Federal contractors, borrowers, grantees, and other recipients of federal funds are subject to a range of regulations restricting the use of those funds for political purposes, including lobbying. On August 28th, President Trump issued a presidential memorandum emphasizing these limitations, focusing specifically on 31 U.S.C. § 1352 (also known as the “Byrd Amendment”) and directing the Department of Justice (“DOJ”) to investigate whether Federal grant funds are being used to illegally support lobbying activities. This move underscores the increased legal risks for contractors and recipients of Federal financial assistance, particularly for activities that may be interpreted as political in nature.
According to the memorandum, recent federal funding reviews revealed instances where grant funds appeared to support politically charged projects, raising concerns that such funds might be used for legislative or political advocacy. The directive underscores that federal law prohibits grantees from using appropriated funds to lobby or to support political candidates or parties. As a result, the Attorney General has been instructed to investigate these issues, enforce the relevant laws as needed, and report back on progress within 180 days, with special attention to the requirements of the Byrd Amendment.
The Byrd Amendment generally bans the use of appropriated funds by recipients of federal contracts, grants, loans, or cooperative agreements for lobbying efforts aimed at influencing or attempting to influence agency officials, Members of Congress, or Congressional staff on any matters connected to those agreements. Federal funding recipients may not use appropriated funds to lobby for the making or awarding of federal contracts, loans, cooperative agreements, or grants, and may also not lobby for their renewal, extension, amendment, or modification. The applicability of this restriction often depends on the specific facts, so federal funding recipients must carefully review any proposed lobbying activity even if it is only indirectly connected to a covered agreement. Where it applies, recipients are obligated to (a) disclose their lobbying activities, typically via Standard Form (SF) LLL, Disclosure of Lobbying Activities, (b) list any federal lobbyists associated with the relevant contract or grant, and (c) certify compliance with the Byrd Amendment and related laws. These obligations also extend to subcontractors and subgrantees, as primary recipients must collect similar disclosures and certifications from these downstream entities.
The Byrd Amendment’s statutory certification requirements and prohibitions have also been implemented in federal contracts through the Federal Acquisition Regulation (“FAR”). FAR 52.203-11 implements the Byrd Amendment’s certification and disclosure requirements (requiring offerors to submit the SF-LLL and states that, by signing the offer, the offeror certifies that it is complying with these provisions of law). FAR 52.203-12 implements the Amendment’s lobbying prohibition (including requiring prime contractors to “flow down” the clause to their subcontractors). The inclusion of these FAR clauses in the terms & conditions of federal contracts subject government contractors specifically to not only the statutory penalties in 31 U.S.C. § 1352, but also to potential termination of their contract, breach of contract claims from the awarding agency, and negative performance reviews, among other consequences.
Given the memorandum's call for increased scrutiny, federal grantees and contractors would do well to review their compliance with the myriad restrictions imposed on them by the Byrd Amendment, the Lobbying Disclosure Act, and state lobbying laws. They should also establish or seek to improve robust compliance procedures—including sound accounting controls—to navigate this complex regulatory environment and emergent political scrutiny.
[View source.]
