Research Administration Office

University of California

Memo Operating Guidance

No. 90-2

Supplement No. 2

July 12, 1990

Subject: Lobbying Restrictions, Additional Information and Clarification

Enclosed for your information (Enclosure 1) is a memorandum prepared by Sandra McMullan of the National Association of Independent Colleges and Universities which describes and analyzes the current status of federal lobbying restrictions for educational institutions. This document, which was an attachment to the May 19 AAU Washington Report, puts the Byrd Amendment in the context of three other federal laws and regulations dealing with lobbying.

Enclosure 2 is a June 15, 1990, Notice published in the Federal Register by OMB, providing further clarification of OMB's implementation of the Byrd Amendment. This Notice expands on and 'supersedes the May 23 OMB letter that we distributed as Enclosure 2 to Supplement No. 1 of this C& G Memo- The Notice makes the following points:

Routine and ongoing post-award administration of grants [and contracts] falls within the exemption for "Professional and Technical Services."

To the extent a person can demonstrate that the person has sufficient monies, other than Federal appropriated funds, the Federal Government shall assume that these other monies were spent for any influencing activities unallowable with Federal appropriated funds.

Nothing in OMB's final guidance requires a person to make any changes to that person's existing accounting systems.

The prohibition on the use of Federal appropriated funds does not apply to influencing activities that are not connected with a specific covered Federal action. These [permissible] activities include those related to legislation and regulations for a program versus a specific covered Federal action. [emphasis added]

These clarifications are entirely consistent with our interpretation of how the Byrd Amendment is to be applied to University activities (see C& G Memo 90-2, February 9, 1990).

Finally, Enclosure 3 contains the FAR clauses that you have seen or will be seeing in federal solicitations and contracts over $100,000. These clauses --

52.203-11 Certification and Disclosure Regarding Payments to Influence Certain Federal Transactions [JAN 1990]

52.203-12 Limitation on Payments to Influence Certain Federal Transactions [JAN 1990]

-- are acceptable to the University (see pp. 3193-3195 of Enclosure 3). Flowdown instructions for subcontracts over $100,000 have already been issued by the Office of the President Materiel Management Office.

Refer: Bill Sellers

ATSS 8-582-1638

(415) 642-1638

Subject Index: 02, 06, 19

Organization Index: U-115, F-005

David F. Mears

Director

Research Administration Office

Enclosures

cc:

Sue Spitz, Institutional Relations, OP

Phil Spiekerman, Office of General Counsel Dave Haskins, Materiel Management, OP

Nancy Coolidge, Student Financial Support, OP Vivian Scrudder, Business Operations, OP

Paul Sweet, Federal Government Relations, OP Campus and OP Legislative Liaisons


OFFICE OF MANAGEMENT AND BUDGET

Governmentwide Guidance for New Restrictions on Lobbying

AGENCY: Office of Management and Budget.

ACTION: Notice.

SUMMARY: This Notice provides further information about OMB's interim final guidance, published December 20, 1989, as called for by Section 319 of Public Law 101-121.

DATE: The effective date of the interim final guidance was December 23, 1989.

FOR FURTHER INFORMATION CONTACT: For grants and loans, contact Barbara F. Kahlow, Financial Management Division, OMB (telephone: 202-395-3053). For contracts, contact Richard C. Loeb, Office of Federal Procurement Policy, OMB (telephone: 202-395-3300).

SUPPLEMENTARY INFORMATION: On October 23, 1989, the President signed into law the Department of the Interior and Related Agencies Appropriations Act for Fiscal Year 1990 ("the Act"). Section 319 of the Act amended title 31, United States Code, by adding a new Section 1352, entitled "Limitation on use of appropriated funds to influence certain Federal contracting and financial, transactions." Section 1352 took effect with respect to Federal contracts, grants, loans, cooperative agreements, loan-insurance commitments, and loan guarantee commitments that were entered into or made more than 60 days-after the date of the enactment of the Act, i.e., December 23, 1989.

Section 1352 required the Director of the Office of Management and Budget (OMB) to issue governmentwide guidance for agency implementation and compliance with the requirements of this section. Interim final guidance was issued on December 18, 1989 and published on December 20, 1989 (54 FR 52306).

This Notice is to inform the public about certain clarifications which OMB has made since the December 20, 1989 publication. These include replies to two letters addressed to OMB from Members of Congress. Both letters are reproduced herein as well as OMB's replies. In addition, OMB has issued an internal government memorandum which is reproduced herein.

Allan V. Burman, Administrator for Federal Procurement Policy

Susan Gaffney, Acting Assistant Director for Financial Management.

Herein follows the text of the first letter and OMB's reply:

United States House of Representatives

Employment and Housing Subcommittee of the Committee on Government Operations

May 9, 1990.

Richard Darman, Director, Office of Management and Budget, 10300 New Executive Office Building, Washington, D.C. 20503.

Dear Mr. Darman: As the House sponsor the Clean Consultants Act of 1989, for which you are now writing regulations, I would like to encourage you to consider and include clarification in the implementation this law to state that it does not preclude legitimate functions of local governments which includes contact with Federal agencies.

A priority in the case of cities and counties is the ability to contact Federal agencies information concerning grants. At present, Federal agencies are not responding because there is either confusion on the part of Federal employees concerning how to deal · with direct contact from local governments and their representatives, or there is a policy of no response to requests for information clarification from local government representatives because of an extremely strict definition of what the new law does and does not allow OMB should direct Federal agencies to continue past practices providing information to local governments and their representatives until final regulations make clear and uniform the appropriate parameters for contacts local officials, their representatives and Federal employees. I cannot stress enough how important it is for local government to receive timely and accurate information Federal programs. Providing information is clearly not within the realm of 'influence pedaling' or lobbying to which the new law addresses itself.

In relation to drafting of regulations, I urge you to consider comments to clarify potential problems which surfaced in the NPRM.. Among my concerns and the concerns of local government are:

1. The unnecessary inclusion of entitlement programs in reporting requirements. Entitlement programs do not fall under the category of programs which could be 'brokered' in the manner of discretionary grant programs. The Clean Consultants Act [has,] as its focus, the process of obtaining discretionary grants by the use of undue influence. Entitlements do not go through the same kind of process and therefore I do not understand why recipients would need to follow disclosure regulations as applicants and recipients of discretionary monies would need to follow.

2. Grants management is, for all practical purposes, a general duty job with most cities and counties. Whether that individual is a direct employee, or holds a long-term bona fide consultant contract. the duties involved in grants management often include the need to monitor the grants program from which the city or county benefits. Seeking information in this role, a grants manager would not appear to be using undue influence to obtain funding--rather, it seems an informed manager serves a function for the best use of funds from the perspective of the Federal government as well as the local government entity. Therefore, contacts with the Federal government by grants managers would seem to be an appropriate action and one not prohibited under the lobbying portions of the new law.

The intent of the law is to either disallow those receiving Federal funds from using employees on that grant to solicit other Federal monies, and to make public those individuals hired with non-Federal funds to obtain a Federal grant. The law makes a clear distinction which singles out the special arrangement or contract individual hired to secure specific program funding. Abuses in this area are the focus and the background of the law. A local government employee or a long-term Washington agent for a local government clearly does not fit into the same abusive pattern.

During the period regulation to make this distinction are being written, and safeguards are put in place to cut abuse, local governments, should not be shackled by loss of opportunity to use informed employees and other legitimate representatives in grants application and management when they seek information on grant opportunities. The current unresponsiveness of many Federal agencies, which appears to be a reaction in advance of final regulations, acts as a veil behind which grant-making agencies decline to provide any information to local officials or their representatives. This seems a needless impediment for appropriate actions by local governments competing for existing programs of Federal assistance.

5. In your writing of regulations, I trust you will define terms to clarify problems which preens themselves in the NPRM in the context of current practice. Special project lobbyists and 'influence peddling' as exemplified in the HUD hearings conducted by the Employment and Housing Subcommittee of the House Government Operations Committee, which I chair, define themselves. Specifically. the $300,000 phone calls to HUD and the contracting of well-connected Washington operatives for specific projects are the target of the new law. Day- to-day grants managers and long-term bona fide general interest consultants perform a service different from those abusive actions which have been uncovered during our HUD hearings. This distinction between individuals and actions should be made clear--which does not appear to be the case in the NPRM.

I appreciate your attention to my comments end hope that you will contact me or have your staff contact Lisa Phillips on my Subcommittee staff (225-6751) if you have any questions. I am particularly interested in the Issue of Information availability and ask that your office contact me in the next ten days to advise on how Federal agencies are provided guidance on the new law while regulations are being finalized.

Sincerely, Tom Lantos, Chairman, Executive Office of the President

Office of Management and Budget

Honorable Tom Lantos, Chairman, Employment and Housing Subcommittee, Committee on Government Operations, U.S. House of Representatives, Washington, DC 20515.

Dear Chairman Lantos: This responds to your letter of May 9, 1990, concerning Section 319 of Public Law 101-121 and the Office of Management and Budget's (OMB's) interim final guidance entitled "Governmentwide Guidance for New Restrictions on Lobbying," Your letter raises concerns about "legitimate functions of local governments which include contact with Federal agencies,"

First, your letter raises concerns about Federal agencies' responsiveness to requests from cities and counties for information or clarification about grants. Nothing in the statute or OMB's guidance limits Federal agencies from continuing to respond to such informational requests. However, as your letter indicates, there appears to be a need to better inform the agencies with respect to this aspect of OMB's guidance. Therefore, we will be raising this issue with the agencies during the interagency common rulemaking process which is proceeding with work on the Final version of the OMB guidance. We want to insure that the guidance. does not inappropriately impose a chilling effect on communications between Federal agencies and their grantees. As agencies become more familiar with this new law and OMB's guidance, questions about responding to these types of requests should be eliminated. Several commenters included in the docket of public comments on OMB's interim final guidance, as well as your letter, raise concerns about the appropriateness of requiring disclosure of routine and ongoing post-award administration of grants. After consideration of these concerns, we intend to indicate in OMB's final guidance that such activities fall within the exemption for "Professional and Technical Services."

Also, your letter raises concerns about the applicability of the law, as well as OMB's guidance, to entitlement programs. Neither the statute nor OMB's guidance exempts any particular grant programs. We believe that coverage of mandatory awards, including the entitlement programs (e.g., grants for State administration of Medicaid) and formula grants, is appropriate, since subawards under these grant programs are discretionary. For example, contractors are competitively selected by State grantees for electronic data processing of Medicaid claims.

Lastly, your letter raises concerns about ways to clarity or more specifically target OMB's guidance to better capture the types of activities which this new law was intended to curb. We are carefully considering ways to improve this aspect of OMB's guidance along the lines that you raised. as well as in response to the public comments that we have received.

We have every intention of achieving reasonable implementation of this law, within the context of the statutory framework provided by Congress. I hope this letter fully meets the concerns raised In your letter. If you have additional questions. please do not hesitate to call me.

Sincerely,

Frank Hodsoll, Executive Associate Director.

Herein follows the text of the second letter and OMB's reply:

United States House of Representatives May 10, 1990.

Director, Office of Management and Budget Old Executive Office Bldg., Washington, D.C. 205O3.

Dear Mr. Darman: When Congress passed the appropriations bill for the Department of the Interior, the intent of Section 319 was to prohibit the use of federally appropriated funds to lobby Congress or federal agencies in connection with federal grants, contracts, loans, or cooperative agreements. However, I fear that the interim final rule unnecessarily affects state agency communications with Congress and federal agencies in the course of administering ongoing programs. These communications are appropriate, they foster more efficient and effective program implementation and benefit all levels of government.

I ask that you consider re-examining section 319 in light of these concerns. Thank you for your attention.

Sincerely,

Timothy J. Penny, Member of Congress, Executive Office of the President

Office of Management and Budget

June 8, 1990.

Honorable Timothy J. Penny, U.S. House of Representatives, Washington, DC 20515.

Dear Congressman Penny: This responds to your letter of May 10, 1990, concerning Section 319 of Public Law 101-121 and the Office of Management and Budget's (OMB's) "Governmentwide Guidance for New Restrictions on Lobbying."

Your letter raises concerns about "State agency communications with Congress and Federal agencies in the course of administering ongoing programs." We are sensitive to the concerns you raised and those raised by State and local officials and their interest groups. We are attempting to address all of these concerns in finalizing OMB's guidance.

Several commenters on OMB's interim final guidance pointed out the inequity of requiring disclosure by a grantee or a contractor's newly-hired employees who are expected to become employed over 130 days, including newly-elected State officials. After consideration of these concerns, we expect that OMB's final guidance will expand the regulatory definition of "regularly employed" so as to no longer require disclosure by such persons.

In addition, several commenters, as well as your letter raised concerns about the appropriateness of requiring disclosure of routine and ongoing post-award activities to administer grants and contracts. These activities are not influencing activities. After consideration of these concerns, we intend to indicate in OMB's final guidance that such activities tall within the exemption for "Professional and Technical Services."

We have every intention of achieving reasonable implementation of this law, within the context of the statutory framework provided by Congress. I hope this letter fully meets the concerns raised in your letter. If you have any questions, please do not hesitate to call me.

Sincerely,

Frank Hodsoll, Executive Associate Director.

Herein follows the text of OMB's clarification memorandum to the agencies:

June 12, 1990

Memorandum for Assistant Secretaries for Management and Agency Senior Procurement Executives

From Allan V. Burman, Administrator for Federal Procurement Policy, Susan Gaffney, Acting Assistant Director for Financial Management

Subject: Clarification Regarding "Governmentwide Guidance for New Restrictions on Lobbying"

On December 20, 1989, the Office of Management and Budget's (OMB's) interim final "Governmentwide Guidance for New Restrictions on Lobbying" was published in the Federal Register. The effective date of the Guidance was December 23, 1989. Included in the guidance at Appendix A are the "Certification Regarding Lobbying" and the "Statement for Loan Guarantees and Loan Insurance." This memorandum provides clarifications concerning the guidance and the "Certification" and "Statement." Please alert your headquarters and field staffs to them.

First the Certification and the Statement are intended to apply only to the instant Federal transaction for which a Certification or Statement is being obtained: the awarding of a Federal contract, the making of a Federal grant, the making of a Federal loan, the entering into of a cooperative agreement or the making of a Federal commitment for a loan guarantee or loan Insurance.

Second. the final version of the Certification and Statement will reference OMB's guidance, including Subparts B and C, which specify certain "Agency and Legislative Liaison" and "Professional and Technical Services" activities which allowable with appropriated funds and for which no disclosure is necessary.

Third, only bids, offers, applications and awards, submitted or made on or after the December 23, 1989 effective date of the restrictions need to contain certifications or statements and disclosures, if required, i.e., awards and commitments made before December 23, 1989, but modified, amended, extended, continued or renewed after that date do not need certifications or statements unless they are modified or amended beyond the scope of the award. An existing Federal grant, loan, or cooperative agreement with such a modification or amendment needs to contain a certification and disclosure form, required. A bilateral modification to an existing Federal contract which requires justification and approval pursuant Federal Acquisition Regulation (FAR) section 6.303, citing the authorities in FAR section 6.302, and which exceeds the $100,000 threshold needs a certification and disclosure form, if required.

Fourth. only Federal transactions over the $100,000 (contracts. grants, cooperative agreements) or $150,000 (loans, loan guarantees, loan insurance) thresholds need certifications or statements and disclosures, if required.

Fifth, contracts subject to the FAR are covered by the January 30, 1990 FAR interim final rule (Federal Acquisition Circular 84-55), not the February 26, 1990 common rule. The February 26, 1990 rule applies only to contracts not subject to the FAR (generally nonprocurement contracts) as well as to grants, loans, cooperative agreements, loan guarantee commitments, and loan insurance commitments.

Sixth, nothing contained in Subpart C of the guidance, Activities by Other Than Own Employees, applies to selling activities by independent sales representatives before an agency provided that the selling activities are prior to formal solicitation by an agency. Such selling activities are:

(1) Discussing with an agency (including individual demonstrations) the qualities and characteristics of the person's products or services, conditions or terms of sale, and service capabilities; and,

(2) Technical discussions and other activities regarding the application or adaptation of the person's products or services for an agency's use.

Note that the activities in (1) and (2) above are specifically limited to the merits of the matter. An independent sales representative who engages in selling activities described above, prior to the issuance of a formal solicitation by an agency, is not deemed to be engaged in influencing with regard to a particular contract and will not need to disclose such activities.

Seventh, under subsections ___.205(b) and ___.300(c), the examples cited are not intended, in any way, to be all inclusive, to limit the application of the "Professional and technical services" exemption provided in the law, or to limit the exemption to licensed professionals. "Professional and technical services" shall be advice and analysis directly applying any professional or technical expertise. Note that the "Professional and technical services" exemption is specifically limited to the merits of the matter.

Lastly, the following clarify OMB's interim final guidance:

(1) To the extent a person can demonstrate that the person has sufficient monies, other than Federal appropriated funds, the Federal Government shall assume that these other monies were spent for any influencing activities unallowable with Federal appropriated funds. This assumption applies equally to persons who do and do not submit to the Federal Government cost or pricing data. Where no cost or pricing data are submitted, the Federal Government shall assume that monies spent are a reduction from profits otherwise available.

(2) Profits and fees earned under Federal contracts (see FAR subpart 15.9) are not considered appropriated funds. Profits, and fees that constitute profits, earned under Federal grants, loans, and cooperative agreements are not considered appropriated funds.

(3) Nothing in OMB's interim final guidance requires a person to make any changes to that person's existing accounting systems.

(4) The prohibition on use of Federal appropriated funds does not apply to influencing activities not in connection with a specific covered Federal action. These activities include those related to legislation and regulations for program versus a specific covered Federal action.