Appeals court debates whether to allow federal contractors to make campaign donations

A panel of 11 appeals court judges on Tuesday seemed reluctant to overturn a ban on contractors donating money to federal elections, a prohibition that has been on the books for 70 years.

A lawyer and two government retirees sued in an effort to topple the restriction, which carries a five-year prison term for violations. The three are a university law professor who holds a $12,000 federal contract and two retirees working for the U.S. Agency for International Development as contractors — one supervising federal employees, the other offering policy advice.

Congress banned political contributions by contractors largely in response to a long-ago scandal involving Democratic Party operatives and New Deal contractors. In that case, one of the contractors was reminded of the business he had received from the government and the prospect of future favors was dangled. The contractor then was asked to buy worthless political books at bloated prices. The law is designed to guard against such pay-to-play schemes.

Alan Morrison, an attorney for the contractors challenging the ban, told the U.S. Court of Appeals for the District of Columbia Circuit that the law doesn't accomplish its intentions.

"The purpose is to avoid the appearance of impropriety and possibility of corruption, and this fit simply is not there," Morrison said in court arguments Tuesday.

Appeals judge David Tatel disagreed.

"There's no risk here that Congress is trying to accomplish some nefarious purpose, like leveling the playing field or limiting the amount of money in politics or even protecting incumbents," he said. "This law is focused on government corruption — corruption just in the procurement process — and its focus applies only to people participating in that process and only while they're participating" as contractors, he said. "So it seems that the fit is actually quite snug."

The ban does not apply to political action committees of corporate contractors, nor does it apply to a corporation's officers and shareholders — all of whom are able to donate to federal elections.

So, for example, the president of a corporation with a multibillion-dollar defense contract may make contributions, directly or through his PAC, but someone with a $12,000 federal contract cannot.

The challengers filing the lawsuit say the different treatment violates the equal protection clause of the Constitution because similarly situated groups of people are not subject to the ban.

The different treatment is "a mismatch" that needs to be addressed, said Morrison, a George Washington University law school professor

Federal contractors include people such as translators or interpreters, those hired by executive branch agencies to give advice, retired FBI agents who do background investigations and people who are hired as expert witnesses for the government in court cases.

The language of the prohibition is clear and unequivocal, but many individuals who are paid government consultants are unaware of it.

"They are unwittingly breaking the law by donating," Morrison said.

One way to narrow the prohibition might be to exclude small contracts. But as the Democratic campaign-book racket illustrated 70 years ago, corruption can emerge even when relatively small amounts of money are in play, U.S. District Judge James Boasberg wrote in rejecting the contractors' arguments in 2012.

The challengers pointed to the way others besides the federal government have narrowed such bans — such as excluding from the ban contracts won through competitive bidding. Boasberg said that while competitive bidding offers some protection against corruption, officials can still rig the bidding or favor a contractor in renegotiations.

The federal prohibition does not apply to state election campaigns.