GM Shadow Lobbying in Defense Contracting

Shadow Lobbying in Defense Contracting

The Stealthy Persuaders

Shadow lobbying, the act of influencing government officials without registering as a lobbyist, remains a persistent issue, especially within the defense sector. This can lead to a lack of transparency and potentially drive up government contracting costs.

Understanding the Lobbying Disclosure Act

The Lobbying Disclosure Act (LDA) requires registration for anyone who spends 20% or more of their time contacting covered government officials to influence legislation or appropriations. This includes:

  • Military officers (Brigadier General or Rear Admiral Lower Half and above, or O-7 and above)
  • Certain political appointees
  • Schedule C Senior Executive Service (SES) officials
  • Members of Congress and their staffs

Is it Lobbying or Business Development?

The LDA hinges on the “two-contact rule.” If you have two communications with the same covered official on the same topic with the intent to influence an outcome, it’s considered lobbying and must be reported. Even preparation for such meetings falls under this umbrella.

Why Shadow Lobbying Matters

Many defense industry professionals engage in these discussions routinely yet fail to report them. This can have significant consequences:

  • Improper Cost Charging: Lobbying expenses cannot be billed to the government. Failing to separate these costs can inflate contract prices.
  • Legal Penalties: Non-compliance with the LDA can lead to hefty fines of $200,000 per instance.
  • Government Scrutiny: The Government Accountability Office (GAO) regularly audits lobbying reports and identifies under-reporting.

Taking Action

Here’s how defense contractors can ensure compliance:

  • Track Lobbying Activities: Maintain a calendar highlighting meetings that might constitute lobbying.
  • Separate Unallowable Expenses: Identify and remove lobbying costs from overhead charges billed to the government.
  • Seek Guidance: Don’t rely on personal relationships with officials as an excuse to avoid reporting. Consult legal counsel for clarification on specific situations.

Promoting Transparency for Better Defense Contracting

By adhering to the LDA, defense contractors can foster transparency in their interactions with government officials. This, in turn, helps ensure fair contracting practices and fosters trust in the defense acquisition process.

For a copy of my book, Pitching the Big Top: How to Master the 3-Ring® Circus of Federal Sales, and more information on federal sales, visit Capitol Integration.

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