Faced with mounting public pressure in the wake of recent scandals, Illinois Governor Pat Quinn is expected to sign several pieces of "ethics" legislation that the General Assembly adopted in May. Two bills, SB 51 and SB 54, which amend the Procurement Code and Lobbyist Registration Act, change the registration and reporting requirements for companies doing or seeking more than $50,000 worth of business with the state and for lobbyists.
State contractors who have or are bidding on more than $50,000 in annual business with the state and who must file business entity registrations with the Illinois State Board of Elections will need to resubmit their registrations electronically later this summer. These changes will not affect the upcoming deadlines for the semiannual lobbyist activity reports due to the State of Illinois (July 31, 2009) or the City of Chicago (July 20, 2009). Please note that under both the State of Illinois and City of Chicago laws, with very limited exceptions, a "lobbyist" includes anyone who attempts to influence any executive, legislative or administrative decision, including certain procurement matters. If you think you may need to register or report activity to any Illinois authority, contact counsel for advice on the steps to follow.
What You Need to Know as a State Contractor (SB 51)
In conjunction with several other significant changes to the state procurement process, SB 51 amends the Procurement Code to revise Public Act 95-0971, the "Pay-to-Play" legislation that became effective earlier this year. Although those who work with the legislation on a practical level continue to request additional revisions, the language the General Assembly passed in SB 51: (1) expands the scope of covered contracts, (2) extends the filing deadlines for notification of changes, (3) expands the definition of "affiliated entity" to include all operating subsidiaries of the contracting or bidding entity and that entity's corporate parent, (4) removes minor children from the definition of "affiliated person," (5) expands the definition of "executive employee" to include anyone who "fulfills equivalent duties as the President, Chairman of the Board, or Chief Executive Officer" regardless of whether that person has the title, and (6) clarifies the definition of "executive employee" to more clearly reach people whose commissions or bonuses increase based on the award or payment of state contracts, but not necessarily the people who actually perform the underlying services on the contract.
Additionally, most companies and subcontractors will need to disclose the name and address of each lobbyist and other agent communicating with any state officer or employee about bids or offers and to supplement this and other disclosures throughout the bid process. Any conflicts of interest revealed may render the contract or bid void following a public hearing process. Companies also will have to reveal all fees paid to lobbyists related to the contract, and certify that the state is not paying for the lobbyists' activities. Additionally, lobbyists may not accept contingent fee agreements for work attempting to influence the outcome of any procurement decision and will need to submit written reports memorializing oral conversations with state employees for posting on the Procurement Policy Board's public Web site. These changes will become effective when the governor signs the legislation.
What You Need to Know if You Are Lobbying (SB 54)
The changes SB 54 makes to the Lobbyist Registration Act will become effective on January 1, 2010. The amendments distinguish between a "lobbyist" and a "lobbying entity" based on what role each plays in efforts to influence any executive, legislative or administrative state actions. Notably, the new legislation imposes annual ethics training requirements on all registered lobbyists and increases the annual registration fees from $350 per person or entity to $1,000 per person or entity.
Lobbyist disclosures will be more detailed and more frequent. The reports will now require disclosure of activities and entities lobbied by client, rather than taken together. Electronic submission of the reports will be due monthly (instead of semiannually) with weekly reporting requirements when the General Assembly is in session. The secretary of state will be able to investigate violations of the act and transmit them to the secretary of state inspector general for further investigation and prosecution.
Slightly modified exemptions from reporting requirements will continue to exist for certain people working in or for the government, the news media or religious organizations, or those working for no compensation. Limited exemptions will also continue for certain people participating in the administrative or procurement processes.
The final state semiannual reports before this new law becomes effective (assuming the governor signs it) will be due July 31, 2009. (City of Chicago reports are due by July 20, 2009.) Anyone who is just beginning state lobbying efforts must register before communicating with covered officials or within two days thereafter.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
