Another State Joins Ranks on "Pay-to-Play" Law for Government Contractors - McDonnell Signs Legislation

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May 20, 2010

April 15, 2010 – Virginia Governor Robert F. McDonnell today signed Senate Bill 506, a "pay-to-play" law which prohibits political contributions and gifts from government contractors in certain situations. With this new law, Virginia joins a growing national trend of state and local regulation of the political activities of government contractors, including not only their political contributions and gifts, but also their business-to-government sales programs and their compensation agreements.

The new Virginia law generally prohibits political contributions or gifts with a value of greater than $50, made by government contractors, their officers and directors, to the Governor, his political action committee, or a cabinet secretary with jurisdiction over the contract at issue. It contains the following specific provisions:

  • The bill applies to no-bid contracts under Virginia Public Procurement Act, the Public-Private Transportation Act, or the Public-Private Education Facilities and Infrastructure Act.
  • It does not apply in cases involving contracts awarded as a result of competitive sealed bidding.
  • The stated or expected value of the contract must be $5 million or more.
  • The bill prohibits political contributions and gifts worth more than $50 to the Governor, his political action committee, and cabinet secretaries with responsibility for an agency with jurisdiction over the contract.
  • The prohibition applies upon the submission of a bid, and continues through contract award and execution.
  • The prohibition applies to the contracting entity and its directors and officers. 
  • For knowing violations, the bill provides for enforcement by local prosecutors and the assessment of civil penalties ranging from a minimum of $500 to a maximum of twice the value of the contribution or gift.

Numerous other states and localities have passed similar laws, many of which are broader in scope than the Virginia statute. These "pay-to-play" laws are part of a growing regulatory movement at the state and local level to restrict the political activities of government contractors by limiting campaign contributions, requiring business-to-government sales personnel to register and report as "procurement lobbyists," and banning "contingent compensation" agreements. Penalties for violations of these laws include civil monetary fines, forfeitures, debarment, and even criminal sanctions for knowing and willful violations.

LeClairRyan's Political Activity Law attorneys advise companies on multi-state and local regulation of their interactions with government agencies and officials, including "pay-to-play" laws, procurement lobbying, contracting ethics rules and contingent compensation bans. For more information on these laws, their impact on your business, and your registration, reporting and compliance obligations, please contact Lee E. Goodman [email protected] or Chris Ashby [email protected].

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