New Federal Earmark Rules Will Impact For-Profit Companies


The system by which Congress awards earmarks during the annual appropriations process has recently come under increased scrutiny. As a result, both the President and congressional leaders have introduced initiatives aimed at increasing the transparency of the earmark process. The most recent reforms are two new policies — enacted in FY10 appropriations bills and thus now law — that require executive branch review of all congressionally-requested earmarks and a "competitive bidding process" for all earmarks designated for for-profit entities. Understanding these significant new restrictions on earmarks is therefore essential for any company or organization that is considering applying for federal earmark funds. Of the new reforms, Congressman David Obey (D-WI), Chairman of the House Appropriations Committee, recently stated that "in practical terms, it ends the practice of earmarks being the functional equivalent of sole source contracts."

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