Chairman ISSA. OK. So the Executive order, as we read it, is asking for information that is not needed.

Mr. GORDON. To decide which company should receive a contract;

that is correct.

Chairman ISSA. That’s OK. So you’re asking for unneeded information.

Do you believe that people may choose not to make contributions

if they are forced to make, for example, known that they gave to

Planned Parenthood or National Right to Life?

Mr. GORDON. Sir, you’re outside the area where I feel comfortable

expressing an opinion.

Chairman ISSA. I think it is very clear this Executive order is

outside the procurement process.

With that, I recognize the ranking member for his questions.

Mr. CUMMINGS. Thank you very much. Mr. Gordon, I would

thank you for being here. And I want to help answer the question

that the chairman just asked.

He asked about full disclosure and whether that is appropriate.

And let me just read this quote—and listen carefully. ‘‘I think what

we ought to do is we ought to have full disclosure, full disclosure

of all of the money that we raise and how it is spent. And I think

that sunlight is the best disinfectant.’’ And that was said by Speaker Boehner.

By the way, before he became Speaker, on Meet the Press back

on February 11, 2007. So I just wanted to help answer the question. The Speaker clearly was of the opinion back then and I think

he’s of the opinion now—and let’s not get confused about some

things.
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The public knowing—first of all, let’s get back to what the chairman talked about a few moments ago. He was very complimentary

of contracting officers. And I was just so impressed and so moved.

And then he implies that you talk about how they must—folks

must, in dealing with these contracts, they must deal with only the

factors stated and set out in, I guess, the bid documents or whatever; is that correct?

Mr. GORDON. Yes, sir.

Mr. CUMMINGS. Now, so it is true that it is not about bid officers,

these good people that the chairman just talked about doing their

job well, doing it with integrity. It is not about them looking at

these documents, trying to decide what a bid—who should be

awarded a bid; is that right?

Mr. GORDON. That is right.

Mr. CUMMINGS. This is more about the public having an opportunity to know, the public having an opportunity to know generally

what’s going on with these contributions or whatever; is that right?

Mr. GORDON. It is, sir.

Mr. CUMMINGS. Now, Mr. Gordon, last week a coalition of 34

good government and other organizations sent a letter to the President supporting this draft, you know, Executive order. And the letter said this, and this is very interesting. It says, ‘‘The undersigned

organizations, on behalf of our members and supporters, write

today to express our strong support for the April 13th draft Executive order. It simply requires that a business entity, as a condition

of bidding on a government contract, disclose campaign contributions and expenditures of the company. It seems management and

afflicted political action committees for all’’—for all—‘‘to see.’’

And it just seems to me that we have disclosure now and folks

can always go to certain reports and see what people have been

giving; is that right.

Mr. GORDON. It is correct, sir.

Mr. CUMMINGS. Yeah. So if they wanted to, I guess—so following

this logic, no disclosure would be appropriate. You know, you’ve got

a situation where folks already are disclosing, and now they’re giving money to organizations that don’t disclose. So I guess the public—and the public is getting very, very frustrated.

All of our polling shows that the frustrated—the public, not contracting officers, but the public wants to know more about, you

know, who’s giving money where. They want to know. They want

to have an idea.

As a matter of fact, very shortly, in a matter of 3 or 4 days, you

know what’s going to happen, Mr. Gordon? Everybody up here,

we’ve got to do some disclosing.

And again, the organizations that have come forward, they have

said, Look, they have looked at this. This is what they do. This is

what they do. They are trying to make sure that the public has an

opportunity to know as much information as possible. And you

know why, Mr. Gordon? The reason why they want to know is because many of them feel powerless. Many of them feel that government goes off and does its thing, and they have no idea what’s

going on generally behind the scenes.

And I think that is what these organizations, in the letters that

I asked to be admitted into the record, that is what that is all
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about; 30 organizations basically begging the President to sign the

Executive order.

Now, there’s another thing that is very interesting. I know you’re

not commenting on all of this, but this is a draft. So we’re here

talking about a draft. We don’t know what—first of all, we don’t

know that there will be a final Executive order. We don’t know

what will be in the final Executive order. And so with that, I just—

it is kind of frustrating and I’m glad you’re here to testify.

Mr. GORDON. Thank you.

Chairman ISSA. The chair now recognizes the chairman of the

full Committee on Small Business, Mr. Graves.

Chairman GRAVES. Thank you, Mr. Chairman. Just to kind of

dovetail on what the ranking member said—and he’s correct. You

can find out this information, you know, if somebody gets a contract for the Federal Government, you can go look at what their

contributions were. So in terms of the public feeling powerless, I

don’t understand where that comes from because they can find out.

He stated himself.

So my question to you, Mr. Gordon, is, ahead of the fact, submitting this information ahead of the fact—and you said yourself it is

information we don’t need to make determination on a contract—

so submitting this information ahead of the fact, what purpose does

it serve?

Mr. GORDON. Chairman Graves, as you know, that would get me

into a discussion of the draft Executive order, and I don’t think it

is appropriate for me to do that. But I can make a couple of points

that may be helpful.

I used to teach for a good number of years at George Washington

University’s law school. I taught international and comparative

public procurement law. And one of the principles that we talked

about when we look both at our State procurement systems and

foreign procurement systems, the fact is a huge amount of taxpayer

funds flows through government contracting. That is true whether

you’re talking about, in my home State, the city of Annapolis, or

the Federal Government or foreign governments.

And one of the things that we talked about in those classes is

the importance of transparency, the enormous value of transparency. I sometimes used to refer to it in class as Vitamin T. It

is enormously helpful to strengthen public confidence that their tax

dollars are being used properly, that they feel that information is

available to them.

Chairman GRAVES. Let me ask you, then, how does this information do that? How does your agency know ahead of time who gave

to what and how much they gave? How does that help in terms of

transparency? Are we talking about your contract or how you’re

going to award the contract, or are we talking about—you know,

I don’t understand that. I don’t understand the purpose when you

can find out the transparency is there, if you award a contract to

a company and they can go see what that company gave and who

they gave to.

But it seems to me that it would serve no other purpose doing

it ahead of the fact. You already said your agency doesn’t need that

information to make a determination on that contract. So I still fail

to see what purpose it serves, whatsoever, in that determination.
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Mr. GORDON. The transparency, transparency serves an extremely important purpose to the information.

Chairman GRAVES. Can you get that information? Can the public

get that information? Once you’ve awarded a contract to a company, can they get that information and find out, all right, this

company just got a contract for X number of dollars from the Federal Government. I want to see who they gave to and what organization, how much, whatever. Can they get that information?

Mr. GORDON. I understand that. I am not an expert——

Chairman GRAVES. You agreed with Mr. Cummings they can get

that information. They can get that information. And you agreed

with Mr. Cummings when he said that.

Mr. GORDON. My understanding is that some information about

political contributions is currently available already.

Chairman GRAVES. The fact of the matter is it is available. It is

fully available. And so if a company gets a contract from the Federal Government, you can go look and see total transparency. But

the simple idea that you want that information ahead of time disturbs me in a big way. And why the administration would want

that information ahead of time, ahead of awarding the contract, it

disturbs me in a big way.

And the fact of the matter is, we asked a lot of small businesses

to come in and testify today, and they didn’t want to testify today

because they are afraid of retribution from this administration.

Well, the simple fact that they are afraid of retribution from this

administration and they’re in the contracting process means that

there is at least that paradigm or that idea that is out there.

So my question to you is, how are you going to assure that at

least the appearance of awarding these contracts based on, or the

appearance of—let’s look at it the other way. How are you going

to assure small businesses that the appearance is on the up-andup and that you don’t need that information to make that award?

How are you going to assure that to these small businesses who

are already scared to even come in here and testify?

Mr. GORDON. We have, as Chairman Issa said, we have a terrific

corps of contracting officers. They know what the rules are. They

are set out in the Competition in Contracting Act and in the Federal Acquisition Regulation. No factors, no factors can be considered except those set out in the solicitation. If the company feels

those rules weren’t followed, they can file a bid protest. They will

get independent review.

Chairman GRAVES. Are any of those people in that process politically appointed?

Mr. GORDON. We are generally dealing with career people, although there is an exemption and it is worth pointing out, by statute chief acquisition officers of the agencies are in fact politically

appointed. I remember hearing years ago when that was originally

created some concern that having a political appointee could cause

trouble. In fact, at least to my knowledge, there have never been

allegations of interference. I don’t think that there is a problem,

but if there were a problem a company can file a bid protest.

Chairman GRAVES. I am out of time now, but the fact remains

you said you don’t need that information for the contracting process

and that information is widely available after the fact, after the
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contract is awarded, and anybody in this country or worldwide can

find out what that information is.

So submitting it ahead of the fact is something that disturbs me

a great deal, and what the motivation, the true motivation, is behind asking for this.

Thank you, Mr. Chairman.

Chairman ISSA. Thank you.

The chair now recognizes the ranking member, Ms. Vela ́zquez.

Ms. VELA ́ ZQUEZ. Mr. Gordon, there are many concerns that providing donor information to contract officers willfully decides the

procurement process. Is there an example of another program

where there are safeguards to prevent such a conflict of interest?

Mr. GORDON. Conflicts of interest, if I could, Ranking Member

Vela ́zquez, is a subject to which I’m particularly sensitive and my

office is particularly sensitive. In my year and a half as the Administrator for Federal Procurement Policy, I have led an effort to

strengthen the rules about conflicts of interest, both personal conflicts of interest and organizational conflicts of interest. Those,

again, go to the importance of protecting the integrity of our process. It is a very important area.

Ms. VELA ́ ZQUEZ. So let me ask you, are there situations where an

intermediary is placed between participants needing sensitive information and a Federal agency who might be biased by such information?

Mr. GORDON. I would want to hear more specifics, but we would

certainly be sensitive to ensuring that there is insulation and there

could—you can imagine an arrangement where there would be a

firewall so that contracting officials could be separated from any

sensitive information that could create an appearance of a problem.

Ms. VELA ́ ZQUEZ. We hear from many people that say that transparency can help engender public trust and increase taxpayers’

confidence in government. My question to you is, can transparency

efforts also generate cost savings by creating more competitive and

efficient Federal programs?

Mr. GORDON. Absolutely. I should tell you that the Organization

for Economic Cooperation Development, the OECD, just did an

international peer review of the U.S. Federal procurement system.

And I am happy to report that one of the things they focused on

was integrity and competition, and frankly we came through with

flying colors.

The fact is that increasing transparency and increasing trust in

the system brings more businesses in. It is a special concern for us

in the area of small businesses. When I go around the country talking with small businesses, they so often say, Dan, the system is so

difficult; how are we ever going to break in? We will never get a

contract.

We work with our friends at the Small Business Association and

other agencies to get them to try to get a contract with the Federal

Government. The more trust we have in the system, the more competition we have. The more competition we have, the lower the

prices, the more innovation we can get.

Ms. VELA ́ ZQUEZ. Whenever we are debating legislation here,

there are some that says that localities and municipalities, that we

should not be dictating the Federal Government to localities of the
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State government. The fact of the matter is that many States have

enacted pay-to-play laws.

Even today there is in Wall Street Journal an article about Andrew Cuomo putting pressure on the legislature to pass pay-to-play

laws to prevent favoritism in contracting. So given the many recent

scandals, contracting scandals, are there similar issues in Federal

procurement that need to be addressed immediately?

Mr. GORDON. I am not an expert on State laws. But I will tell

you that because so many taxpayer dollars are at issue, there is always concern about improper decisions. And the little bit I know

about the State pay-to-play statutes suggests that you can have

disclosure of those contributions there without, in fact, ever taking

them into account, in contracting award decisions.

Ms. VELA ́ ZQUEZ. Thank you.

Chairman ISSA. The chair recognizes the gentleman, Mr.

Walberg.

Mr. WALBERG. Thank you, Mr. Chairman. And thank you, Mr.

Gordon, for being here.

Mr. Chairman, I would like to submit for the record an article

that was published in today’s Washington Examiner. I think it accurately points out that if this draft Executive order goes through

and gets finalized, it will effectively restore the partisan spoil system in Federal contracting that civil service reformers struggled for

decades to eradicate.

I believe that acquisition award should be based on merits. Despite what the administration may say, there is no way one can

claim that politics won’t be taken into consideration in the source

selection process if this is EO finalized. So I would like to submit

this for the record.

Chairman ISSA. Without objection so ordered.

Mr. WALBERG. Mr. Gordon, the White House has stated clearly

that disclosure is one of their overall goals, but under this draft Executive order, isn’t it true that contributions to unions that sign

collective bargaining contracts with the Federal Government, yet

are engaged in independent political activities, are exempt from the

EO?

Mr. GORDON. Sir, as you know, I can’t speak to the draft Executive order at this point. But if the question is are unions Federal

contractors, I’m not aware of situations where they actually hold a

Federal contract, although I may be wrong on that.

Mr. WALBERG. But they’re exempted in this draft Executive order

from this provision, so there must be some expectation about that

at the very least. And if transparency is the goal, wouldn’t this

have the opposite effect?

Mr. GORDON. I’m not in a position to speak to that, sir, sorry.

Chairman ISSA. Would the gentleman yield?

Mr. WALBERG. Yes, I’ll yield.

Chairman ISSA. Mr. Gordon, if you would presume that the draft

Executive order that you have read is a draft piece of legislation

from here forward and answer it as though it was draft legislation

of Congress which you are able to respond to.

I yield back.

Mr. GORDON. It feels, sir, like I’m being asked indirectly to talk

about the draft Executive order. I’m simply not comfortable doing
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it. Although I must say I don’t understand the question about an

exemption for unions. I’m simply not familiar with that.

Chairman ISSA. If the gentleman would further yield.

Mr. WALBERG. To the chairman, yes.

Chairman ISSA. We can only deal with what fortuitously became

available to us. It exempts unions which do have a limited amount

of contracts and a great many grants to the Federal Government.

We clearly saw that as a deliberate effort. And if it is draft legislation, how would you feel about exempting anybody who is a contractor to the government?

And I yield back and thank the gentleman.

Mr. WALBERG. Well, thank you, Mr. Chairman. Good points. And

I have information in front of me that clearly indicates that union

support in elections goes on and there are grants and contracts

that are made effectively to these unions as well.

But let me move on here. Is the Executive order, as you understand it, I know you say you can’t respond to it, but—I mean, that’s

the purpose we’re here today. Is the Executive order narrowly tailored to serve an important government interest, in your opinion?

Mr. GORDON. Sir, there is no Executive order that has been

signed by the President. There is a draft.

Mr. WALBERG. Is the draft Executive order narrowly tailored to

serve an important governmental interest?

Mr. GORDON. I remember from my days working at the Office of

General Counsel at GAO that ‘‘narrowly tailored’’ is a phrase not

chosen at random, and I don’t feel comfortable using constitutional

language. I can tell you that disclosure serves an extremely important public purpose of transparency and therefore increasing public

trust in the procurement system.

Mr. WALBERG. Now, let me ask you this, following up on that.

Does, in your opinion, disclosure per se eliminate corruption in government contracting?

Mr. GORDON. You bring me back, sir, to Vitamin T. Transparency

is one of the best ways of fighting corruption. Sunlight is the best

disinfectant.

Mr. WALBERG. One of the best ways of fighting corruption within

governmental system itself, within Congress, and I certainly agree

with Speaker Boehner on that statement as it relates to us, our

body, in being clear and with sunlight on us, but to put sunlight

on, as someone once said, inappropriately on the private sector in

ways like this is an excessive amount of sunlight that can bring

cancer. And that’s my concern with what’s going on here, that it’s

a cancerous approach, and within government contracting it can

shut down all sorts of good things.

Let me ask one more final question because of time. Do you

imagine certain entities will instead of giving up their Federal contracts withdraw from engaging in political speech as a result of this

draft Executive order?

Mr. GORDON. I don’t feel comfortable speculating on that question, sir. I understand that many—much political speech already

has to be disclosed. I’m not aware of that chilling that speech, but

I’m really not in a position to speak.
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Mr. WALBERG. Well, I thank you for appearing, but I’m concerned

that the light of day from this administration was not afforded to

us today. Thank you.

Chairman ISSA. The gentleman from Virginia, Mr. Connolly.

Mr. CONNOLLY. Thank you, Mr. Chairman. And welcome, Mr.

Gordon. It’s interesting to have sparring matches between committee members and a witness when he really is not at liberty to

comment on the subject matter. And I must say I find it a little

ironic that many of the people who now are so concerned about the

rights of Federal contractors had no such concern just a few weeks

ago when this committee very peremptorily decided that if you

were a Federal contractor and you were charged with delinquent

taxes, by God, we were going to judge you guilty and we were going

to short circuit due process and make sure that you were suspended from doing business with the Federal Government.

Having said that, and having been a major critic of the Supreme

Court in what I consider one of the top 10 worst Supreme Court

decisions in American history with respect to Citizens United

which is going to upend the politics of America and is going to profoundly affect how campaigns are funded and what the public gets

to see or not see, I am concerned about unintended consequences.

So if you and I can engage in a hypothetical conversation, Mr. Gordon.

Hypothetically I might want—you and I might both agree that

disclosure is a good thing, it’s the best disinfectant, as Speaker

Boehner said. However, I am concerned theoretically if somebody

were to come up with the idea of requiring contractors before

they—before an award of a contract were made, or even after, immediately after the award of a contract being made, to disclose any

and all campaign contributions that their political action committee

may have made and their top officers may have made, the unintended consequence of that is that it suggests to the public that

there’s a relationship between the two when in fact there may—as

you have testified, there is not. Would you share my concern that

could be an unintended consequence hypothetically of such activity?

Mr. GORDON. Thank you for setting out that hypothetical. Let me

say, sir, that I want to reflect both on those possible unintended

consequences, and in all fairness to all the Members here, I want

to reflect on the other comments that the Members have shared.

I do think it is—you could have a situation of an unintended consequence and it is certainly worth reflecting on that, because you

don’t want a situation where transparency ends up rebounding

against the intended goal.

Mr. CONNOLLY. And to that end I would strongly urge you, at

least as one Member on this side of the aisle, to consider that or

to take that back to those colleagues you have who may be participating in cogitating about theoretically such a draft, because I am

very concerned that all kinds of people are going to make a conclusion that in fact it’s false even though the dots are both there. I

made a contribution, I got an award of a contract. You have testified we don’t take that into account at all, and you’ve never been

aware of that being taken into account. Yet nonetheless, once we

change this procedure that is the risk that both the media and the
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public could draw that conclusion, albeit a false one, and now

somebody’s good name is damaged. So I think that’s not a trivial

issue.

The other issue that concerns me, again, with the best of intentions, the intention being disclosure is the best disinfectant, I agree

with that principle. But I am also concerned that by changing the

policy at this time it could have a chilling effect on the ability or

willingness of people in fact to participate in the political process,

to exercise the First Amendment rights, whether we agree with it

or not, to make a contribution, to show up at an event, whatever

it may be.

Might that be, again hypothetically, a concern you and I might

have if we were contemplating such a change of policy?

Mr. GORDON. Your first hypothetical, sir, involved a possible allegation against the procurement system, so I’m more comfortable

ruminating, if you will, and reflecting on that. The second hypothetical takes me outside the procurement system, and I’m not sure

that my ruminations would lead to any useful product on that

score.

Mr. CONNOLLY. Yes. I just thought you could put your professorial hat back on, Mr. Gordon, and share with me just a genuine concern—a general concern as a citizen that we not have the

unintended effect here of chilling, of having a chilling effect on people’s participation, including Federal contractors.

Mr. GORDON. I understand, sir. The fact is, again, my understanding is that many political contributions, although not as—perhaps not all of them, but many political contributions are already

publicly available, including by Federal contractors and their leaders. I’m not sure that there’s evidence that the political—excuse

me, that the transparency that already exists about those political

contributions has in fact had any chilling effect on government contractors.

Mr. CONNOLLY. My time is up. Thank you, Mr. Chairman.

Chairman GRAVES [presiding]. The chair now recognizes the gentleman from Florida, Mr. West.

Mr. WEST. Thank you, Mr. Chairman. Honorable Gordon, pleasure to have you here today. I would like to speak from experience

on this, because after serving 22 years in the U.S. Army I was a

DOD contractor. So I want to ask you this very simple question.

The Department of Defense sends out an RFP to have, you know,

recently retired individuals that can go and help to augment the

military in Afghanistan or Iraq. Why before a contract is awarded

would you then have the head of an organization, a retired threestar or four-star general, disclose his political affiliations or contributions? What impact does that have on that request for proposal?

Mr. GORDON. I want to make very clear, Congressman West, two

points. One, to the extent that you’re taking me into a discussion

of the details of the draft Executive order I don’t feel comfortable

speaking, but I think I can still address the point.

Mr. WEST. But why are you here, sir?

Mr. GORDON. I think I can address the point. As soon as I heard

the acronym RFP I realized that you do have experience in this

area and that’s helpful.
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Mr. WEST. Absolutely.

Mr. GORDON. The contracting officer who is awarding that contract will never take into account political contributions, but, but,

the public may want to know, she the contracting officer, he the

contracting officer, will not take that information into account. The

only thing that they will take into account are the factors in the

RFP. The question isn’t is it going to be a factor in the selection,

the question is does the public have the right to know what contributions were made by contractors.

Mr. WEST. But what bearing does that have on the request for

proposal for someone to come in and provide services for the Department of Defense, you know, their political contributions? I

guess my question is, what has been broken in the procurement

process up to this point which leads to that draft Executive order

being proposed?

Mr. GORDON. As a general matter, as I said earlier, every procurement system, ours, the States, the local governments and foreign ones, are constantly facing a risk that the public will view

their system as tainted. Because the fact is enormous numbers of

dollars of taxpayer funds are at risk in the procurement system,

and in order to instill confidence in the public you want to have

as much transparency as you can.

Mr. WEST. But you don’t think that the American people will

have confidence in a retired three-star or four-star general to be

able to, with his team, be able to write an RFP to compete for a

contract? What purpose does it have with this draft Executive

order to bring forth this requirement to disclose your political contributions? What is the purpose of that with that RFP? What is the

purpose of that in the awarding of this contract? As we have said,

I can understand after a contract is awarded that’s public knowledge, but why is that part of the criteria that we have up front?

Mr. GORDON. It would absolutely not be part of the evaluation

criteria, absolutely not part of the criteria, sir.

Mr. WEST. But correct me if I’m wrong, that’s what this draft Executive order brings forth?

Mr. GORDON. The only question is whether companies that want

to get contracts should be required to have made disclosure of their

contributions. Contributions would never be, would never be a criterion for selecting a company.

Mr. WEST. And then I come back to my original premise. What

has been broken with the process up to this point that was the impetus for this draft Executive order to be created?

Mr. GORDON. There is concern in every system, including ours,

that award decisions may have been affected by inappropriate considerations. Having more information available to the public, having more transparency, can help strengthen confidence in the system.

Mr. WEST. Would subsequent subcontractors or subsequent employees also be under the jurisdiction of this draft Executive order,

such as myself when I was hired on to go to Afghanistan in June

2005?

Mr. GORDON. I don’t feel comfortable responding to the question,

sir. I’m not in a position to.
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Mr. WEST. Well, then I’m going ask this one last question. As you

sit here today do you support that draft Executive order or not?

Mr. GORDON. I’m not in a position to talk about the draft Executive order, sir.

Mr. WEST. Well, I don’t understand why you’re here. It’s a simple

question. Do you support the draft Executive order that is placed

before you right now or not? Yes or no question.

Mr. GORDON. I am not in a position to express an opinion about

the draft.

Mr. WEST. I yield back.

Chairman GRAVES. The chair recognizes the gentleman from

North Carolina, Mr. McHenry.

Mr. MCHENRY. I thank the gentleman. Thank you, Chairman.

Mr. Gordon, I want to thank you for your service to your government. We know that this is probably not the highlight of your career to come before Congress with this draft Executive order that

Mr. West was asking about. But I want to start by saying, you

know, for the average American business, small businesses especially, they’re dealing with high government regulations, they’re

dealing with the burden of government regulations every day.

I was just talking to a group of constituents up here, small business folks, heating and plumbing contractors, and they’re talking

about regulations, the burden on their ability to hire folks. And

what we’re talking about with this is in essence employers going

to their employees and saying, we need you to give us every donation you’ve made to the causes most dear to you. That’s an additional burden. And, you know, Americans are private folks. You

know, even if you have to disclose a political contribution, for instance, on the Internet, it’s a little different when your boss comes

in and says, hey, tell me who you’ve been voting for. I mean, that’s

basically what we’re saying with this. So, you know, but I’ve got

a larger question.

In a time when the cost of government has gone up and government is spending more this year as a percentage of the economy

than it has since World War II, so my question is, with this disclosure requirement will this in any way reduce the costs to the taxpayers of these government contracts?

Mr. GORDON. The issue of the cost that we spend on contracts

that you raise, sir, is an extremely important one for us. I have to

tell you, and I tell you this with pride, that over the prior 12 years

we saw the amount of money being spent on government contracts

year after year increasing. In fact, over the 8 years before this administration came in we were increasing on average year after year

12 percent. People said to us you’ll never be able to stop that. We

stopped it. In fiscal 2010 we spent something on the order of $15

billion less on Federal contracts for services than the year before.

Mr. MCHENRY. Mr. Gordon, I appreciate that, and that’s not the

question I’m asking, with all due respect. Someone is offering—

someone—you put out a bid for paper products. With this disclosure requirement, this additional certification that you would require, does that reduce the cost of those paper products to the government?

Mr. GORDON. I understand the question, I think, sir.
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Mr. MCHENRY. Does it reduce the cost of providing that good or

service to their government? And if you don’t want to answer, just

say that.

Mr. GORDON. No, no. It’s an area we focus on a lot. The fact is

transparency requirements impose burdens as we implement them.

Mr. MCHENRY. Or costs, burdens or costs?

Mr. GORDON. Absolutely, sir. Those burdens turn into costs and

we the taxpayers pay for them. Transparency is not free. One of

the benefits we hope to get through transparency, though, that was

alluded to earlier, is more competition, and more competition can

lower cost, absolutely.

Mr. MCHENRY. So more competition by having a greater requirement on a contractor to do business with government. That seems

a little interesting to me and sort of defies logic. But let me ask

another question. And, you know, you talk about the bid protest

process which you have a great level of expertise in.

Would you anticipate that this additional disclosure would increase the bid protests?

Mr. GORDON. Actually, sir, I don’t think it is likely to do that.

I think it’s good to have bid protests available as a check. But if

you have a system in place where there is information available to

the public but not taken into account in award decisions, you

shouldn’t have an increase in protests.

Mr. MCHENRY. Well, thank you. And additionally, as this would

operate, in the bid process you would ask those that are bidding,

the government, if they—you would ask them to certify that they’ve

made these disclosures on their political contributions, right, you

would ask for a certification; is that likely how it would work operationally?

Mr. GORDON. Boy, you’re several steps ahead of me, sir. But I understand that one method that’s been used in some States is to say

that, yes, companies have to say they’ve made all required disclosures, just like today we require companies to say we don’t have

a tax liability above $3,000.

Mr. MCHENRY. OK. And would you verify that certification is indeed correct or was made?

Mr. GORDON. Normally—we try to minimize the burden on our

contracting staff, so normally unless they have reason to doubt a

certification we don’t require them to check. For example, if a company certifies that they’re small, normally the contracting officer

can simply accept that certification unless she or he has a reason

to believe that it’s inaccurate.

Mr. MCHENRY. Thank you, Mr. Chairman. I appreciate the opportunity to comment. And it is certainly interesting with that certification, you know, we would just simply hope that procurement

officer wouldn’t look at those contributions that are publicly made

to certify that they were indeed made public. And if they did view

those contributions, it would have to necessarily influence the outcome of the bid.

Chairman GRAVES. The chair now recognizes Mr. Lankford from

Oklahoma.

Mr. LANKFORD. Thank you, Mr. Chairman. Mr. Gordon, thank

you for being here as well. Let me try to clarify something. You

were just talking about the hope of this and adding more trans-
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parency and such as to increase competition. So it is your belief if

we ask companies to disclose who they’re giving to and ask their

employees who they’re giving to more companies are going to say,

yes, I want to get in that, this will increase competition, therefore

decrease price. Is that what you’re saying with that?

Mr. GORDON. We always hope that increasing trust in the system

will cause more companies to participate in the system, yes.

Mr. LANKFORD. So you anticipate when we ask people who they

give to they’re going to say, yes, I haven’t done bidding before, but

I want to jump in, I want to participate in that, now that I’m going

to be required to say who I give to before I bid I’m now going to

engage in a process that’s new so to increase competition on that?

Mr. GORDON. Not because they’re looking forward to making the

disclosure, but because the disclosure can increase trust in the system, that’s right.

Mr. LANKFORD. Where would this data be distributed? We talked

about a little bit about this before. Who will make the decision on

how this data gets out to the public?

Mr. GORDON. You’re really then getting into the specifics. And I

should say a word about the specifics of a draft. The fact is a draft

Executive order is a confidential document, we’re discussing it internally.

Mr. LANKFORD. Right. I understand that. I’ve got several questions. I understand that. I’ve heard that loud and clear. My concern

is, obviously, once this data comes in and the political appointees

begin to look at it there is a chance that they’re going to look at

it and suddenly 57 percent of the contracts gave predominantly to

Democrats and this administration will go, oh, that’s not a good

idea to release because then it looks like we’re giving preferential

treatment to more people, and then suddenly there is a statement

if this Executive order suddenly goes away, is this not a mining to

go out and look and say, we are either going to expose one thing

or another, and if it is politically not expedient there’s the opportunity to say, I don’t think we’re going to release it at this time.

Obviously, I understand we’re two or three steps down the path on

that, but it becomes this circle on this.

And your comments about transparency, I understand the transparency concept. But having gone through job interviews and interviewed multiple people myself, I know when I’m looking at an application that’s not about transparency, that’s about who I’m hiring

and who I’m not. Transparency is after the fact, it’s exposed to everybody what’s happened. Before the fact the information is an application. That’s information I’m gathering to make a decision. So

to say ahead of time I’m going to gather this information but I’m

not going to really use it to make a decision begs the question why

it’s on the initial information. That seems to be something that

would be exposed later, not before. As I’ve gone through interviews

there’s not been a time I’ve looked at it and said I’m not going to

look at that section of the application, I’m pretty much looking at

all of it.

Do you anticipate with this that there will be a time as we get

down the road, again it’s a hypothetical, to say, we need to balance

this out better, we have too many people that are in companies

that give from Republicans or Democrats, let’s establish a quota
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system that will only do procurement based on we need to have a

balanced number of companies that give to Democrats, Republicans

or don’t give at all? Do you anticipate this is the way that would

head to just try to balance things out and make it more fair if we

determine there are a lot of Republicans, let’s say, that give to

these companies so we need to make sure we have more companies

that are Democrat owned that actually get engaged in this in the

procurement process and set that quota aside?

Mr. GORDON. Absolutely not. We need to protect. We need to

keep politics out of the contracting process.

Mr. LANKFORD. I would completely agree, and there is a good

way to do that, is to keep it exposed as we are right now.

One last thought on this. OMB currently has the authority to put

out a circular to require, you know, information about grant writing, in particular. Is there any conversation that you’re aware of

in OMB on the grant writing to put out a circular saying, well, let’s

do for all of those that get grants, let’s say, from unions, that they

would have to give who they give to and the union members that

are leadership to note political contributions. Now, that wouldn’t

take an Executive order. OMB could do that now. They already

have the authority to do that.

Do you know if there’s been any conversation related to that.

Mr. GORDON. You won’t be surprised to hear, sir, that I’m not in

a position to disclose internal discussions.

Mr. LANKFORD. OK. Well, that would be interesting to note just

on that.

The President has been very good to just say, we don’t want to

do an end around Congress. But this certainly feels like the previous Congress said this wasn’t a good idea, and so they’re going

to do an end around Congress just to be able to find a way to legislate in an area that is not, does not have legislative authority. I

understand you have a responsibility, but this was a clear decision

made by a previous Congress not to do this and now we’re going

to currently try to do it anyway. And I find that fascinating and

an interesting conversation for another day on constitutional issues

and authority.

So thank you for your time.

Chairman GRAVES. The chair now recognizes Mr. Mulvaney of

South Carolina.

Mr. MULVANEY. Thank you, Mr. Chairman. Mr. Gordon, thank

you for coming before us today. I want to go back to something that

I thought I heard you say earlier on in the testimony, which is I

believe you said that the contractor’s action, that their conduct in

participating in the political process doesn’t really, it’s not really

related to what they’re doing for the government, is that correct?

Mr. GORDON. What I said, sir, was that a contracting officer in

deciding who should win a contract will look only at the selection

factors in the solicitation, not at political activities or political contributions.

Mr. MULVANEY. So political activity is not a selection factor?

Mr. GORDON. That’s right, sir.

Mr. MULVANEY. So it’s fair to say that political activity has nothing to do with whether or not they’ll be fully able to perform their

duties to the government?
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Mr. GORDON. Certainly nothing to do with whether they’re going

to get the contract.

Mr. MULVANEY. Thank you. Well, if it did have an impact on

whether or not they could perform the contract, would you consider

it?

Mr. GORDON. Boy, it feels very hypothetical. If you told me factor

X would make a company incapable of performing should that be

taken into account, then the answer to that would be yes.

Mr. MULVANEY. Certainly.

Mr. GORDON. But why would political activity have any ability on

their ability to perform.

Mr. MULVANEY. Actually, Mr. Gordon, I know will come as a surprise to you, but I’m trying to agree with you on that point.

Mr. GORDON. I had a suspicion of that.

Mr. MULVANEY. Which is why I asked the question, because I’m

trying to figure out where this directive is coming from. If political

activity has nothing to do with a firm’s ability to perform its contract for the government, is it coming from your office, is this directive coming from the Office of Federal Procurement?

Mr. GORDON. The direct answer is that’s an internal matter within the Executive Office of the President that I’m not in a position

to discuss. But I think the broader question is, would it help the

procurement system to have more disclosure, and that takes us

back to the earlier conversation. The hope is that transparency increases public trust, which brings more companies into the competitive process, which improves economy and efficiency. That’s the

hope.

Mr. MULVANEY. Well, again, then it goes back to my original

question, which I understand you’re not going to answer, which is,

did this directive come from your office? And I understand that

you’re invoking a privilege that I’m not familiar with, is that correct, that you’re invoking a type of executive privilege here today?

Mr. GORDON. No. I’m simply explaining that this is a matter of

internal deliberation that I don’t think it’s appropriate for me to be

disclosing here.

Mr. MULVANEY. What department does the OFPP operate under?

Mr. GORDON. OFPP is an office within the Office of Management

and Budget, which is within the Executive Office of the President.

Mr. MULVANEY. Are you the head of that department?

Mr. GORDON. I am the Administrator and the head of the Office

of Federal Procurement Policy.

Mr. MULVANEY. Are you head of the department under which

OFPP functions?

Mr. GORDON. As I said, sir, there is not actually a department,

it’s the Executive Office of the President, and no, I’m not the head

of the Executive Office of the President.

Mr. MULVANEY. Do you have—when we’ve been asking these

questions today about where this directive began, do you actually

know the answers to those questions?

Mr. GORDON. I’m not comfortable answering questions, sir. I

don’t think it’s appropriate for me to be disclosing our internal deliberations.

Mr. MULVANEY. And I think you’ve explained for us at some

length why you’re not comfortable giving that.
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Let me ask you some general questions then, which is would a

disclosure requirement in general, not dealing with this specific

draft, would a disclosure requirement put an obligation on members of the public in order to do business with the United States

of America?

Mr. GORDON. Yes. We have many disclosure requirements. I

mentioned one earlier. You have to disclose lobbying activities if

you want to get a Federal contract, you’ve got to disclose the compensation of your five highest paid executives. We have a whole series of things which frankly can be quite burdensome for private

companies. And we’re always looking at the balance. These are

often driven, I might add, by statute.

Mr. MULVANEY. And that was my point. In fact they’re always

driven by statute. That the requirement that you disclose your lobbying activities and the other requirements are driven by statute,

not by Executive order, that’s correct, isn’t it?

Mr. GORDON. On those two specific ones, yes, but there are others that are not driven by statute. For example, organizational conflicts of interest, the requirement for disclosure is driven by regulation.

Mr. MULVANEY. By regulation?

Mr. GORDON. That’s right. That my office is responsible for

issuing.

Mr. MULVANEY. Mr. Gordon, finally, I’ll ask you this. Is the violation of an Executive order a punishable offense?

Mr. GORDON. That’s a question to ask counsel, sir.

Mr. MULVANEY. Do you believe that it should be?

Mr. GORDON. I’m not in a position to express a view. I would

turn to the lawyers and ask them that question.

Mr. MULVANEY. I’m not asking you—I think you actually have to

answer that question unless you are invoking a privilege. Do you

think a violation of an Executive order should be a punishable offense?

Mr. GORDON. I’m not sure I understand the question. Should executive agencies be following Executive orders? Absolutely.

Mr. MULVANEY. No. Should a member of the public be able to be

punished for a violation of an Executive order?

Mr. GORDON. I’m not sure that it—you’ve got me over my depth,

but I don’t think an Executive order would actually apply to a

member of the public. An Executive order typically is implemented

through regulations, and obviously the regulations might apply to

the public.

Mr. MULVANEY. Thank you, Mr. Gordon.

Chairman ISSA [presiding]. I thank the gentleman. The gentleman from Connecticut, Mr. Murphy.

Mr. MURPHY. Thank you very much, Mr. Chairman. You know,

campaign finance laws have existed for more than a century. I

mean, going back to 1907, the Tillman Act prohibited contributions

by corporations to political parties for the first time. And most recently in 2002 Congress passed the bipartisan Campaign Finance

Reform Act. Mr. Gordon, I know you’re a procurement expert,

you’re not an expert on campaign finance laws, but I think it’s useful to explain what’s on the books already today. Today, all individual contributors or aggregate contributors in excess of $200
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have to be disclosed. All contributors from PACs and party committees have to be disclosed. All contributors and expenditures made

by PACs have to be disclosed. All independent expenditures in electioneering communications have to be disclosed.

I lay this out because one of the arguments that’s used by the

opponents of increasing disclosure requirements is that by doing so

you’re going to chill free speech, that by requiring individuals or

entities to disclose the contributions that they make that all of a

sudden they’re going to stop making them.

But here’s what we know: That political contributions from people who do business with the Federal Government have increased

from $5 million in 1998 to almost $10 million today. That’s what

we know about. That’s the people that are contributing through existing disclosure laws, mainly through individual contributions.

And so I guess I say all of this by a means of asking you this simple question. We have a lot of disclosure requirements on the books

today. In fact, what we’re talking about is just really one loophole

within our existing laws that prevent donations to 527 and like organizations from the light of day. And I’m interested to know, Mr.

Gordon, if you think that the disclosure requirements that we have

already have had a chilling effect on either contributions to political candidates from existing government contractors or on firms or

companies willing to do government work.

Mr. GORDON. I can only tell you what I know, sir. No. 1, I’ve

never heard a complaint that the existing disclosure requirements

have deterred any company from competing for a Federal contract.

And No. 2, I’m not aware of any complaint that the fact that we

know which companies give money to which political candidates

that’s publicly available, I’ve never heard of a bid protest being

filed because of an allegation that information somehow was improperly used.

Mr. MURPHY. It seems as if that we’re litigating this issue for the

first time on this committee, as if this is a contest of first impression. It’s not. Individuals and companies for 100 years have been

required in some way, shape or form to disclose the political contributions that they make. And we have pretty irrefutable data to

show that over the last 10 years at least that government contractors have not been making less contributions, they’ve been making

more.

And I go straight to Justice Scalia when I think about this argument regarding a chilling effect. In Doe v. Reed Justice Scalia, one

of the most conservative justices in the Court, said that, ‘‘requiring

people to stand up in public for their political acts fosters civic

courage without which democracy is doomed.’’

And with that, I yield back.

Chairman ISSA. I thank the gentleman. The gentleman from Tennessee, Mr. DesJarlais.

Mr. DESJARLAIS. Thank you, Honorable Gordon, for attending

today. How does the draft EO improve transparency above and beyond the status quo? I know we’ve talked about it, but can you explain it again?

Mr. GORDON. Sir, I hesitate to point out again that I’m not comfortable talking about the details of the draft. But I will just say

from the earlier conversation, and in fact from Congressman Mur-
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phy’s remarks, that there are some aspects of political contributions which have long been required to be disclosed and there are

some aspects of political contributions which are not today required

to be disclosed.

Mr. DESJARLAIS. But you talked about how public perception

would improve this process.

Mr. GORDON. Absolutely, sir. Disclosure and transparency can

strengthen the public trust in the procurement system.

Mr. DESJARLAIS. Is the public involved in any way in advance of

the awarding of these contracts by your agency?

Mr. GORDON. In many ways actually. When there is public

trust—this is an issue that’s come up when I’ve worked with developing companies in improving their procurement system. When

there is public trust in the integrity of the system, you get more

companies willing to participate in competitions. It’s extremely important, absolutely.

Mr. DESJARLAIS. So you’re saying then that by this draft EO, essentially what we’re going to see is that people will have a better

idea of who these contractors are and that would influence your decision whether or not to award a contract.

Mr. GORDON. Without talking about the draft, as a general matter when people have more trust in the system you can hope to

have greater competition, absolutely.

Mr. DESJARLAIS. So I guess what I’m trying to get at, are you

expecting the general public to influence your decision on a specific

contract award?

Mr. GORDON. I’m sorry, I’m not sure I understand the question.

The award decision has to be based on the selection criteria and

the solicitation, not public perception.

Mr. DESJARLAIS. OK. So there’s no political involvement in the

decision?

Mr. GORDON. Absolutely not. It is prohibited. And we have a very

strong core of acquisition professionals that know that the Competition in Contracting Act would prohibit them from considering

any factor, except what’s set out on the solicitation.

Mr. DESJARLAIS. OK. And so you believe contracting officials are

able to award contracts without regard to political consideration or

how it is achieved?

Mr. GORDON. Absolutely.

Mr. DESJARLAIS. Are political appointees removed from the selection process, for example?

Mr. GORDON. It depends on the situation. There are very large

procurements where the selecting official, I think, could be a political appointee, but they are bound just like anybody else by the

evaluation criteria. No one can deviate from what’s in the solicitation. And if someone deviates they’re going to face an independent

review by GAO or the Court of Federal Claims.

Mr. DESJARLAIS. And you feel that we do need more disclosure

than we currently have; the current system that we have in place

is not good enough?

Mr. GORDON. I will say as a general matter I am an advocate of

transparency.

Mr. DESJARLAIS. OK. So you think we need more than we currently have, you agree with this draft EO?
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Mr. GORDON. I was asked earlier, sir. I want to say that respecting the sensitivity and the confidentiality of deliberations on drafts

is very important. That’s true whether it’s a discussion in the Situation Room or whether we’re talking about a draft Executive order.

Until the President decides I don’t think either I or any executive

branch official should be discussing the content.

Mr. DESJARLAIS. Do you think this is an important hearing for

this process?

Mr. GORDON. I always respect congressional committees. I

worked at GAO for 17 years, sir. I know the enormous value that

congressional oversight committees bring.

Mr. DESJARLAIS. Just earlier when Ranking Member Cummings

seemed shocked that we were doing this and that we needed more

disclosure, it just kind of took me back to the last time before I was

an elected official when we heard that we need to pass the bill before we know what’s in it, and that was of course the Affordable

Health Care Act that was referred to by both the President and the

former Speaker. And I think that the example of the 1099 provision

which was repealed and the President subsequently signed into law

would be an example of why we have these hearings. So I was a

little shocked at Ranking Member Cummings’ displeasure for this

hearing today.

But I appreciate your attendance and I yield back.

Chairman ISSA. I thank the gentleman. The gentleman from

Ohio, Mr. Chabot.

Mr. CHABOT. Thank you, Mr. Chairman. Just a number of questions for Mr. Gordon. I would like to read to you a few descriptions

of what others have called this Executive order and see if you agree

with them or not. One example was that this order amounts to the

White House brazenly directing the power of government against

its political opponents. And it’s an unabashedly partisan move.

Would you agree with that representation?

Mr. GORDON. Sir, I’m not going to feel comfortable coming up

with a view on the various opinions that have been expressed, but

I guess on that particular one I will tell you that, no, I don’t agree

with it.

Mr. CHABOT. All right. Let me ask you about this one. The minority leader of the U.S. Senate said that this was the crassest political move he’s ever seen, this is almost gangster politics to shut

down people who oppose them, referring to the administration. I

would assume that you probably don’t agree with that statement.

Mr. GORDON. You assume correctly, sir.

Mr. CHABOT. I thought so. Let me ask you this one. As designed

to muzzle corporations and businesses, it would at the same time

allow unions to continue spending at will, isn’t that accurate? Even

though you may not agree with it, wouldn’t that be accurate?

Mr. GORDON. No, sir, I don’t believe it’s accurate.

Mr. CHABOT. All right. Well, let me try another one then. This

particular individual is also in the Senate, and this person is a

moderate, and in fact actually voted for the McCain-Feingold campaign finance reform, which a lot of Republicans did not vote for.

This person did. This person called this Executive order Orwellian,

and also said that the order undermines decades of work by this

person and others to ensure Federal business is free of corruption
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of political influence, called it the equivalent of repealing the Hatch

Act, and further said that it’s taken decades to create a Federal

contracting system based on best prices, best value, best quality,

and that the effect of this order is to again have politics play a role

in determining who gets contracts. Companies may choose not to

bid, which will reduce competition and raise government cost.

Now, I know you believe that this is going to help us relative to

cost and make there be more transparency and more competition,

but this person disagrees with that. I assume you would disagree

with the statement that I just read there as well.

Mr. GORDON. Yes, sir.

Mr. CHABOT. And let me conclude with this one. Supporters of

the President, President Obama, are predicting that he’s going to

raise $1 billion this year for his campaign. Talk about campaign finance reform and the corruption of money and politics and all of

that, $1 billion this year for the first time if he attains that. And

that simultaneously that he’d be positioned even more strongly if

he could in effect by this Executive order dry up some at least, and

maybe a substantial amount, of Republican donations.

I would assume that you would disagree with that point of view.

Mr. GORDON. I’ve spent many years, sir, working to improve and

protect the integrity of the procurement system. I intend to continue doing that.

Mr. CHABOT. Let me just conclude, because I’ve only got a minute

left.

Now I will tell you what I think. I think that this is nothing

more than blatant raw politics, and I think in the 15 years that

I’ve been here I’ve not seen anything as outrageous and as much

of an exercise of naked political power than this Executive order.

I think it’s shameful, I think it’s disgusting, I think it’s despicable,

I think it’s outrageous. And this administration is talking about

doing this by fiat essentially. That is what an Executive order is.

Rather, if you’re going to do something this dramatic it ought to

be done by the will of the people, by their elected representatives.

That’s the U.S. Congress, it’s not by an Executive order coming out

of a White House. And I think the administration ought to be

ashamed of what it’s trying to do here. And as I say, I’ve been here

a while, 15 years now, although I had a 2-year involuntary sabbatical.

Chairman ISSA. Would the gentleman yield?

Mr. CHABOT. I would be happy to yield.

Chairman ISSA. On that I agree. Thank you for your comments.

Mr. CHABOT. Thank you. I yield back.

Chairman ISSA. The gentleman from Iowa, Mr. Braley.

Mr. BRALEY. I thank the chairman. And I want to start by going

back to the clip the chairman played at the beginning of this hearing. Because if you go back and listen closely to what President

Obama said, he is a prophet, because that is exactly what happened after Citizens United. We’ve seen a massive flow of secret

money, which is something that’s a much greater threat to democracy in this country than this Executive order is. And you indicated, Mr. Gordon, that you had taught at a law school dealing

with procurement issues, so you know that the Federal procurement slice of nearly $500 billion is an enormous part of the Federal
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budget. And yet 4 years ago in this very committee we had a hearing where the head of the General Services Administration, Lurita

Doan, came and testified about illegal activity taking place in a

Federal agency in violation of the Hatch Act when a gentleman

named Scott Jennings, who worked in the White House as Karl

Rove’s chief deputy, was doing political briefings on government

time in violation of the Hatch Act. And President Bush fired her

because of that. That was the only recourse he had. And it’s ironic

that Scott Jennings was the deputy of Karl Rove, who heads Crossroads and many of the secret donor groups that are engaged in

pumping millions of dollars of secret money to try to influence the

outcome of political elections. And one of the things that nobody

talked about in this hearing is the very different levels of scrutiny

applied to different types of speech. Because as a fundamental part

of constitutional First Amendment law there’s the regulation of

content, which is a high level of scrutiny, and the government is

supposed to have very little impact on what you say, and then

there’s the regulation of time, manner and place of speech, where

the government is given much more leeway. And that’s exactly

what this Executive order is all about.

So I am confused by the people who come to this hearing and

claim about the threat to the right of free speech and the threat

to our democracy when in fact it’s the unlimited amount of secret

money coming into elections that’s the biggest threat to democracy

we face today. And I’ll say that whether it’s money coming in to

support a Republican candidate or a Democratic candidate.

One of the things we know is that in their opinion the Supreme

Court rejected the arguments being offered today, because Justice

Kennedy wrote for the majority and made it clear that disclosure

doesn’t prevent speech. He said, the First Amendment protects political speech and disclosure permits citizens and shareholders to

react to the speech of corporate entities in a proper way. This

transparency enables the electorate to make informed decisions

and give proper weight to different speakers and different messages.

The Executive order, Mr. Gordon, does nothing to regulate the

content of what anyone wants to say, isn’t that true?

Mr. GORDON. Transparency is what is at issue here, and transparency is something that I very much agree with as an extremely

important value, including in the Federal procurement system.

Mr. BRALEY. And one of the reasons why that’s so important is

something we’ve talked about, and that’s because American taxpayers are the ones whose money is being used to fund these

projects with these contractors, isn’t that true?

Mr. GORDON. Absolutely. More than half a trillion dollars a year.

Mr. BRALEY. Absolutely. And that’s a big chunk of money. So taxpayers across the political spectrum have a strong interest in making sure those contracts, regardless of who is in the White House,

are not being unduly influenced by political contributions, isn’t that

true?

Mr. GORDON. Absolutely.

Mr. BRALEY. And you look at what goes on in this country, in

States where they elect judges, and the massive amount of money

that’s being spent to elect judges, and then you come into court in
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some of these States and you may be facing a judge that your opponent has given millions or hundreds of thousands of dollars to, and

I think everyone should have a right to know what those donations

are so that they can judge for themselves whether that’s a fair and

impartial decisionmaker.

Isn’t that the same way we’re talking about here with this level

of transparency.

Mr. GORDON. I think that is the goal of the advocates, absolutely.

Mr. BRALEY. And one of the reasons why this is so important is

because the Supreme Court made clear in Citizens United that you

can have opportunities to engage in greater forms of political

speech, but that transparency is a legitimate and noble purpose

that everyone should embrace, and apparently the Speaker of the

House himself has embraced, isn’t that true?

Mr. GORDON. Indeed.

Chairman ISSA. The gentleman’s time has expired.

Mr. BRALEY. I yield back.

Chairman ISSA. Thank you. In support of the gentleman’s statements, I would ask unanimous consent that the copy of The Hill

from May 10, 2011 entitled, Unions Spent $100 Million in 2010

Campaigns to Save Democratic Majorities, and the Wall Street

Journal entitled, Public Employee Union is Now Campaign’s Biggest Spender. Without objection so ordered.

And I now recognize the gentlelady from North Carolina.

Mrs. ELLMERS. Thank you, Mr. Chairman. Thank you for being

here today, Mr. Gordon. I don’t usually—I usually maybe jot down

a few things, but I have pages here. I keep running into conflict

after conflict after conflict in your statements, so I’m going to start

off with No. 1, one being you said that you believe that this will

increase competition amongst businesses wanting to participate because of this up front disclosure, is that correct?

Mr. GORDON. I wasn’t actually speaking about the draft Executive order. I said that in general the hope with transparency is that

transparency engenders more trust in the system and therefore increases competition, that’s correct.

Mrs. ELLMERS. OK. But the Office of Advocacy in the Small Business Administration found that regulations cost small businesses

45 percent more than large businesses in regard to this situation.

Doesn’t that show that we will have a decrease in the number of

small businesses that will participate in this?

Mr. GORDON. You’re actually talking about one of our very highest priorities. We are working hard to meet the statutory goal of

23 percent of our Federal contracting dollars going to small businesses. And the President has made clear meeting that goal is not

enough. We need to exceed that goal, including for the subcategories, such as the small businesses owned by our service disabled

vets.

Mrs. ELLMERS. On the point of the idea of the trust in the system

by the American people, which is what you are saying that this

process will provide, did you or did you not say that there is, that

these things will be handled internally so that the information will

not come out as to which candidates or contributions are made? Is

that information disclosed right off the bat as soon as that contract

is bid on or is that held internally, as you stated?
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Mr. GORDON. Actually, I don’t believe I spoke to that issue before. But it’s been said earlier that the information about political

contributions would be publicly available.

Mrs. ELLMERS. Publicly available immediately.

Mr. GORDON. You’re getting into a level of detail that—we’re in

a situation where we’re talking about or rather not talking about

a draft Executive order, and I don’t feel comfortable getting into

the details. The advantage of having our executive branch review

of a draft is Executive orders are improved.

Mrs. ELLMERS. So what is the difference then? What is the difference, because we know that these things have to be disclosed

after the contracts are obtained? This is information, the transparency is already there. So the difference I’m seeing is the time

that they would have to disclose this information up front with

their application, the contract process rather than afterwards. So

what is the change?

Mr. GORDON. I’m not an expert in campaign finance disclosures,

but my understanding is there is, and it was said earlier in one of

the colloquies, more information being disclosed than is in fact disclosed today. I’m not sure that the timing is actually any different

at all. The timing, the information is, some information is already

available today.

Mrs. ELLMERS. Well, in closing I just would like to say this. You

know, the American people, I know you have basically stated that

this is about transparency for the American people and instilling

trust in the system. I don’t see how that happens with this. And

I think that the American people are so wonderfully filled with

common sense that they’re going to come up with the same conclusion that I have right now, which is this is nothing more than a

political move, I agree with my colleague Mr. Chabot, that this is

politics at its worst, and this is nothing more than retaliation

against the Supreme Court decision for Citizens United.

Thank you, and I yield back.

Chairman ISSA. Will the gentlelady yield?

Mrs. ELLMERS. Yes, sir.

Chairman ISSA. I thank the gentlelady.

Mr. Gordon, you’ve basically said you’re not comfortable, you

don’t know, you’re not an expert repeatedly. Isn’t that the best reason that your part of government should not be reviewing or doing

this, that in fact the Federal Election Commission, which is

charged with campaign disclosure and which is charged by Congress, should be the appropriate way to handle this?

Your choice is to say yes or suddenly become an expert and start

answering our questions. You may pick.

Mr. GORDON. There is one other possibility, Mr. Chairman, and

that’s that there are other people in the Executive Office of the

President and across the executive branch who have knowledge

and expertise that I do not.

Chairman ISSA. Well, we asked for the person most knowledgeable in an agreement when the OMB Director wasn’t available.

They sent you. We’ll undoubtedly have to ask for some additional

people who are more knowledgeable, because it does appear as

though the questions of the procurement—the only thing we’ve decided today is this is not necessary to do your job, your people will
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not look at it, but in fact we can see that the draft order circumvents current IRS laws that protect disclosure for nonprofits

and other groups that would fall under this.

With that, I recognize the gentleman from Vermont Mr. Welch.

Mr. WELCH. Thank you, Mr. Chairman. You know, part of the

issue for me, sitting here listening to this, is if it were, if the things

that are feared by opponents of this were in fact to be allowed,

then I would share their concerns. So I just want to pin down what

is the effect of this. No. 1, any individuals or corporations that

make contributions have to disclose them under current law, isn’t

that right?

Mr. GORDON. I do believe that there is extensive disclosure already.

Mr. WELCH. And the effect of this would be to put in one place

for easier review by the public the contributions that were made,

correct?

Mr. GORDON. I think that is one of the ideas.

Mr. WELCH. And so to the extent there’s a reporting requirement,

that burden is already part of what a contributor must deal with,

right?

Mr. GORDON. Yes.

Mr. WELCH. And have you had input from some of the—also, if

a union were to get a contract, a Federal contract, they would be

subject to this law just like a private corporation, is that correct?

Mr. GORDON. You heard my colloquy earlier. I was rather surprised at reference to an exemption for unions.

Mr. WELCH. Right. I mean, everybody is in the same boat here

basically?

Mr. GORDON. This applies—the draft, if it were ever finalized,

the draft would apply, as I understand it, to contractors, whoever

they are.

Mr. WELCH. And have you had reactions from corporations that

are saying one thing or another about this requirement or this

draft order?

Mr. GORDON. I think the committees are going to have an opportunity in the next panel to hear from many of those responses. I’ve

seen several articles in the press.

Mr. WELCH. In the drafting of this—let me ask you this. Do you

anticipate any difficulties that contractors would have in complying

with this?

Mr. GORDON. I don’t feel comfortable talking about a draft. The

fact is that a draft Executive order as it goes through the process

may be changed substantially, may never be finalized. I can’t predict that. What I can tell you is that disclosure requirements, and

there are many of them today, can be challenging for the companies, especially for small companies. We look for ways to minimize

the burden on companies because we don’t want disclosure requirements to deter them from participating in the procurement process.

Mr. WELCH. The disclosure requirement here would be that, if I

were a small company, that I would just simply have to list the

contributions that I made and the individuals and where I made

them, correct?

Mr. GORDON. I understand your point, sir.

Mr. WELCH. All right. I yield back.
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Chairman ISSA. I thank the gentleman. The gentleman from

South Carolina, Mr. Gowdy.

Mr. GOWDY. Thank you, Mr. Chairman. Mr. Gordon, I want to

thank you for being here and also thank you for your service to our

country.

Can you please describe for me what involvement you personally

had in the drafting of this draft Executive order?

Mr. GORDON. Sir, I don’t think it’s appropriate for me or any executive branch official to disclose our internal deliberations.

Mr. GOWDY. Are you relying on any specific testimonial privilege

in reaching that conclusion?

Mr. GORDON. I’m telling you, sir, that in my experience it is extremely important to protect the confidentiality of advice shared

within the Executive Office of the President and across the executive branches.

Mr. GOWDY. Well, rather than disclose for me the contents of any

communication, can you answer whether or not there was communication? Not the content of it, but whether or not there was any

between you and the President.

Mr. GORDON. I understand, sir. My concern, and our shared concern across the government, and I should say this is true across administrations, there is nothing unique in this administration about

this. We need to be able to have frank discussions internally and

not share even the fact of who participated outside.

Mr. GOWDY. Do you believe the privilege belongs to you as the

witness or to the President if we were to seek a waiver of that

privilege?

Mr. GORDON. Actually, sir, I didn’t mention the word ‘‘privilege.’’

I was talking about the need to protect the confidentiality of our

process.

Mr. GOWDY. But that would be the only legal basis for not answering the question, would be the executive privilege, correct.

Mr. GORDON. Sir, I’m not talking about privilege, I’m talking

about my belief about the importance of protecting the confidentiality of our internal deliberations.

Mr. GOWDY. Well, let me ask you this. Would you agree with me,

let’s assume arguendo that there were a privilege, well, let’s assume arguendo about the need for confidentiality in all regards,

would you agree with me that confidentiality is waived by the presence of third parties who are not members of the executive branch?

So let me ask you this. Were there any third parties who were not

members of the executive branch present for any communications,

thereby waiving any confidentiality?

Mr. GORDON. Sir, you’re talking in the area of privileges, and

that’s not where I am. But you’re also asking me questions where

frankly if you or other members of the committee want to pursue

that it’s something that I think we should pursue with the assistance of counsel.

Mr. GOWDY. Can you tell me where the Executive order originated?

Mr. GORDON. No, sir, I don’t think that it’s appropriate for me

to be disclosing that.

Mr. GOWDY. And by your answer I take it that you do know the

answer to it but you choose not to disclose the answer?
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Mr. GORDON. I don’t think it’s appropriate for me to be talking

about any of the—either the content or the process in the development of a draft document.

Mr. GOWDY. How did you become aware of the Executive order,

or the draft Executive order?

Mr. GORDON. Sir, it’s another way of asking me to disclose either

the content or the process. I’m not comfortable disclosing that. Protecting the confidentiality of deliberations within the Executive Office of the President is nothing unique to this President. It is, in

my opinion, extremely important, extremely important, for us to be

able to deliberate without having to disclose outside who we met

with and what we discussed and who participated.

Mr. GOWDY. Does it strike you at all as being ironic to invoke

confidentiality and not answering questions when we’re having a

hearing about transparency?

Mr. GORDON. It does not, sir. I think that there are discussions

even about transparency and developing rules about transparency

that we need to be able to have quietly and behind closed doors.

That’s true when we were working recently on a rule about conflicts of interest. You could say, well, surely if you’re talking about

conflicts of interest you should be open. In fact, we needed to have

quiet discussions internally.

Mr. GOWDY. You would agree with me, though, let’s assume for

the sake of argument that your analysis is correct, and I in some

regards do agree with you about the need for confidentiality, if

there were third parties who are not part of the executive branch

who were present for those conversations then your need for confidentiality or your desire for it has already been breached, correct?

Mr. GORDON. Sir, I feel like the conversation—the question feels

too hypothetical. I would need to think about that afterwards and

get back to you if you would like.

Mr. GOWDY. Well, let me ask you this. Are you aware of one scintilla of evidence or study supporting the notion that contracting officials are swayed by undue influence or factors extraneous to the

underlying merits of contracting decisionmaking such as political

activity or political favoritism?

Mr. GORDON. Am I aware of such allegations? Absolutely.

Mr. GOWDY. Have any hearings been conducted in that regard?

Mr. GORDON. I’m not aware of a hearing by a congressional committee, but there have certainly been allegations. In fact, in GAO,

in bid protests we would—you would get occasionally allegations

that an award decision was swayed by an improper and in some

cases a political consideration, absolutely.

Mr. GOWDY. Were there studies that were relied upon in the

drafting of this draft Executive order?

Mr. GORDON. You’re asking me a question about our internal deliberations. I’m not comfortable disclosing our internal deliberations.

Mr. GOWDY. All right. One final question. And I apologize, Mr.

Chairman. The draft says, the failure to make a full disclosure in

the certification could result in criminal prosecution. That’s an interesting word to me, because if it could then it could not. And my

question is who are you going to prosecute and who is going to

make the decision?
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Mr. GORDON. I can answer the question in general terms. When

we have requirements for disclosure, to give you an example, contractors today have to disclose whether they have a tax delinquency above $3,000 and over a certain period of time. If they fail

to accurately disclose, they could be making themselves liable for

prosecution, absolutely. Do we prosecute every case? No.

Mr. GOWDY. So an Executive order can provide criminal liability

for average citizens?

Mr. GORDON. That I don’t know, sir, to be the case. But an Executive order is frequently, and in fact in the area of procurement is

generally implemented through a regulation, and if in fact a contractor takes action inconsistent or that violates a regulation that’s

a very serious matter, absolutely.

Mr. GOWDY. Thank you, Mr. Chairman.

Chairman ISSA. The gentleman’s time has expired. I would ask

unanimous consent that the article, The Daily Briefing, from

March 31, 2011 be inserted into the record. It’s entitled, Former

OSC Scott Bloch Sentenced to One Month in Prison. Of course he

was the one who found Lurita Doan to have committed the Hatch

Act. Without objection, so ordered.

We now recognize the gentleman from Idaho, Mr. Labrador.

Mr. LABRADOR. Thank you, Mr. Chairman. And it seems to me,

and I think the comment was already made by the good gentleman

from South Carolina, that in a transparency hearing this has been

one of the most opaque hearings that I’ve ever been a participant

in. And I’m not really sure why you’re here.

Can you tell me why you’re here? Why exactly did the administration send you, because I have no idea what exactly you have

aided this committee in doing today?

Mr. GORDON. I was asked—I was asked to appear in order to talk

about the general issues of integrity. And in fact I think the issues

of integrity are directly relevant to the subject matter of the hearing. And I think you’ve seen, although I can’t talk about a draft

Presidential document before the President makes a decision, I can

certainly, and I have talked at some length, about the principles

that are at issue.

Mr. LABRADOR. Let’s talk about those principles real quick. You

told us toward that the no award decision will be based on this information that’s being given, that you’re going to base it on the selection criteria; is that correct.

Mr. GORDON. Award decisions can only be based, according to the

Competition in Contracting Act, on the selection criteria in the solicitation.

Mr. LABRADOR. So you’re a law school professor. You were a law

school professor. I was a law school student at one point, so this

is kind of fun for me. Let’s—when you gave law school exams,

there was—at least in my law school I was not able to—I never

wrote down my name. Did your law school have that same—that

same requirement?

Mr. GORDON. At GW where I taught, yes. You used the number

rather than a name.

Mr. LABRADOR. Why is that?
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Mr. GORDON. Because you want to be sure that your judgment

about the quality of the exam is not based on your knowledge of

the individual, but rather on the content of their answer.

Mr. LABRADOR. And that’s because there are certain students,

right, that you don’t like in your class or that you have a problem

with.

Mr. GORDON. Never in my class, sir.

Mr. LABRADOR. OK. But some professors—hypothetically there

are some professors who don’t like some of their students.

Mr. GORDON. They also may like somebody———

Mr. LABRADOR. Or they may like somebody too much; is that correct?

Mr. GORDON. Yes.

Mr. LABRADOR. OK. So it’s in order for us to make—for the professor to make an unbiased decision; isn’t that correct?

Mr. GORDON. Absolutely.

Mr. LABRADOR. So under this proposed rule, and let’s just speak

hypothetically about it, any requirement to do this, would the contracting agent have the document in front of him or her that shows

what those donations were?

Mr. GORDON. It depends, sir. My understanding is that in some

of the States that have pay-to-play laws, in fact, the contracting officials do not have the information. All they know is that the company affirms that it made the disclosure. So if you had that on the

Federal level, all you would know is the company says, yes, we

made all required disclosures. The contracting officer would see

nothing, nothing about who received the money or how much.

Mr. LABRADOR. But somebody would in the administration see

that document, correct?

Mr. GORDON. Oh, just as today. Today there is already public information about contractors’ disclosures. Absolutely.

Mr. LABRADOR. Absolutely.

Then let’s followup on that comment. There’s already public information, and you’re telling us that you’re an advocate of transparency, correct?

Mr. GORDON. I am an advocate of transparency in procurement.

Mr. LABRADOR. And it increases public trust.

Mr. GORDON. That is always our hope.

Mr. LABRADOR. So what is unavailable at this time that you

think we need to have more information of that is not currently

found in the public documents out there?

Mr. GORDON. As actually several members of the committee has

pointed out, there is information about third-party donations which

is not publicly disclosed today.

Mr. LABRADOR. OK. Now, does that have anything to do—were

you an advocate or did you have a problem with Citizens United?

Mr. GORDON. Sir, I’m a procurement person, Not a campaign finance person.

Mr. LABRADOR. No, but you must have an opinion. You’re a law

school professor.

Mr. GORDON. I was a law school professor before I came into this

job, before Citizens United was decided, and I was professor of procurement law, sir.

Mr. LABRADOR. And did you read the opinion of Citizens United?
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Mr. GORDON. I did not.

Mr. LABRADOR. You are aware that the administration has some

problems with that opinion?

Mr. GORDON. Yes, sir. I am aware of that.

Mr. LABRADOR. So let me just give you another hypothetical. If

I am the procurement officer—you know, one of the concepts that

I was taught in law school is to make sure in drafting legislation

you have to be really careful not to encourage future lawsuits when

you’re drafting legislation. So let’s say we have a Republican conservative—socially conservative administration, and we have one

contractor who shows that he or she has donated thousands and

thousands of dollars to the prolife community, and you have another contractor who shows that he or she has donated thousands

and thousands of dollars to a prochoice or a proabortion community, and this Republican administration gives the contract to the

person who did the prolife—gave the money to the prolife community. Don’t you think there might be a cause for a lawsuit? Because

you are an expert in procurement law. Would there be a cause for

a lawsuit here?

Mr. GORDON. There are? You do have allegations. As I said, in

my years—in the 17 years I was at GAO, we had a small number,

I am happy to say, but there were a few cases where there were

allegations that political interference had caused the contract to go

one way or the other. In my recollection, GAO found when it did

an independent investigation, it never found a basis for it to be

true. But could a company have concern about that today already?

Absolutely.

Mr. LABRADOR. Let me ask you another hypothetical. OK. My

time is up.

Chairman GRAVES. Thank you.

This concludes the first part of our panel. Mr. Gordon, we appreciate you being here during the first part of our hearing. Appreciate you being here, and appreciate your testimony. We will now

seat the second panel.

Chairman GRAVES. We will now recognize our second panel of

witnesses. We have with us today Mr. Alan Chvotkin, senior vice

president of Professional Services Counsel.

We have Mr. Mark Renaud. He’s a partner at the law firm of

Wiley and Rein.

We have Ms. M.L. Mackey, who is the CEO of Beacon Interactive

Systems and the vice chair of the small business division of the National Defense Industrial Association. And of all of the businesses

that raised this issue with our committee, Ms. Mackey was the

only one that wanted to testify today. All of the other cited feared

some reprisals. So we thank you very much for coming Ms, Mackey.

We also have Lawrie Hollingsworth, who is president of Asset

Recovery Technologies, Inc., and is testifying on behalf of the U.S.

Women’s Chamber of Commerce.

We have Ms. Marion Blakey, who is the president, chief executive officer of the Aerospace Industries Association.

And Mr. Brad Smith, who is the former Federal Election Commission chairman and is professor of law at Capital University Law

School.
135

Pursuant to the committee rules, we have to swear in all of the

witnesses, all of you today. So you if you will please stand and

raise your right hands.

[Witnesses sworn.]

Chairman GRAVES. Let the record reflect that all witnesses answered in the affirmative.

Please be seated.

In order to allow time for discussion, I would ask that you please

limit your testimony to 5 minutes. But your entire written testimony will be made a part of the record. And we will start with you,

Mr. Chvotkin. And, again, I want to thank all of the witnesses for

coming today. I appreciate it very much. I am looking forward to

your testimony.

STATEMENTS OF ALAN CHVOTKIN, SENIOR VICE PRESIDENT,

PROFESSIONAL SERVICES COUNCIL; MARK RENAUD, PARTNER, WILEY REIN LLP; M.L. MACKEY, CEO, BEACON INTERACTIVE SYSTEMS; LAWRIE HOLLINGSWORTH, PRESIDENT,

ASSET RECOVERY TECHNOLOGIES, INC.; MARION BLAKEY,

PRESIDENT AND CEO, AEROSPACE INDUSTRIES ASSOCIATION; AND BRAD SMITH, PROFESSOR, CAPITAL UNIVERSITY

LAW SCHOOL

STATEMENT OF ALAN CHVOTKIN

Mr. CHVOTKIN. Chairman Graves, Mr. Issa, members of the two

committees, thank you for your invitation and the opportunity to

testify at this joint hearing. So there’s no mistake about it, the Professional Services Council is opposed to the draft Executive order

in its current form, and we hope that it will not be issued.

Political contributions currently are not and should not be disclosed as part of the bidding and source selection process for Federal contract awards. Yet the draft Executive order takes the illconceived approach of injecting that very information into the contracting process, forcing all bidders for Federal contracts to disclose—collect and disclose that information as part of their bid.

Furthermore, only those competing for Federal contracts are covered by this draft order. We are not aware of any action that has

been taken elsewhere to cover other entities or even the Federal

employees who are source decisionmakers for those Federal procurements. Singling out Federal contractors adds its own political

tinge to the draft order.

The first paragraph of section 1 of the draft order spells out the

policy foundation. We fully endorse those statements. They spell

out a necessary and appropriate requirement that is and, in our

view, must be at the very heart of the Federal contracting process.

Today no information about campaign contributions or other political activity is ever asked to be presented to a contracting officer

or other source selection official.

I doubt that any procurement official has done her own research

in the publicly available campaign contributions to aid them in

their source selection, but if there is that concern, rather than insulating contracting officers from this tainted information, this

draft order requires every bidder for a Federal contract to affirmatively disclose that information, and further provides that making
136

the required disclosure is a condition of award. For us, this is not

a question of disclosure of political contributions; it is a question

of the linkage to the Federal procurement process.

The first paragraph of section 2 of the draft order requires a certification that disclosure of this information has been made and the

FAR Council is given authority to establish the manner in which

the certification is made. It is not clear whether the draft order

also gives the FAR Council the flexibility to determine the nature

of the certification required.

Certifications have special importance in the Federal procurement system. Typically and ideally where they are required, they

should be made subject to the certifier’s best knowledge and belief

where the contractor’s dependent on obtaining information from

others in order to make the necessary certification.

Second, there should be some method for the bidder to be able

to identify areas outside the contractor’s control where the certification cannot be made, such as when a contributor refuses to provide the relevant information to a bidding entity.

Section 2 of the order also requires the disclosure of two types

of contributions. The first is contributions to Federal candidates,

like the discussion, while that is publicly available. Today companies are not now required to collect this information. Once the contributions are made, it is the recipient of the contribution that

makes the disclosure, not these companies.

We also have concerns about the threshold that has been established, because the bidder still has to collect the information in

order to know whether the aggregate exceeds the $5,000 threshold

in the Executive order.

The second type of contribution is to third-party entities with the

intent or reasonable expectation that those parties would use the

contribution to make independent expenditures. None of these contributions as have been discussed today are now subject to reporting, yet the draft order used as an undefined standard of reasonable expectation whose interpretation may vary, thus undercutting

the value of the information.

Further, by adding a requirement that the bidder ascertain from

the contributor whether she was aware of the intent of the third

party or had reasonable expectation of the likely use of the contribution, the bidding entity would have to further pry into the contributor’s knowledge of the actions of the third-party recipient.

While the reporting requirements are not duplicative of existing reporting requirements, it would still impose a heavy information collection and compliance burden on contractors that does not exist

today.

PSC is opposed to this draft order and recommends that it not

be issued. This type of political information has been intentionally

kept out of source collection to ensure a merit-based evaluation and

award process. But the order would make its disclosure a condition

of award. While the purpose of this order is to prevent pay-to-play

contracting seen in some State procurement environments, the result will be to create the very pay-to-play environment on the Federal level where none exists today.
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Thank you for the opportunity to present these comments. I look

forward to any questions you may have.

Chairman GRAVES. Thank you, Mr. Chvotkin.

[The prepared statement of Mr. Chvotkin follows:]
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Chairman GRAVES. Mr. Renaud.

STATEMENT OF MARK RENAUD

Mr. RENAUD. Thank you, Mr. Chairman, and Mr. Ranking Member, and the members of these two committees, for inviting me to

testimony. This is an important issue facing Congress, and I hope

my comments prove useful. These views are solely my own and do

not reflect the views of my firm or any of its clients.

In short, there is simply no connection between the political information sought by the President’s draft Executive order and the

contracting process, no corruption to be remedied, and no need to

burden on core First Amendment rights of speech and association.

Among other things, under current campaign finance law, employees and PACs of government contractors are subject to the

same contribution limits as other contributors, and their contributions are fully reported. As just mentioned, businesses are currently not required to collect or report their employees’ contributions and are advised against it. All contributions are voluntary.

The President’s draft EO is styled as a pay-to-play law, the laws

that stops the giving of contributions for the receipt of contracts.

But terminology alone is insufficient. I have extensive experience

working on compliance issues related to Federal, State and local

pay-to-play laws. Many of these laws suffer from the same infirmities as this draft EO. Here there is no evidence of corruption

from campaign activity in the Federal contracting process; maybe

in New Jersey and Connecticut in the past, but not here.

The nexus, then, between the contracting process and the contributions is created solely by this draft EO and its supporters, because Federal acquisition officers, as we just heard today, are insulated from the campaign system, as they ought to be. The connection put forward pollutes the marketplace of ideas with this idea

of corruption.

Because there is no nexus, the draft EO is unlike pay-to-play regimes that target elected officials and their political cronies who

are thoroughly and unavoidably involved in the procurement process.

The draft EO also reaches beyond contributions to independent

expenditures, which no other pay-to-play regime does directly, save

the rules of the Nebraska Lottery Commission. The Supreme Court

has reminded us frequently that independent expenditures do not

cause corruption or the appearance of corruption. The Securities

and Exchange Commission, in its recent rigorous pay-to-play rulemaking, fully disclaimed affecting independent expenditures.

The draft EO, unlike any other pay-to-play system, also targets

grassroots lobbying in the form of electioneering communications.

Because of its inclusion in the contracting process—that’s the key,

inclusion in the process—the disclosures under the draft EO will

have a negative effect on corporate and personal political activities

of those covered.

Because of uncertainty about how the information will be used,

the contractors will rationally move to eliminate any activity that

might make them less competitive. The disclosures also will politicize the employer and employee relationship with officers, especially for small businesses who may not be able to afford parallel
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compliance systems that many large corporations use, forcing subordinate officers to report political activity to their superiors and

fear for the consequences.

The vagueness of the draft EO exacerbates this chilling effect.

The FAR Council is tasked with providing guidance, but campaign

finance is not its core competency, and it will be undertaking this

task on an accelerated basis during the Presidential election cycle.

With vagueness, an ever larger group of persons will curtail an

even wider set of activities.

In closing, I leave you with a sample of the burdens imposed.

Contractors must report contributions made to third parties with

the intention or reasonable expectation that the parties will use the

contributions for independent expenditures or electioneering communications. This is a precursor to an unending number of disputes over contribution certifications.

With hindsight, competing and losing bidders will be able to protest awards based upon donations, perhaps even trade association

dues paid by the bidder but not reported, given the attention or

reasonable expectation of the bidder at the time. And some think

there will be no chilling here.

Thank you. I am happy to answer any questions you might have.

Chairman ISSA. Thank you.

[The prepared statement of Mr. Renaud follows:]
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Chairman ISSA. Ms. Mackey.

STATEMENT OF M.L. MACKEY

Ms. MACKEY. Good afternoon. I’m speaking to you today in my

capacity as vice chair of National Defense Industrial Association

small business division, legislative affairs committee, and as CEO

and cofounder of Beacon Interactive Systems. NDIA membership is

composed of over 90,000 individual members and 17,000 corporate

members, over half of which are small businesses. Beacon Interactive Systems is a 17-year-old small business that for the past 9

years has been a Federal contractor actively developing and delivering innovative technology and cost savings to the Department of

Defense.

In terms of today’s discussion, the contribution that I can make

is to describe the potential impact of this proposed Executive order

on small businesses that actively engage in the Federal procurement process.

The intent of ensuring that campaign contributions do not unduly influence the award of Federal contracts is laudable. Unfortunately, the approach taken by this proposed order could have serious negative consequences on business, especially small business.

The order presents five areas of significant concern. First, it politicizes the Federal procurement process, which by all accounts

should be completely independent and transparent.

Second, it puts company management in the distasteful position

of invading the privacy of their senior management by requiring

disclosure of their personal political contributions.

Third, this proposed Executive order could have the effect of silencing the voice of small businesses, who might, in an effort to

mitigate potential contracting risks, no longer be comfortable making the grassroots contributions to advocate for the issues that are

important to them.

Fourth, the small business may decide that operating under the

proposed order is not worth the effort of doing business with the

Federal Government.

And fifth, this order will increase the reporting burden on small

business and contracting officers, which in turn increases costs and

further prolongs an already lengthy procurement process.

None of these consequences are acceptable.

Let me expand on some of these challenges.

It is imperative in the realm of government contracting that

small businesses be able to operate on a level playing field. In

order for small businesses to compete effectively, proposals must be

evaluated in an open and consistent manner with a laser focus on

three main factors: technical merit, cost competitiveness, and past

performance history.

The proposed disclosures will now shine a spotlight on a company’s political contributions. At the end of a lengthy, rigorous, and

often convoluted evaluation process, small business owners will be

required to provide contracting officers with a detailed record of a

company’s political expenditures. It is not hard to imagine that this

information could, whether intentionally or not, be used to influence the procurement decision, precisely the outcome the proposed

Executive order seeks to prevent. Even if there were no impro-
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priety, a competing vendor who lost a procurement opportunity

might argue and protest that political affiliations were a contributing factor in the decisionmaking.

Second, the proposed Executive order requires me, as an example, to report individual contributions made by my company officers. As a small business owner, I do not want to force my employees to disclose their political leanings. How employees allocate their

campaign contributions should have no bearing on my hiring, compensation or promotion policies. My employees should be concentrating on how to best execute their job responsibilities, not worrying about whether their political choices are consistent with

mine. This is a personal matter that does not need to be thrust into

the workplace. In the same manner, personal political choices

should not be unnecessarily thrust into contracting.

The third area of concern is that this proposed Executive order

could have a chilling effect on the political activities of small business and their management. It is difficult enough for small businesses to compete effectively and navigate the often complex waters of Federal contracting. Politicizing the process will add one

more possible obstacle to small business participation. From my

personal experience as a small business owner, I can tell you that

I do not have the resources or the inclination to manage this

unquantifiable risk. If my political contributions can negatively affect my ability to win Federal contracts, I will not make them.

As you know, true small business advocacy is funded at the

grassroots level. If small businesses fear that their operations will

be harmed by their political choices, they may remove themselves

from the public discourse and halt future donations. This effectively limits free speech and may leave the small business constituency without adequate representation. Alternatively, some small

businesses might feel coerced into supporting the party in power in

order to bolster their chances of winning contracts. Either way, the

political process is compromised.

And finally, there is likelihood that the proposed Executive order

could discourage small businesses from pursuing Federal contracts.

The intrusive disclosures of personal political contributions combined with the additional reporting requirements would add unproductive time and costs to the procurement process. If this pushed

small businesses to adopt the ‘‘why bother’’ stance, our Nation and

particularly our men and women in uniform would be deprived of

the innovations, agility and cost efficiencies that small business

brings to the table.

Mr. Chairman, on behalf of the National Defense Industrial Association, I would like to thank you and the committee for your

leadership on this important issue. We appreciate your efforts to

keep the Federal procurement process fair and independent, as this

is a critical component of successful small business participation.

I’d be pleased to respond to any of your questions. Thank you.

Chairman ISSA. Thank you.

[The prepared statement of Ms. Mackey follows:]
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Chairman ISSA. Ms. Hollingsworth.

STATEMENT OF LAWRIE HOLLINGSWORTH

Ms. HOLLINGSWORTH. Good afternoon, Chairman Graves, Ranking Member Cummings, Chairman Issa and members of the committee. I am here today as a member of the U.S. Women’s Chamber

of Commerce representing our half a million members, three-quarters of whom are American small business owners and Federal contractors.

I am Lawrie Hollingsworth, president of Asset Recovery Technologies. My engineering business, founded in 1994 and

headquartered in Chicago with multiple offices nationwide, provides technical services for disaster recovery and disaster response

to business and government offices impacted by fire, flood, and catastrophe; and the recovery of technology assets to return these

businesses and offices to operation. We were, by the way, proud responders to 9/11 and Hurricane Katrina.

As a small business owner, I appreciate the opportunity to provide this testimony and appreciate being here. Hopefully I can impart some insights and perspectives from the small business viewpoint on the issues of political spending, campaign finance, transparency, and prevention of the politicization of the procurement

process through unscrupulous pay-to-play tactics.

Our political system, which is already too full of cash for influence, now faces a threat of undisclosed corporate political spending.

With the landmark Citizens United case, we are already seeing a

flood of corporate campaign spending, much of which will not be

publicly disclosed. At stake are millions of dollars in undisclosed

donations that will be provided by large corporations to trade associations and other not-for-profit organizations and entities that will

use the money for independent campaign expenditures.

To get a grasp of the amount of money known to be used by the

biggest firms to influence government, consider this. The top 10

Federal contractors spent over $65 million in 2010 for lobbying

alone, and I believe I heard a figure of $100 million tossed around

today. That is an amount that is considerably more than the gross

annual sales of probably most small businesses as the SBA defines

them.

Small business owners do not possess the resources, financial

and otherwise, to compete with the enormous amount of capital, influence and lobbyist activity the large businesses employ to gain

access to and win government contracts, and I’d like to especially

note single-source government contracts.

Through enacting a policy as is detailed in the draft of the President’s Executive order, it is my hope that by being aware of the influences that govern the awarding of government contracts, we will

level the playing field for the small business owner.

Currently small business owners have only limited resources to

compete with large corporations in the awarding of government

contracts. While many factors are at play, certainly campaign contributions and other politically related acts of large corporations

place the small business owner at a substantial disadvantage in

the awarding of government contracts.
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While I feel that the stated purpose of this policy, which is to

cast light upon hidden interests and influences in letting of government contracts, is admirable and desirable, it is also desirable to

impact small business with additional burdens as little as possible

in the process. Small business owners already face substantial obstacles and impediments to the point of entry to government contracting, so much so that many small businesses literally give up

on the process.

Clearly, regulations and paperwork that do not result in increased opportunity for small business is undesirable. However, if

a policy is enacted that brings greater transparency and integrity

to our Federal contracting and our political fundraising processes

in such a manner that our small business owners can respond

without undue burden, then I feel this is a worthy proposal deserving the support of small business.

The draft EO would allow the public to see the flow of money

that is now hidden through third-party groups, cut-out funding

mechanisms and other political strategies that allow donors to hide

their contribution. Rather than hurting small business by politicizing the process, it is very likely this much-needed transparency

will depoliticize the process, help to prevent pay-to-play schemes,

and assure small businesses compete fairly. Public scrutiny will

prevent contractors from using their taxpayer-funded deep pockets

to secure an unwarranted advantage in the government procurement process.

I believe certain steps can be taken to approve the draft Executive order, including raising the disclosure threshold and establishing a contract site, assuring that the rules and regulations developed to support the proposal provide easy, clear steps for compliance. In short, the right sort of rules will allow small business in

many cases to be exempt from what is allegedly an onerous burden

to comply with this act.

I appreciate your time here today, and I would be happy to answer any questions. Thank you.

Chairman ISSA. Thank you.

[The prepared statement of Ms. Hollingsworth follows:]
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Chairman ISSA. Ms. Blakey.

STATEMENT OF MARION BLAKEY

Ms. BLAKEY. Thank you, Chairman Issa, Congressman

Cummings, Congresswoman Ellmers. I am delighted to be here testifying today. My name is Marion Blakey, and I am the president

and CEO of the Aerospace Industries Association. I am here representing the 345 member companies of aerospace and defense industry and their 800,000 U.S. workers.

We want to express our grave concerns about the provisions contained in the draft Executive order regarding political contributions. Through our member companies, we represent thousands of

small businesses across the Nation, and I am particularly offering

their voice today.

As written, the draft EO would for the first time introduce political contributions into the government contracting process. It’s unclear how that information will be used by a contracting officer in

the source selection process. This creates the possibility that donations to a particular political party or candidate would be a consideration when evaluating contract proposals, whether specifically intended or not.

This also might have the unfortunate consequence of contributing to the belief among some that particular political contributions are a requirement for winning contracts. Political contributions should never be considered by any procurement officer when

making a decision to either award or deny a contract to an entity.

In order to comply with this Executive order, any company bidding on the Federal contract would have to develop, implement and

maintain a system to track and record all personal political contributions, to include retroactive contributions upon implementation. This will also result in an additional cost burden that in most

cases will be reflected in higher contractor overhead rates. This is

particularly challenging for small companies such as those in the

extensive aerospace supplier base who don’t have a large corporate

infrastructure to meet the Federal mandates.

Furthermore, the certification requirement places an undue risk

on small companies in the event that any of their directors, officers,

affiliates, subsidiaries would perhaps provide inaccurate or even incomplete information. If the company submission for the contract

contains a list of donors that’s incomplete, even though the company tried to fully comply, they may find themselves in an expensive legal proceeding for a violation of both Title 18 and Title 31

of the U.S. Code for making false claims or statements. Smaller

companies that can’t afford to defend themselves in these situations may instead opt to avoid government contracting altogether.

The resulting impact is not necessarily restricted to small companies. The imposition of disclosure and certification requirements

would also result in large and medium-sized commercial businesses

opting out of selling to the Federal Government, potentially leaving

the government without access to technologies and services necessary for its mission. This is a real liability in the aerospace and

defense arena, where our defense and industrial base has shrunk,

and there may be only one or two suppliers for a particular technology critical to protecting our fighting men and women.
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Requirements already exist, as has been reported out, to ensure

transparency of political contributions. Those requirements apply

evenly across the board for all individuals and organizations that

make political contributions.

AIA and its member companies support efforts to ensure there

is greater transparency and accountability in the Federal contracting arena; however, we do not support actions which would introduce politics into that arena, increase the regulatory burden at

risk for companies, or infringe upon the constitutional rights of a

particular segment of corporate citizenry.

As I stated earlier, political contributions should never be considered by any procurement officer when making a decision to either

award or deny a contract to any entity. Not levying this requirement on companies to report such contributions to the procurement

officer is one important way to safeguard against the risk that any

such consideration would ever be given.

Thank you very much.

Chairman ISSA. Thank you.

[The prepared statement of Ms. Blakey follows:]
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Chairman ISSA. And now for the only person who has the expertise our previous panel did not show, Mr. Smith.

STATEMENT OF BRAD SMITH

Mr. SMITH. Thank you, Mr. Chairman.

First I will note that you—and thank the ranking member as

well. I’m sorry. I want to note first that I know you took some flack

for having an unbalanced panel. Fred Wertheimer, who has left

and is undoubtedly out issuing a press release now, has said he’s

never seen such an unbalanced panel. And I just thought I’d mention that I have been on many of those in the last 4 years, usually

as the minority witness. So in any case, I appreciate you having

this hearing today.

Whenever we get to a regulation speech, we find we talk immediately about constitutional issues. And in interpreting the Constitution, the Supreme Court, it’s very clear, has granted quite a

bit of leeway to regulating disclosure laws relating to campaigns,

has given the government quite a bit of leeway to regulate in the

area of disclosure. However, as Mr. Gordon eventually conceded in

the last panel, transparency is not an unequivocal good in all circumstances at all times. And, in fact, the Supreme Court has never

blessed everything that’s tabled as campaign finance disclosure,

and the Supreme Court has never blessed this particular kind of

disclosure that is proposed in this draft order.

Just to give a quick rundown, for example, in Thomas v. Collins,

the Supreme Court held that labor organizers don’t have to identify

themselves; they can do that anonymously. In Tally v. California,

the Supreme Court held that picketers and boycotters, such as people who might want to boycott the Koch brothers or Target, don’t

have to identify themselves; they can do that anonymously. In

Watchtower Bible and Tract Society v. Village of Stratton, the Supreme Court said that people going door to door don’t have to identify themselves, such as, for example, maybe people working for,

what is it, Organizing for America; they could do that anonymously. In McIntyre v. Ohio Elections Commission, the Supreme

Court held directly that individuals cannot be required to report

small levels of political activity to the government, which is what

this draft order would require to be done through an indirect process. And, of course, in NAACP v. Alabama and a series of other decisions, the Supreme Court held that membership organizations, at

least those at a minimum that feared—had legitimate fears of harassment and retaliation, could not be required to disclose their

members to the government.

So the government—or the Court has not as a constitutional

matter generally approved all disclosure. When it has approved disclosure, it has done so for political committees or where there is no

vagueness. That is, it has required a bright line test.

It goes without saying that we’re not being mean with political

committees here. So we’re dealing with the question, is there a

bright line? I don’t think this meets this test as set forth in Buckley

v. Vallejo and other cases. I won’t go into the details other than to

say that terms such as ‘‘intention’’ or reasonable expectation that

funds you gave to somebody 2 years ago were going to be used for

some type of political activity are, I think, very vague terms.
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Other terms that could be vague, ‘‘officers,’’ how far down does

it go, subsidiaries that are under control of a company or other organizations under control of a company, and to even terms such as

‘‘independent expenditure’’ and ‘‘electioneer in communications’’ are

malleable; that is, they have meanings for election law specialists,

but it is not at all clear that they have meanings for Federal compliance officers. And I doubt that most officers working there would

have expertise in that area or know the relevant judicial precedence.

Further, the government has to have a compelling government

interest. What is that government interest here? We’ve heard repeatedly that A, this information won’t actually be used by the government in contracting; B, there is no problem with contracting

corruption, and if there were you should probably be issuing some

subpoenas and having some investigations of the current process.

We’re told that it has been pointed out that most of these activities

are already disclosed.

What’s not disclosed are contributions by contractors that would

go to a third party that might spend them for political activity, but

they’re not designated for political activity. We’ve never seen something like that required and approved by the Court before.

This is what we call at the Center for Competitive Politics—

which, I should note, I also run—we call this ‘‘junk disclosure.’’ It

basically just duplicates. It requires extra forms, extra reporting. It

may create different standards for different people. And indeed

there is quite a bit of growing evidence that this does not increase

public confidence in government. Studies by Nate Persily of Columbia, Kelly Lanny of the University of Pennsylvania, Jeffrey Milo of

the University of Missouri, have shown that excessive disclosure

often in fact decreases public confidence in government.

Here you would have the presumption out there that, Ah, here’s

disclosure and here is the contract and people are going to draw

the connection; ah, you have to give to get the contract. What is

a contractor going to think 6 years from now, someone who is not

in business today and he sits down to bid on his first government

contract and he sees who have you given your major political contributions to?

So I don’t see this reducing or, I mean, increasing public confidence in government, and I think we should recognize that the

possibilities for retaliation that made the Supreme Court hesitant

are very real. We know the Nixon enemy list. We know the K

Street Project. We know that during the Clinton administration

there was concern that trips on—international business trips were

being sold to donors, and the answer to that was not to require

more disclosure, not to say tell us all this stuff; it was to say, you

cannot consider that, you cannot put that in your application. And

I think that’s the way that this should be dealt with here.

Thank you.

Chairman ISSA. Thank you.

[The prepared statement of Mr. Smith follows:]
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Chairman ISSA. I’d recognize myself for 5 minutes.

Ms. Hollingsworth, are you concerned that the disclosure nowhere in the draft Executive order would cause the unions of companies who are contractors to be disclosed, meaning that—let’s just

assume for a moment that all contractors gave all of their money

to Republicans and all unions gave all of their money to Democrats.

Are you concerned you’d be seeing only half of the contributions?

Ms. HOLLINGSWORTH. Well, I just assume that’s actually the case

today.

Chairman ISSA. Of course, both sides have some crossover. But

I said assume for a moment just because, obviously, the truth is

there is a leaning, about 90 percent of union money goes to the

President’s party. But that’s not disclosed. Does it concern you that

90/10 ratio historically would not be disclosed and, more importantly, a specific independent activity of millions of dollars of union

money in some independent way would not be disclosed, even if it’s

to further the contract of one of your large competitors, Boeing or

somebody of that sort? You know, because you talked about small

business being impacted. Isn’t small business disproportionately

not union, large business comparatively highly union and wouldn’t

that nondisclosure be of concern to you?

Ms. HOLLINGSWORTH. Well, I think to answer the question somewhat similar to the gentleman before me, from the OMB.

Chairman ISSA. You mean evasively? Evasive? That’s how the

gentleman from OMB was. He could answer ‘‘yes’’ to the minority

and he could answer ‘‘I am not qualified to answer’’ pretty consistently to the majority.

Are you going to be more specific? Do you believe there is a concern because the draft Executive order completely exempts unions

using their collective dues, involuntarily collected, where that

money goes? Do you have a concern, please? Yes or no?

Ms. HOLLINGSWORTH. That sounds like have I quit beating my

dog, yes or no? But to answer that, the answer is no, I don’t.

Chairman ISSA. OK. You’re not concerned.

Mr. Smith, because you came out of, among other things, the

time at the FEC, does the FEC operate, to the best of your knowledge, under any Executive orders?

Mr. SMITH. As an independent agency, generally the FEC is not

bound by Executive orders——

Chairman ISSA. Right. So if I understand correctly, the Federal

Elections Commission was created by Congress under a law; and,

periodically, new laws have been passed that set guidance and then

empower the Federal Election Commission to set rulemaking after

those are passed, including even rules by the House and Senate

that you then act on; isn’t that true?

Mr. SMITH. Yes. And a crucial point of that is that the FEC has

a bipartisan makeup; that is, no one party can control that rulemaking process, or the prosecution is under it and you always have

to have——

Chairman ISSA. So wouldn’t this Executive order essentially circumvent that and create a new entity that is not bipartisan, that

in fact is inherently partisan? It goes to one party’s control or another, depending on who wins the Presidential election?
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Mr. SMITH. That could certainly be an appearance that many

people would draw.

Chairman ISSA. I am not trying to be argumentative.

Mr. SMITH. That’s a yes.

Chairman ISSA. Thank you.

Ms. Blakey, you heard my earlier question to Ms. Hollingsworth.

Are you concerned that in fact there would be a disparity between

union and non-union companies’ ability to make undisclosed contributions because of their union activities that are not covered in

this?

Ms. BLAKEY. I think our feeling is that you have to have real

parity and real equity across all entities involved in the political

process. Our big concern is there simply should be no link between

the political contributions and the Federal contracting process.

That’s making a false link and it is something that really introduced politicization where it should never be.

Chairman ISSA. Ms. Mackey, you’ve been very courageous. You’re

the only person that our side could find.

Ms. MACKEY. Courageous or ignorant. I’m not sure which one it

is.

Chairman ISSA. Well, we’ll take courageous. Willing to come forward both on behalf of an association and in a personal capacity.

Do you feel—and this is a little bit of a stretch—that if something like this were going to be instituted, that it should be done

by Congress, require full disclosure of all parties, and be handled

by the Federal Election Commission? In other words, would you be

more comfortable if this process was done in a way in which it was

deliberative, it was done nonpartisan and, more importantly, you

were not asked to ask your employees questions, but if there was

a requirement to disclose, that requirement would be between the

FEC and not your insisting on various people telling you and having a penalty if you’re unable to get the facts right.

Ms. MACKEY. I don’t think I have the civics expertise to know

who should be making those calls. What I can tell you, it’s very important that this discussion this private discussion gets taken out

of two places for me: one, my business; and, two, my business development with the contracting officer. I am happy with transparency. I am happy with everyone knowing where people are contributing. I just don’t want it brought into the private conversations in my company or the business development relationship with

my contracting officer.

Chairman ISSA. I thank you. We may have a second round, but

I recognize the gentleman from Maryland, Mr. Cummings.

Mr. CUMMINGS. I stand here and I listened to all of this. And one

of the things that I say to my children is that I want to leave a

better world than the one that I found. I want to leave a world

with more opportunity. I want to leave a world where the rivers

are not polluted. I want to leave a world that’s safer and better.

And as I listened to all of this, there’s another thing I want to

leave. A stronger democracy. A stronger democracy. You know it’s

easy to—you know, the public is in a position now, the general public is saying they want more disclosure. They want to know what’s

going on. You know why? Because they don’t feel like they got—

they have a chance, period.
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Ms. Hollingsworth, I heard what you said, and there are a lot of

small business folks like you. Mr. Smith, you talked about Mr.

Wertheimer. It would have been nice to have him here, I am sure

you would agree with that. But his organization that stands up for

all of those little people were shut out and unable to voice what

they had to say in person.

And I think that if we’re going to leave a better world, we’ve got

to be very careful, because, I mean, I think about the elections and

where we’ve got situations where you can drop millions of dollars

in a congressional district, millions, and literally wipe out a Representative, period. Period. And you know, a lot of people will talk

and say Well, the Supreme Court said in Citizens United we can

do certain things.

I think we’ve got to guard this democracy that we’ve got, because

I think that at the rate we’re going, there will come a time when

we won’t even know it, you will have a district that’s owned by this

corporation or that. And it’s interesting as I listen to all that has

been said, on the one hand I hear business saying, ‘‘Trust us,’’

which is great. But on the other hand they say, ‘‘We don’t trust the

President. We don’t trust our elected officials.’’

You know, I think that when it comes to disclosure, if it were up

to me, I’d want every single thing. Everything disclosed. Everything. Unions, everybody. Because I want the public, I want the

public to know. I want them to have a clue of what’s going on. And

if they look at that information and they determine that, you know,

that they believe that something is unfair, fine.

And I go back to what Mr. Gordon talked about. You know, there

is a thing about trust that I think he makes a point, and people

tried to make fun of him and ridicule him for saying it. But there

is something called the speed of trust. Covey writes about it in his

book, The Speed of Trust, one of the greatest books ever written.

What he says is, when you can establish the mechanisms for

trust and if there is trust, that people are more likely—the relationships are better. And it does make sense that there would be

more competition if people trust the process. If they feel like everything is stacked against them before they even get in the game, I

mean that goes against everything. So why bother?

But the interesting thing is that, you know, we’re talking about

an Executive order, and I can understand the chairman’s position.

We’re talking about a draft document and, you know, I think that

some kind of way we’ve got to move more toward disclosure than

moving away from it, because the playing field that we’re playing

on now is a playing field that says no—less and less disclosure.

And I don’t think that’s what America is all about. I really don’t.

I don’t think that our Founding Fathers would about that.

So with that, Mr. Chairman, my time is up. I yield back.

Chairman ISSA. Thank you. Mrs. Ellmers.

Mrs. ELLMERS. Thank you, Mr. Chairman. My first question is

for Ms. Mackey.

Ms. Mackey, I understand that you are an SBIR success story.

And SBIR is near and dear to my heart, and I have legislation

pending right now for us to reenact it and get it in place for another 3 years. So I would just like you to elaborate on that, on that

process. And then I know in your opening statement, you did speak
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to the dangers that you feel exist with this draft EO. And I would

just like for you to reiterate that as well.

Ms. MACKEY. So first I am very pleased to tell you we’re a SBIR

success story, on some level of effort. We started playing with the

SBIR program and participating in 2002. It’s taken us 9 years. I

can tell you that the technology that we were delivering to the private sector was expanded on the innovation and is now rolling out

to every ship in U.S. Fleet Forces Command. So every maintainer

will look at our application to understand what they should be

maintaining to keep our ships ready for mission readiness. So it is

a very good thing. It’s a very proud experience for me. It’s a great

thing for my company that’s growing and expanding. It’s a good

thing for my company, the jobs in my company, and my employees.

And when I think about the risk that this kind of—that the approach taken by this Executive order could impact on stories like

mine is that, as intimately aware with the SBIR program that you

are, it takes some time—there are fits and starts when you are developing technologies and innovation, and it doesn’t transition directly into a product. There are some places—and there are times

that, maybe when we were little, is this going to happen, is this

going to work; that if I had seen this kind of an onerous reporting

and if I had seen myself exposed legally for the kind of HR challenges that I get by asking my employees—you should see the

checklist I have when I recruit people of what I can ask, what I

can’t ask, and how I tell my employees to interview people.

I could also tell you that in the business community in general,

but certainly for small businesses, it’s more painful as we don’t

have a lot of corporate resources. When you have to let someone

go for poor performance, no one wants to hear they’re being let go

for poor performance, and they often want to find another reason.

And if they don’t find another job, they often want to be punitive

on who let them go. I really don’t want to introduce politics into

that equation.

So as far as your question about SBIR successes and will we as

a country be getting back the investment in RDT&E that we need

to go to our Federal Government, I think you run the risk of encouraging people to back away and step out because it’s too much

to overcome. I hope I answered your question.

Mrs. ELLMERS. Actually, you have. I appreciate that. My thought

also is that would deter businesses from moving forward when we

know that it is a lengthy process. You’re going to have your ups

and downs, and when faced with something like this, that would

deter someone. And that is my feeling on it. Thank you very much.

Yes, please.

Ms. MACKEY. I don’t know that it would deter people to participate, but in that place where you choose now the investment that’s

been made, do I want to further look to giving that to the Federal

Government or should I step out to the private sector, and that’s

the junction that I don’t want our tax dollars—I mean, I think it

should go back to our warfighters, especially in the DSDF division.

Thank you.

Mrs. ELLMERS. Thank you. Thank you.
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Ms. Hollingsworth, I just wanted to clarify. My understanding

from your opening statement is that you are in favor of this draft

Executive order; is that correct?

Ms. HOLLINGSWORTH. That’s correct, Congresswoman.

Mrs. ELLMERS. But you feel that small businesses should be exempt from it?

Ms. HOLLINGSWORTH. It seems to me this afternoon, I’ve heard

small business being used as a sympathy card being played quite

a bit. As a matter of fact, certain sized small businesses and the

definition of small businesses is a very wide definition, depending

on industry and so forth. I think a very straightforward remedy is

to raise the threshold for contribution, whether it’s 5,000 for a contribution or the size of contractors.

So there are many of the concerns that Ms. Mackey and other

people are speaking here today that are simply answered by exempting small business up to a certain point from falling under

this act.

Mrs. ELLMERS. So at what point would you consider a business

that this should be adhered into? Where would you draw the line?

I mean, so you obviously do not see this as a deterrent for government contracts or working with the Federal Government. You just

feel that it may be a little more costly for a small business.

At what point would you consider a business, this Executive

order would apply to them?

Ms. HOLLINGSWORTH. Well, to answer the first part of your question, Congresswoman, no. I mean, I do agree with this potential

draft EO. And in terms of thresholds or at what point should it

apply to a small business, I would defer that to wiser if not older

heads than my own. Certainly people familiar with the government

contract process know the size of businesses that might fall under

certain categories.

So I don’t have a concrete opinion for you, but I do believe that

we can kind of take out the tiers aspect of this for small business

by some simple thresholds similar to the thresholds that are in

place for small business in other arenas.

Mrs. ELLMERS. OK. One last question on that. So along that line

do you agree that there’s already transparency, it’s just an issue of

when these things are divulged beforehand in the contract process

rather than afterwards as a business reporting contribution, Federal contribution?

Ms. HOLLINGSWORTH. Well, again, I’m an engineer, not a constitutional lawyer, as we’ve heard the excuse many times today, so

I can’t pretend to be a complete expert about that. From what I understand so far is the disclosure and the transparency is incomplete

and lacking. I don’t feel it’s complete yet, and I do feel the parameters that have been discussed in this draft EO would shed additional sunlight, and I do think that is needed.

Mrs. ELLMERS. Because it would be beforehand rather than after

an award of a contract?

Ms. HOLLINGSWORTH. I think in general that the public could

look at what influences are coming to bear, particularly on the single source contracting, which is something that has been jumped

over constantly here today. That’s contractors that receive—you

know, they are a single source, there’s no competition. And I think
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the public and small business has a right to know just why these

single source contracts are being let the way they are. And obviously current disclosure rules are not giving us enough sunshine on

that.

Mrs. ELLMERS. Mr. Chairman, will you indulge me for just——

Chairman ISSA. One minute.

Mrs. ELLMERS. OK. Wonderful. Mr. Smith, I have a question for

you. My understanding is that the order requires information to be

retroactive for the past 2 years. Would you—could this be—I mean

could this information not be used politically in a campaign? For

instance, we have the 2012 election coming up. Could this information not be used against those running for office as to who is contributing to their campaigns and possible affiliations?

Mr. SMITH. I think of course it could. And to some extent that’s

what I meant when I said earlier that we call this junk disclosure.

That is in some ways it’s more misleading to the public than leading. They’re going to say, you know, here’s the contract, here’s the

donation, they’re going to assume a connection there. And that

leads us to what seems to be the purpose here. We can’t have this

discussion today without ignoring it.

I mean, the question has been answered already. Is this going to

politicize the process, right? It already has politicized the process.

I mean, look at this hearing, look at what’s being said, look at what

people are doing. And why would the American people think that

the purpose of this is to maybe chill speech or to get people to give

to the right side? They might think that, because rightly or wrongly, correctly or incorrectly, the President of the United States has

been out repeatedly saying, we need to do something about all this

secret hidden money that is going to come out after Citizens

United. And he has specifically identified groups that he wants to

silence; big oil, banks he calls them. We might think that because

last Congress on a straight party line vote with two exceptions in

this Chamber, this Chamber passed and the other Chamber did not

pass the DISCLOSE bill. We might think that because then when

the FEC attempted to issue new regulations complying with Citizens United the three Democratic commissioners insisted that the

regulations go further and include the kind of disclosure that’s

being asked for here. People might think that because on a straight

party line vote the SEC recently put new restrictions on reporting.

And so is it true or not? I won’t try to answer that. I’ll leave that

for others to say whether this is politically motivated. But people

certainly might think it’s politically motivated, and I think there’s

a pretty good trail that might lead them to that conclusion.

Chairman ISSA. Ms. Vela ́zquez.

Mr. VELA ́ ZQUEZ. I’m sorry that I wasn’t here for your testimony,

but I was in a full committee markup on Financial Services and

I had an amendment.

Mr. CUMMINGS. It was brilliant.

Mr. VELA ́ ZQUEZ. Thank you. Yeah. I can imagine. But I would

like to ask some questions if I may.

Ms. Hollingsworth, as a small business owner, do you have concerns that undisclosed political spending could disadvantage your

firm in the contracting marketplace.
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Ms. HOLLINGSWORTH. I am very concerned about that, Congresswoman.

Mr. VELA ́ ZQUEZ. The Executive order will require your business

to report the political spending of yourself as the owner and also

that of your officers. Do you have any concerns that asking colleagues about their political spending could complicate your business relationships?

Ms. HOLLINGSWORTH. Congresswoman, I think one remedy to

that would be to use either third-party or in the case of a very

small business the bookkeeper-accountant who is already privy to

such things as compensation, you know perhaps special medical

issues, etc., insurance. I would designate a person with the competence to as a third-party or entity, if you will, to take that information and pass it along without it ever coming to my eyes. And

I would think that small, even much larger, but still small business

in mind, could easily implement something like that.

Mr. VELA ́ ZQUEZ. Ms. Blakey, if a contractor spent millions of dollars to influence fair elections in a congressional district where it

also conducts $1 billion defense contract with taxpayer funds,

doesn’t the public have a right to know?

Ms. BLAKEY. The contractor of course does disclose all contributions, so that information is out there in front of the public. At any

point people can access it. Our concern is we are making a link between the procurement process and political contributions. There is

an inference there that really we believe is fundamentally wrong.

And we also look at the fact that we’re very supportive of the administration in terms of strengthening the acquisition work force,

trying to improve the acquisition process. But at the same time you

put this information in front of contracting officers over and over

and over again in the procurement process, and it’s looking to

make a connection that should never be there.

Mr. VELA ́ ZQUEZ. But my question is, taxpayers, do they have a

right to know since it’s taxpayers’ money that is given, is awarded

through Federal contracting?

Ms. BLAKEY. Taxpayers can go any time they choose to and go

to the information that is publicly available, and they can choose

to look up anything they want.

Mr. VELA ́ ZQUEZ. Is that a yes or no answer?

Ms. BLAKEY. The information is there.

Mr. VELA ́ ZQUEZ. That the public should know.

Ms. BLAKEY. Yes, the public can no and should know.

Mr. VELA ́ ZQUEZ. Thank you.

Mr. Smith, you have noted that this Executive order will chill

free speech. Could you explain how this order will legally limit the

amount of contributions that Federal contractors could give to any

political campaign or organization at any time.

Mr. SMITH. Sure. This illustrates one of the problems here and

one of the issues of vagueness and chilling. For example, right now

Federal contractors do not make any contributions to political campaigns. It is illegal for them to do that. If they’re doing that, they’re

violating the law and they can be prosecuted. What we’re talking

about here is Federal contractors who might give money to a trade

association which then might spend money on independent expenditures down the road. And we’re going to say that should be held
192

responsible and the company has to report that kind of information. Now, how would that chill companies?

Mr. VELA ́ ZQUEZ. But there is nothing that legally will prohibit

them from writing contributions to——

Mr. SMITH. That’s right. But the question you asked then was

how it would chill them from doing that. And it will chill them because if people feel they are likely to be retaliated against, that is

government has tremendous power, somebody who is bidding on

contracts——

Mr. VELA ́ ZQUEZ. Mr. Smith, you’re changing my question. My

question is, if legally they cannot.

Mr. SMITH. My answer is legally they already cannot make contributions, which was your question. And legally they will still be

able to do independent spending through others. But your question

was how will it chill them, which is different from what they can

legally do.

Mr. VELA ́ ZQUEZ. Mr. Smith, I don’t think you understand my

question. How would it limit the freedom of an organization to give

how much it wants, to whom it wants, when it wants. It wouldn’t,

would it, legally?

Mr. SMITH. Legally the answer is no.

Chairman ISSA. I thank the gentleman, thank the gentlelady.

You’ve all been very generous with your time. I realize the hour is

late. What I would ask, since we had so many members who had

questions and had other obligations, would each of you be willing

to answer additional questions put by both sides? OK. We’re going

to leave——

Mr. SMITH. Mr. Chairman, if I may say so, I will be leaving the

country in 2 days for a month. I would be delighted to answer

questions if I could have——

Chairman ISSA. Are you fleeing the country to get away from our

questions?

Mr. SMITH. I would be delighted to answer questions if I could

have an extension.

Chairman ISSA. This committee has a long history working on

people fleeing the country not to answer our questions. But we will

try to get the questions to you immediately. But I appreciate that.

We’re going to leave the record open for 7 days. If we see a need

for an extension, the ranking member and I can extend. But I

think it’s important. Your testimony was very good and the questions were good, but I don’t think we got enough of them. So with

your indulgence we’ll do that.

And with that, we stand adjourned.

[Whereupon, at 5:53 p.m., the committees were adjourned.]

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