B-218952, AUG 21, 1985, OFFICE OF GENERAL COUNSEL

B-218952, AUG 21, 1985, OFFICE OF GENERAL COUNSEL

LOBBYING - LEGISLATION - USE OF FEDERAL FUNDS DIGEST: A DEFENSE CONTRACTOR MAY EXPEND ITS OWN FUNDS TO EXHORT ITS EMPLOYEES TO URGE MEMBERS OF CONGRESS TO SUPPORT CERTAIN WEAPONS SYSTEM APPROPRIATIONS WITHOUT VIOLATING THE ANTILOBBYING PROVISION IN THE DOD ANNUAL APPROPRIATION ACT OR THE ANTILOBBYING COST PRINCIPLE CONTAINED IN THE DEPARTMENT OF DEFENSE FEDERAL ACQUISITION REGULATION SUPPLEMENT. HOWEVER, NONE OF THESE COSTS MAY BE REIMBURSED DIRECTLY OR INDIRECTLY AS OVERHEAD BY THE FEDERAL AGENCY WITH WHICH IT CONTRACTS.

THE HONORABLE ALAN CRANSTON UNITED STATES SENATE:

THIS RESPONDS TO YOUR MAY 13, 1985 LETTER FORWARDING A CONSTITUENT INQUIRY FOR OUR REVIEW. YOUR CONSTITUENT, MR. PETER E. CROFT, QUESTIONED THE LEGALITY OF A GTE COMPANY LOBBYING CAMPAIGN. ON THE BASIS OF THE LIMITED FACTS WE HAVE BEEN ABLE TO GATHER TO DATE, WE COULD NOT CONCLUDE THAT THE REPORTED GTE ACTIVITIES VIOLATED APPLICABLE LAW AND REGULATIONS. HOWEVER, AS INDICATED BELOW, WE HAVE ASKED THE DEPARTMENT OF DEFENSE FOR FURTHER INFORMATION.

AS WE UNDERSTAND THE SITUATION FROM YOUR SUBMISSION, MR. CLARK G. FIESTER, VICE PRESIDENT AND GENERAL MANAGER, GTE GOVERNMENT SYSTEMS, SENT AN INTER-OFFICE MEMORANDUM, DATED MARCH 1, 1985, TO ALL GTE WESTERN DIVISION (WD) EMPLOYEES, SUBJECT: "MX SUPPORT CAMPAIGN: POSTCARDS TO CONGRESSMEN". THE MEMORANDUM EXPLAINED THAT THE SENATE AND HOUSE WOULD VOTE ON SEPARATE AUTHORIZATION AND APPROPRIATION MEASURES CALLING FOR $1.5 BILLION FOR THE PRODUCTION OF 21 MISSILES. IT INDICATED THESE VOTES WOULD BE CRITICAL TO THE MX PROGRAM AND PREDICTED THAT THE VOTES WOULD BE VERY CLOSE. THE MEMORANDUM THEN URGED WD EMPLOYEES TO ENGAGE IN THE LOBBYING CAMPAIGN IN THE FOLLOWING MANNER:

"WE ASK WD EMPLOYEES, ON A STRICTLY VOLUNTARY BASIS, TO SIGN PRE PRINTED POSTCARDS TO U.S. SENATORS WILSON AND CRANSTON, AND U.S. REPRESENTATIVE ED ZSCHAU. THE POSTCARDS ARE AVAILABLE IN THE EMPLOYEE CAFETERIAS AND LOBBIES. AFTER SIGNING THE POSTCARDS, PLEASE PLACE THEM IN THE INTER- OFFICE MAIL. THE WD MAILROOM WILL AFFIX THE CORRECT POSTAGE."

THE ONLY ANTILOBBYING STATUTE THAT MIGHT BE RELEVANT IS EMBODIED IN SECTION 8069 OF THE DEPARTMENT OF DEFENSE APPROPRIATIONS ACT, 1985, PUBLIC LAW 98-473, OCTOBER 12, 1984, 98 STAT. 1904, 1937, WHICH PROVIDES AS FOLLOWS:

"NONE OF THE FUNDS MADE AVAILABLE BY THIS ACT SHALL BE USED IN ANY WAY, DIRECTLY OR INDIRECTLY, TO INFLUENCE CONGRESSIONAL ACTION ON ANY LEGISLATION OR APPROPRIATION MATTERS PENDING BEFORE THE CONGRESS." THE ABOVE QUOTED PROVISION IS A RESTRICTION ON THE USE OF FEDERAL DEFENSE FUNDS FOR LOBBYING ACTIVITIES. YOUR CONSTITUENT DID NOT ALLEGE THAT FEDERAL FUNDS WERE BEING USED BY GTE TO FINANCE ITS LOBBYING EFFORT. GTE USED CORPORATION (NON-FEDERAL) FUNDS FOR THIS PURPOSE, THERE WOULD BE NO VIOLATION OF THE ABOVE PROVISION.

THE DEPARTMENT OF DEFENSE (DOD) HAS PROMULGATED STRINGENT COST PRINCIPLES MAKING ALL CONTRACTOR LOBBYING COSTS UNALLOWABLE FOR FEDERAL REIMBURSEMENT, REGARDLESS OF WHETHER SUCH COSTS ARE DIRECT OR OVERHEAD EXPENSES. IN THIS REGARD, SECTION 31.205-22 LOBBYING COSTS, IS CONTAINED IN THE DOD FEDERAL ACQUISITION REGULATIONS (FAR) SUPPLEMENT AND READS AS FOLLOWS:

"(A) FOR THE PURPOSE OF THIS SECTION, LOBBYING IS DEFINED AS ANY ACTIVITY, INCLUDING LEGISLATIVE LIAISON, OR COMMUNICATION WHICH IS INTENDED OR DESIGNED TO INFLUENCE, DIRECTLY OR INDIRECTLY, OR TO ENGAGE IN ANY CAMPAIGN TO ENCOURAGE OTHERS TO INFLUENCE MEMBERS OF ANY LEGISLATIVE BODY. THEIR STAFFS, OR THE STAFFS OF THEIR COMMITTEES TO FAVOR OR OPPOSE LEGISLATION, APPROPRIATIONS OR OTHER ACTIONS OF THE LEGISLATIVE BODY, ITS MEMBERS, OR ITS COMMITTEES. LOBBYING ACTIVITY INCLUDES, BUT IS NOT LIMITED TO, ALL FORMS OF COMMUNICATIONS FOR THE ABOVE-MENTIONED PURPOSES BY THE CONTRACTOR, ITS EMPLOYEES, OR ITS AGENTS WITH THE LEGISLATIVE BODY, ITS MEMBERS, AND STAFFS OF MEMBERS AND COMMITTEES.

"(B) THE COSTS OF LOBBYING AS DEFINED HEREIN, INCLUDING THE APPLICABLE PORTION OF THE SALARIES OF THE CONTRACTOR'S EMPLOYEES AND THE FEES OF INDIVIDUALS OR FIRMS ENGAGED IN LOBBYING, ON BEHALF OF THE CONTRACTOR (WHETHER OR NOT THE INDIVIDUALS OR FIRMS ARE REGISTERED AS LOBBYISTS UNDER ANY APPLICABLE LAW) ARE UNALLOWABLE. IN ADDITION, THE DIRECTLY ASSOCIATED COSTS (FAR 31.201-6) OF LOBBYING ARE UNALLOWABLE."

THIS COST PRINCIPLE IS APPLICABLE TO ALL OF GTE'S DEFENSE CONTRACTS AND THEREFORE WOULD PROHIBIT IT FROM RECOVERING ANY COSTS IT INCURRED IN ITS LOBBYING CAMPAIGN. WE HAVE REQUESTED THE DEFENSE CONTRACT AUDIT AGENCY TO DETERMINE IF GTE RECEIVED REIMBURSEMENT FOR ANY OF THESE LOBBYING EXPENSES IN VIOLATION OF THIS COST PRINCIPLE. WE SHALL ADVISE YOU IF THE DEFENSE CONTRACT AUDIT AGENCY DETERMINES THAT ANY OF THE LOBBYING EXPENSES WERE REIMBURSED.

WE ARE RETURNING YOUR ORIGINAL CORRESPONDENCE AS REQUESTED.