By James Simon and Donald Leach
In late 2006, the Ohio General Assembly passed H.B. 694, a sweeping reform of Ohio’s campaign finance laws that affects all public contractors and design professionals. This new law severely constrains public contractors’ and design professionals’ ability to make political contributions to officeholders that award bid or unbid public contracts valued over $500. Its impact is not limited to construction related contracts as affected public contracts include all those let by the state, state agencies and political subdivisions, including local governments and appointed boards, agencies and commissions. H.B. 694 imposes harsh sanctions, including criminal prosecution and contract rescission, for contractors that violate its limits.
The provisions of H.B. 694 affect all contributions made after January 1, 2007. Under the new law an officeholder (and all boards, agencies or commissions the officeholder appoints) cannot award a public contract if the officeholder received campaign contributions exceeding $1,000 during the preceding two years from an individual owner, member, partner, 20% shareholder or professional corporation shareholder of a public contractor. The limit includes contributions by owners’ spouses and minor children.
Further, an officeholder (and all boards, agencies or commissions the officeholder appoints) cannot award a public contract to a contractor or design professional if the officeholder received campaign contributions exceeding $2,000 during the preceding two years from all of a public contractor’s partners, members, 20% shareholders (of a general corporation), or professional corporation shareholders (including owners’ spouses and minor children), and any “affiliated PAC.”
The burden of proving compliance with H.B. 694 rests on the contractor or design professional. Before being awarded a public contract, the contractor or design professional must certify compliance with H.B. 694. False certifications are punishable as fifth degree felonies. The same limits apply from the award of a contract until one year after its completion. Further contributions over the limits after the award of a contract can result in fines and rescission of the contract.
Under H.B. 694, seemingly nominal support of an officeholder from a contractor or design professional or their owners can disqualify the contractor and design professional from receiving public contracts or may result in the loss of already-awarded contracts. Therefore, it is important for every contractor and design professional involved in public construction to closely monitor the political contributions it makes and the contributions made by its owners and any affiliated PAC.