Political Contributions Compliance

SPECIAL NOTICE THE TWO-YEAR CH. 51 CERTIFICATION PROCESS IS SUSPENDED UNTIL THE NEW, COMBINED CH. 51/EO 117 FORM IS DESIGNED. PLEASE NOTE: The Ch. 51 Q&A DOES NOT address the expanded pay-to-play requirements imposed by Executive Order (EO) 117.  For EO 117 Q&A click here

 

SPECIAL NOTICE NEW “PAY-TO-PLAY” RESTRICTIONS TO TAKE EFFECT NOVEMBER 15, 2008 For further information CLICK HERE

 

Business Entity Annual Disclosure Statement A business entity that receives $50,000 or more through agreements or contracts with New Jersey public entities is required to file the electronic annual disclosure statement (Form BE) with the New Jersey Election Law Enforcement Commission on or before March 30th of each calendar year. For information, forms, and instructions, visit https://wwwnet1.state.nj.us/lpd/elec/ptp/Form.aspx. Note: On January 13, 2008, P.L.2007, c.304 was signed into law by Governor Corzine to clarify that the pay-to-play disclosure laws do not apply to nonprofit entities. As a result, nonprofits that contract with government entities are no longer required to file the Business Entity Annual Statement with the Election Law Enforcement Commission (ELEC). Nonprofits are also no longer required to file similar disclosure documents with a government contracting agency prior to the award of a contract.

Public Law 2005, Chapter 51 (Formerly Executive Order 134) Effective October 15, 2004

To be eligible for an award, a vendor must comply with the requirements of Public Law 2005, Chapter 51 (N.J.S.A. 19:44A-20.13-20.25, superseding Executive Order 134 (2004)).

Frequently Asked Question are located here.




On September 22, 2004, Governor James E. McGreevey signed Executive Order 134, which, among other things, imposed new restrictions on State departments, agencies and authorities. The purpose of the Executive Order was to insulate the negotiation and award of State contracts from political contributions that pose the risk of improper influence, purchase of access or the appearance thereof. It is essential that the public have confidence that the selection of State contractors is based on merit and not on the political contributions made by such contractors. To that end, Executive Order 134 prohibited State departments, agencies and authorities from entering into a contract that exceeds $17,500 with an individual or entity that has made a political contribution to a candidate committee and/or election fund of any candidate or holder of the public office of Governor, or to any State or County political party committee. Executive Order 134 further required the disclosure of all contributions to any political organization organized under section 527 of the Internal Revenue Code that also meets the definition of a “continuing political committee” within the meaning of N.J.S.A. 19:44A-3(n) and N.J.A.C. 19:25-1.7, and the analysis of whether such disclosed contributions present a conflict of interest, barring contract award. Executive Order 134 was superseded by Public Law 2005, c. 51, signed into law on March 22, 2005. The Executive Order, and the subsequent legislation, contain additional restrictions and reporting requirements that will necessitate a thorough review of the provisions. To view Executive Order 134, click here. To view Public Law 2005, Chapter 51, click here . VENDOR IMPACT: Requires Vendor to complete and submit a Certification and Disclosure Form In order to further simplify the State Contractor Political Contribution (formerly Executive Order 134) Compliance process, effective December 22, 2004, submission of Certification and Disclosure forms has been required to be submitted following notice of intent to award, for Division of Purchase and Property advertised procurements, and prior to contract award for all other procurements. As a result of this change, we will no longer utilize separate certification and disclosure forms. New contracts - All contracts awarded after October 15, 2004 are subject to the certification and reporting requirements prior to award set forth in the RFP.To view model RFP language, click here. (Adobe PDF 16 kb) Solicitations that were advertised prior to October 15, 2004, but had not been opened or awarded by that date - will be subject to the reporting requirements set forth in an addendum. To view model RFP Addendum, click here. (Adobe PDF 20 kb) Bid proposals under evaluation prior to October 15, 2004, but not scheduled to be awarded until after that date – are subject to the certification and reporting requirements set forth in applicable RFP addenda. To view model letter language click here. (Adobe PDF 72 kb) Contracts awarded before October 15, 2004, including extensions within the original contract terms - are not be subject to Executive Order 134. DISCLOSURE FORMS AND INSTRUCTIONS: Are available on the website under Doing Business – Vendor Forms. Please address all questions by sending your inquiries here.


State Contractor Political Contribution Compliance

Public Law 2005, Chapter 51

Q & A

Click here to access all Chapter 51 Q&A


PLEASE NOTE The Ch. 51 Q&A DOES NOT address the expanded pay-to-play requirements imposed by Executive Order (EO) 117.  For EO 117 Q&A click here

 

Question # 100.	When processing the EO134 forms is it required to have the forms notarized?
	Answer: No.
Question # 101.	We are the concessionaire at certain venues within the State of New Jersey. Many of our contracts with the owner/operators of such venues provide that we are to be the exclusive food and beverage provider at such venues. Since there is no bid process, and the State agency is required to use our company for its food and beverage needs should it decide to schedule an event at such venue, it would appear that the rationale behind EO 134 wouldn't be implicated (i.e., that the fair bidding process shouldn't be compromised through the use of political donations). In other words, there is no bid process, there are no alternative suppliers, and accordingly, there is no opportunity for a vendor to gain favor through contributions. Accordingly, in such an "exclusive rights" circumstance, must we as the service provider still comply with EO 134?
	Answer: Under the circumstances described, it appears that the relevant contracts for EO 134/Chapter 51 purposes would be the agreements between your company and any public agencies or authorities that are the owners/operators of the venues, if applicable, not a State agency which may schedule events at the venues.
Question # 102.	The New Jersey Sports Authority has collective bargaining agreements with 13 different unions. Are the unions subject to the provisions of EO 134?
	Answer: No. Collective bargaining agreements are not transactions subject to the EO 134.
Question # 103.	For purposes of determining the principals of a limited liability company (LLC-1) that holds a state contract valued over $17,500, would a corporation which owns 1% of LLC-1, but which is the managing member of LLC-1 be a principal subject to the restrictions and reporting requirements of P.L. 2005 c.51?
	Answer: No. A limited liability company is a corporation for profit and only the principals owning more than 10% of the stock are subject to the restrictions of P.L. 2005, c.51. Therefore, in your case a corporation owning 1% of the stock would not be subject to the reporting requirements of P.L. 2005 c.51. Please reference the response to question No. 59 on the Division of Purchase and Property EO 134 website pages.
Question # 104.	I represent a limited liability partnership that has a lease agreement with a state agency with a value in excess of $17,500. The lease was signed prior to October 15, 2004, and is still in effect. Can persons that own/control 10% or more of this partnership contribute to current gubernatorial campaigns, and state or county political parties?
	Answer: Lease agreements signed prior to October 15, 2005 are not subject to EO 134(P.L. 2005, c.51), for the duration of the lease and for the duration of any extensions provided for pursuant to the terms of the lease. Accordingly, partnership principals are not prohibited by EO 134 (P.L. 2005, c.51) from making such contributions. Please note that, extensions of the lease pursuant to mutual agreements and/or amendments which are not provided for in the original lease may be subject to EO 134/C.51. See also question No. 46 on the Division of Purchase and Property EO 134 website pages.
Question # 105.	I represent several entities which are limited liability companies and limited liability partnerships that have contracts with a value above $17,500 with the State. Persons who own and/or control 10% or more of these entities are subject to the restrictions and reporting requirements in P.L.2005 Chapter 51. Because business entity is defined to include natural persons who own or control 10% or more of the profits or assets of a business entity, and because, "if a business entity is a natural person, that person's spouse or child, residing therewith, are also included in this definition," are the spouses and at-home children of 10% owners of subject limited liability companies and limited liability partnerships subject to Chapter 51?
	Answer: No. A limited liability company and a limited liability partnership, as a vendor, is not considered a natural person. Therefore, the spouse and children of principals of such entities (a LLC & LLP), are not subject to P.L. 2005, c.51.
Question # 106.	Does EO 134 apply to Federal Social Services Block Grant funding received through DYFS?
	Answer: If this funding is a true grant as outlined in question No. 3 on the Division of Purchase and Property EO 134 website pages, this grant is not subject to EO 134 (P.L. 2005, c.51). Please note this funding could be construed differently if the procurement transaction designated as a "grant" is, in fact, a contract for goods or services or if the State has a substantial role in the funded activity. In that instance, the restrictions of EO 134 would apply. See also the response to question No. 78 on the Division of Purchase and Property EO 134 website pages.
Question # 107.	Our agency receives electricity and natural gas from a BPU regulated utility company.  Billing for these services are based on tariffs established by the BPU.  Is it necessary to have these utility companies complete the EO 134 forms?
	Answer: No. Utility companies are outside the scope of  P.L. 2005, Chapter 51(EO 134).
Question # 108.	Our firm will be merging to form a new firm with two additional principals. Since December 2004 our firm has been a state vendor, under a contract with a State agency. Our contract will end at the end of this month. My question is, if one of our firm's new partners has made a contribution to a state party committee, county party committee or candidate for Governor in the past year, would the new firm be eligible to receive a state contract?
	Answer: In order to be awarded a State contract award after the expiration of the current contract, the new firm will have to supply Chapter 51 (EO 134) compliance documentation. As such, each owner of more than 10% of the firm (Principals) will have to provide a Certification and Disclosure form. If one or more of the Principals is unable to provide a Certification, or discloses a disqualifying contribution, your firm would not be eligible for the contract award.
Question # 109.	Under federal law, pharmaceutical manufacturers are required to enter into an agreement with the Center for Medicare and Medicaid (CMS) to provide rebates for their drug products paid for by Medicaid. Manufacturers that do not sign an agreement with CMS are not eligible for Medicaid coverage of their product (s). Since the State Medicaid rebate agreements are required under federal law, is it correct to assume that the pharmaceutical manufacturers that execute Medicaid rebate agreements are not prohibited from making political contributions under E.O. 134 (Chapter 51)?
	Answer: The State Medicaid rebate agreements do not constitute contract awards, and therefore (1) are not subject to Chapter 51 (EO 134), and (2) do not trigger the restrictions of Chapter 51.
Question # 110.	The State has a similar form agreement to the Medicaid rebate agreement concerning the PAAD and Senior Gold programs. Signature of the New Jersey drug rebate agreement is mandated in order for the drugs produced by a manufacturer to be eligible for State funding when dispensed to PAAD or Senior Gold beneficiaries. The provision of drugs in these two programs are not subject to the public bidding provisions. Is it correct to assume that the pharmaceutical manufacturers that enter into rebate agreements with the Department of Health and Senior Services are not prohibited from making political contributions under E.O. 134 (Chapter 51)?
	Answer: The State rebate agreements under the referenced programs do not constitute contract awards, and therefore (1) are not subject to Chapter 51 (EO 134), and (2) do not trigger the restrictions of Chapter 51.
Question # 111.	If a manufacturer is prohibited from making certain political contributions under Chapter 51 (EO 134), does the prohibition apply to a PAC or continuing political committee formed by a pharmaceutical manufacturer?
	Answer: A continuing political committee formed by and under the control of a manufacturer would be considered part of the business entity of the manufacturer. Accordingly, the restrictions applicable to the manufacturer would be applicable to the committee, and contributions by the committee would be attributable to and required to be reported by the manufacturer.
Question # 112.	With respect to Executive Order 134 (Chapter 51 of Public Laws of 2005), may an individual whose corporation, limited liability corporation or limited partnership has a contract with the State of New Jersey exceeding $17,500.00 make a contribution to the following committees in either an individual or corporate capacity: 1. Senate Democratic Majority; 2. Democratic Legislative Leadership Action Committee; 3. Republican Legislative Leadership Action Committee.
	Answer: Contributions to the Senate Democratic Majority Committee, Democratic Legislative Leadership Action Committee and the Republican Legislative Leadership Action Committee are not encompassed by P.L. 2005, Chapter 51, as those committees are outside of the scope of the statute's designation of "political party committee" and are not "continuing political committees" under applicable law.
Question # 113.	State, county, and municipal agencies and authorities advertise, obtain membership, sponsor and or attend a specific trade association's events or publications. The fees paid for these advertisements, memberships, sponsorships, and attendance fees respectively, often exceed $17,500. We recognize that the Department has previously responded that Executive Order 134/Chapter 51 "applies to the purchase of services, materials, supplies and equipment, and the acquisition, sale or lease of land or buildings." Are the fees paid for advertisements, memberships, sponsorships and attendance fees of the trade association equivalent to entering into an "agreement or contract" or considered a "transaction" for the purposes of P.L. 2005, Chapter 51?
	Answer: Fees paid to a trade association for memberships and/or sponsorships are not considered contracts to procure goods or services; in addition, fees paid to place advertising in media of general or trade circulation (as contrasted with fees for advertising and related services) would not be considered contracts to procure goods or services; neither are the foregoing considered contracts for the sale/lease of land. Therefore, these types of fees would not trigger P.L. 2005, Chapter 51 and are outside the scope of the law.
Question # 114.	If fees paid to a trade association for advertisements, memberships, and/or sponsorships are outside the scope of P.L. 2005, Chapter 51, is it correct to assume that the trade association would not be precluded from making political contributions to Gubernatorial candidates or county or State political party committees or legislative leadership committees?
	Answer: A trade association's contributions to gubernatorial Candidates or county or State political party committees would affect its eligibility for contract awards within the scope of P.L. 2005, Chapter 51.
Question # 115.	Can you tell me if contributions to a State college or university are prohibited under Ch 51.
	Answer: Chapter 51 applies only to contributions to a State or county political party committee, contributions to election committees of gubernatorial candidates and contributions to "continuing political committees" - which are sometimes referred to as Political Action Committees or PACs. Contributions to State colleges or universities are outside the scope of Chapter 51. However, contributions to the political committees within the scope of Chapter 51 will affect a vendor's eligibility for contracts with State colleges and universities.
Question # 116.	A vendor is a publicly traded company, and is owned in part by one or more financial firms, each of which owns more than 10% of the shares of the vendor. Is the vendor required to obtain Certification and Disclosure forms from the financial firms?
	Answer: Publicly traded companies are not required to obtain Chapter 51 Certification and Disclosure forms from holders of more than 10% of their shares, where the holders of such shares are mutual funds, financial advisors, or other institutional investors that own the shares for the benefit of investors. Financial firms that hold such shares for their own account are required to submit Certification and Disclosure forms.
Question # 117	I have read newspaper accounts that indicate giving to a state party, by a greater than 10% owner, is not covered by EO 134 (and the subsequent legislation) if the contribution is directed specifically to the federal account, is this accurate?
	Answer: The New Jersey Election Law Enforcement Commission (ELEC) has issued an Advisory Opinion stating that contributions to the federal account of a New Jersey State political party committee are outside of the jurisdiction of ELEC, so long as the funds in the "federal account" are used exclusively for federal election purposes and are not spent on State candidates or elections. Accordingly, such a contributions would not be a "contribution reportable by the recipient under the New Jersey Campaign Contributions and Expenditures Reporting Act," and are therefore outside of the scope of Chapter 51 (formerly EO 134). See the ELEC Advisory Opinion at http://www.elec.state.nj.us/pdffiles/AO/ao032006.pdf .
Question # 118	If a vendor has made an inadvertent contribution, it has been refunded, although beyond the 30 day limit that reverses disqualification, what is the exact time the vendor is not eligible for State contract awards?
	Answer: Your question raises two separate issues. First, Chapter 51 states that an inadvertent contribution may be returned to the contributor, and eligibility for State contract award restored, if the refund is obtained within thirty days of the contribution. A refund obtained more than thirty days after the date of the contribution will not restore the eligibility of the vendor. Second, the period of ineligibility depends upon the timing of the contribution, and the committee to which the contribution was made. As a general rule, there is an eighteen (18) month period during which the contributor is not eligible for State contract award. Where the contribution is made to a candidate committee or election fund of a sitting Governor, or to the State or county political party committee of the party which nominated the sitting Governor, and the contribution is made during the Governor's term of office, the contributor is ineligible for State contract award for 18 months or during the remainder of the Governor's term of office, whichever is longer. Finally, where the contribution is made to a candidate committee or election fund of a sitting Governor, or to the State or county political party committee of the party which nominated the sitting Governor, and the contribution is made during the last eighteen months of the Governor's term of office, the period of ineligibility could extend through the next gubernatorial term if the sitting Governor is elected to a second term of office.
Question # 119	For State term contracts issued by the Division of Purchase and Property, does the $17,500 transaction threshold amount established by the governing statute pertain to each individual purchase made by each term contract user or to the aggregate purchases made by all term contract users combined?
	Answer: Amplifying the State’s answer to Question #8 above, which addressed Delegated Purchasing Authority (DPA) purchases made directly by State agencies, for State term contracts awarded by DPP’s Purchase Bureau, the $17,500 transaction threshold applies to the aggregate purchases made, or expected to be made, by all users of the individual State contract.
Question # 120	Can Agencies submit disclosure certification forms as a scanned attachment (.pdf) via email?
	Answer: Not at this time, however, we are considering electronic systems for future compliance. ***As of July 1, 2007, submissions can be sent for review to CD134@treas.state.nj.us ***
State Contractor Political Contribution Compliance Executive Order (EO) 117 Q & A
Question # 1	Do all potential vendors have to send in the new EO 117 certification form with their bids?
	Answer: No, the new EO 117 certification will need to be submitted along with the Chapter 51 (formerly E.O. 134) certification by the intended awardee only.
Question # 2	Is the two-year certification process still in place?
	Answer: No, we have temporarily suspended the two-year certification process until we release a new, combined Chapter 51/EO 117 certification form.