Last summer, the General Assembly passed SB 51 to amend the Procurement Code. Governor Quinn vetoed the legislation and proposed specific amendments, which the General Assembly overrode. Accordingly, the law became effective on November 3, 2009 as Public Act 96-0795. The General Assembly returned to ethics reform legislation in October to pass another bill further regulating procurement-based disclosure requirements and contribution bans.
Together, Public Act 96-0795 and SB 146 revise deadlines for updating registration information with the Illinois State Board of Elections and redefine whom businesses must disclose as "affiliated persons" and "affiliated entities" subject to the campaign contribution ban of Public Act 95-971. Most of the changes are effective immediately, with others to become effective January 1, 2010 if the governor signs SB 146.
After the General Assembly formally submits SB 146 to him, Governor Quinn will have 60 days to take action by vetoing the bill or signing it.
"Pay-To-Play" Amendments – Redefining "Affiliated Persons" And "Affiliated Entities" On State Vendor Registrations:
Public Act 96-0795 and SB 0146 address difficulties that businesses have faced this past year when registering with the state pursuant to Public Act 95-971 (the "pay-to-play ban"). The pay-to-play ban requires businesses that have been awarded, or are bidding on, more than $50,000 in business with the state to register with the Illinois State Board of Elections and to disclose affiliated persons and entities. The registering business entity, its affiliated persons, and affiliated entities are subject to certain campaign contribution bans and disclosure requirements.
Effective immediately, state contractors subject to the pay-to-play ban who are bidding on proposals must notify the Illinois State Board of Elections of any changes in information no later than the earlier of five business days following the change or one day before the contract is awarded. Companies not bidding on current business, but who are otherwise registered, must report any changes on a quarterly basis.
The laws also modify the definitions of "affiliated person," "affiliated entity," and "executive employee" in ways that could simplify the registration process. First, the minor children of affiliated persons are no longer "affiliated persons."
Second, the definition of "affiliated entity" no longer includes "any member of the same unitary business group." Instead, an affiliated entity includes the registrant's operating subsidiaries and corporate parent, and all operating subsidiaries of the registrant's corporate parent. Certain tax-exempt organizations and political committees sponsored by the registrant or its affiliated entities remain "affiliated entities."
Third, businesses need to disclose "executive employees" as "affiliated persons." An "executive employee" is any individual who is, or functions as, the registrant's president, chairman, or chief executive officer, even if that individual does not hold the title. Anyone whose compensation directly benefits from the award or payment of state contracts is also an executive employee—generally, anyone who receives a commission or bonus based on the state contract. Executive employees remain "affiliated persons."
If Governor Quinn signs SB 146, which he has indicated that he will, then effective January 1, 2010, all three terms will exclude "any person or entity otherwise prohibited by federal law from making contributions or expenditures in connection with a federal, state, or local election." Thus, businesses will no longer need to disclose foreign nationals (unless they hold a green card) or foreign subsidiaries as affiliated persons, executive employees, or affiliated entities.
Lobbyist Restrictions For State Contractors:
Public Act 96-0795, effective on November 3, 2010, significantly overhauls the state procurement process and imposes many additional requirements on those seeking to do business with the state. For example, a new provision in the law requires most companies and subcontractors 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. Conflicts of interest could render the contract or bid void.
Those bidding on state business should contact counsel with any questions.
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