PAY TO PLAY DEADLINE Attorney Advertising MANY BUSINESSES WITH NEW - PDF document

LOWENSTEIN SANDLER PC CLIENT ALERT PAY TO PLAY DEADLINE Attorney Advertising MANY BUSINESSES WITH NEW JERSEY GOVERNMENT CONTRACTS MUST FILE DISCLOSURE STATEMENTS BY SEPTEMBER 28, 2007 By: Christopher S. Porrino and Michael T.G. Long September 2007 Businesses that received A Brief History Of Pay To contracts with the Executive and Leg- $50,000 or more during calendar islative branches of State government, Play And Chapter 271 year 2006 from contracts with as well as agencies, counties, and mu- “Pay to play” refers to the perception New Jersey public entities must nicipalities. 8 that government work is awarded on file a statement setting forth all political contributions of more the basis of a business’s political contri- Finally, on January 5, 2006, Chapter butions, rather than merit. 1 To combat 271, 9 the most recent addition to New than $300 made by the business and certain of the business’s key that perception in New Jersey, a com- Jersey’s pay to play laws, was en- acted. 10 Chapter 271 requires the dis- personnel and affiliated entities. plex series of laws was enacted to reg- The statement — known as the ulate and monitor political closure of a business’s political Chapter 271 Business Entity Dis- contributions made by those compa- contributions made within the twelve closure Statement (“Form BE”) nies doing business with New Jersey months prior to the award of certain — must be filed with the New contracts. 11 Additionally — and for the government at the State, county, or Jersey Election Law Enforcement local level. 2 purposes of the upcoming September Commission (“ELEC”) no later 28, 2007 deadline — Chapter 271 re- than September 28, 2007. In September 2004, then-Governor quires businesses that received James McGreevy issued Executive $50,000 or more from government Examples of businesses likely Order 134, 3 which was later codified as subject to the pay to play re- contracts in 2006 to file an annual amended by legislation known as quirements include nonprofit or- disclosure statement providing Chapter 51. 4 Executive Order 134 and ganizations, medical detailed contract and contribution Chapter 51 disqualify businesses from professionals, hospitals, private information. 12 � contracts with State-level Executive schools and universities, invest- agencies if the business has con- ment management firms, law firms, accountants, construction tributed to the current Governor, any Who Must File? companies, engineering firms, candidate for Governor, or any State or real estate developers, and any county political party committee within A Form BE must be filed by every busi- other individual or organization eighteen months prior to the com- ness that received $50,000 or more in that provides goods or services mencement of contract negotiations. 5 aggregate payments from contracts or otherwise engages in busi- Executive Order 134 and Chapter 51 with New Jersey public entities during ness with New Jersey govern- also require such businesses to disclose calendar year 2006. Chapter 271’s re- mental entities. contributions made to any political ac- quirements apply to both for-profit and tion committees (“PACs”) within the nonprofit organizations. 13 We are pleased to provide the prior four years. 6 following step-by-step guide for businesses subject to this re- Another law, known as Chapter 19, 7 porting requirement. restricts businesses that made certain political contributions from entering

LOWENSTEIN SANDLER PC CLIENT ALERT In determining whether the $50,000 2. any “partner” (i.e. person or 8. if the business is a natural per- threshold has been met, every con- entity with any level of owner- son (i.e., a sole proprietor- tract with a New Jersey public entity ship interest in a business that ship), that person’s spouse or must be included. 14 In other words, is organized as a general part- any child residing with the there are no exceptions related to the nership, limited partnership, person. 25 method by which the contract was limited liability partnership, As only those contributions made dur- awarded or a minimum dollar amount limited liability company, lim- ing calendar year 2006 are relevant, per contract. 15 ited partnership association, the business need only focus on those or similar business form); 18 For contracts that span multiple years, persons and entities associated with only payments that the business re- 3. any “officer” (i.e., president, the business in 2006. � ceived in 2006 are included in the vice president with “senior management responsibility,” 19 $50,000 calculation. However, this may well include contracts entered secretary, treasurer, chief ex- Which Contributions prior to 2006 from which the business ecutive officer, chief financial Must Be Disclosed? received payments in 2006. Further- officer, or any person per- Once the relevant persons and entities more, under Chapter 271, most forming such function regard- have been identified, the business less of title); 20 grants from public entities are consid- must assess whether any reportable ered government “contracts” and 4. any “director” or “trustee” contributions were made by those per- must be included in threshold calcula- (i.e., member of the business’s sons or entities. Whether a given con- tion as well. 16 � governing body, whether des- tribution is reportable is driven by two ignated as directors, trustees, key considerations: (1) the recipient managers, governors, or by of the contribution; and (2) the Whose Contributions another title); 21 amount of the contribution. Are Relevant? 5. the spouse of any principal, Contributions to the following list of Once a business determines that it re- partner, officer, director, or recipients must be disclosed: ceived payments of $50,000 or more trustee; 22 from government contracts in calen- 1. Governor; dar year 2006, the business must de- 6. any “subsidiary directly or in- 2. State Senator; termine which political contributions, directly controlled by the busi- if any, should be disclosed on the ness” (i.e., where the business 3. Member of General Assembly; Form BE. owns a sufficient interest in 4. county executive; the subsidiary to elect a ma- Under Chapter 271, contributions jority of the subsidiary’s gov- 5. county freeholder; made by certain of the business’s erning body or where the high-level personnel and affiliated en- 6. county sheriff; business has “sufficient con- tities are treated as if made by the trol . . . to direct the sub- 7. county clerk; business itself. More specifically, con- sidiary’s decision-making”); 23 tributions are attributed to the busi- 8. county registrar of deeds; ness if made by the following persons 7. any “continuing political com- and entities: mittee” (i.e., PAC) that is “di- 9. county surrogate; rectly or indirectly controlled” 1. any “principal” (i.e., person or 10. mayor; by the business (i.e., where entity that owns or controls the business participates in 11. member of municipal council; more than 10% of the busi- the PAC’s organization, deci- ness’s profits, assets, or 12. member of school board; sion-making, or policy formu- stock); 17 lation); 24 and 13. fire commissioner;