    [House Hearing, 112 Congress]
    [From the U.S. Government Publishing Office]

      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

                                    _____

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                  COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                     DARRELL E. ISSA, California, Chairman
    DAN BURTON, Indiana                  ELIJAH E. CUMMINGS, Maryland,
    JOHN L. MICA, Florida                    Ranking Minority Member
    TODD RUSSELL PLATTS, Pennsylvania    EDOLPHUS TOWNS, New York
    MICHAEL R. TURNER, Ohio              CAROLYN B. MALONEY, New York
    PATRICK T. McHENRY, North Carolina   ELEANOR HOLMES NORTON, District of
    JIM JORDAN, Ohio                         Columbia
    JASON CHAFFETZ, Utah                 DENNIS J. KUCINICH, Ohio
    CONNIE MACK, Florida                 JOHN F. TIERNEY, Massachusetts
    TIM WALBERG, Michigan                WM. LACY CLAY, Missouri
    JAMES LANKFORD, Oklahoma             STEPHEN F. LYNCH, Massachusetts
    JUSTIN AMASH, Michigan               JIM COOPER, Tennessee
    ANN MARIE BUERKLE, New York          GERALD E. CONNOLLY, Virginia
    PAUL A. GOSAR, Arizona               MIKE QUIGLEY, Illinois
    RAUL R. LABRADOR, Idaho              DANNY K. DAVIS, Illinois
    PATRICK MEEHAN, Pennsylvania         BRUCE L. BRALEY, Iowa
    SCOTT DesJARLAIS, Tennessee          PETER WELCH, Vermont
    JOE WALSH, Illinois                  JOHN A. YARMUTH, Kentucky
    TREY GOWDY, South Carolina           CHRISTOPHER S. MURPHY, Connecticut
    DENNIS A. ROSS, Florida              JACKIE SPEIER, California
    FRANK C. GUINTA, New Hampshire
    BLAKE FARENTHOLD, Texas
    MIKE KELLY, Pennsylvania

                       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
                          COMMITTEE ON SMALL BUSINESS

                         SAM GRAVES, Missouri, chairman
    ROSCOE G. BARTLETT, Maryland         NYDIA VELAZQUEZ, New York, Ranking
    STEVE CHABOT, Ohio                       Member
    STEVE KING, Iowa                     KURT SCHRADER, Oregon
    MIKE COFFMAN, Colorado               MARK S. CRITZ, Pennsylvania
    MICK MULVANEY, South Carolina        JASON ALTMIRE, Pennsylvania
    SCOTT R. TIPTON, Colorado            YVETTE D. CLARKE, New York
    JEFFREY M. LANDRY, Louisiana         JUDY CHU, California
    JAIME HERRERA BEUTLER, Washington    DAVID N. CICILLINE, Rhode Island
    ALLEN B. WEST, Florida               CEDRIC L. RICHMOND, Louisiana
    RENEE L. ELLMERS, North Carolina     GARY C. PETERS, Michigan
    JOE WALSH, Illinois                  WILLIAM L. OWENS, New York
    LOU BARLETTA, Pennsylvania           WILLIAM R. KEATING, Massachusetts
    RICHARD L. HANNA, New York           JANICE HAHN, California
    ROBERT T. SCHILLING, Illinois

                          Lori Salley, Staff Director
                        Paul Sass, deputy Staff Director
                          Barry Pineles, Chief Counsel
                      Michael Day, Minority Staff Director

                                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

      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 Velazquez.
        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 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.
        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:]

        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. Velazquez, 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 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:]

        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 ill-prepared 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 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. Velazquez, for her
    opening statement.
        Ms. Velazquez. 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 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:]

        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:]

        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 Velazquez, 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 political 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 possible 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:]

        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
    pro-life 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 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.
        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 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.
        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-and-up 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 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. Velazquez.
        Ms. Velazquez. 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 Velazquez, 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. Velazquez. 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. Velazquez. 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. Velazquez. 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 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. Velazquez. 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 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.
        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 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 three-star 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.
        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.
        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.
        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
    transparency 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 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?
        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.
        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 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 Murphy'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?
        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 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 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 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?
        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 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.
        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?
        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?
        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?
        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?
        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.
        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 ill-conceived 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 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.
        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:]

        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 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:]

        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
    impropriety, 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:]

        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.
        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:]

        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.
        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:]

        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.
        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:]

        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?
        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.
        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 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.
        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 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. Velazquez.
        Mr. Velazquez. 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. Velazquez. 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.
        Ms. Hollingsworth. I am very concerned about that,
    Congresswoman.
        Mr. Velazquez. 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. Velazquez. 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. Velazquez. 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. Velazquez. Is that a yes or no answer?
        Ms. Blakey. The information is there.
        Mr. Velazquez. That the public should know.
        Ms. Blakey. Yes, the public can no and should know.
        Mr. Velazquez. 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 responsible
    and the company has to report that kind of information. Now,
    how would that chill companies?
        Mr. Velazquez. 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. Velazquez. 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. Velazquez. 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.]