No Federal Payments to Companies Controlled by Special Government Employees Act of 2025
- Bill Number
- S. 1365
- Origin Chamber
- Senate
- Congress
- 119th Congress, Session 1
- Policy Area
- Government Operations and Politics
- Status
- Introduced
- Latest Action
- 2025-04-09: Read twice and referred to the Committee on Homeland Security and Governmental Affairs.
- Last Updated
- 2025-09-04T11:03:17Z
AI-Generated Summary
Purpose of the Legislation
The bill, titled the "No Federal Payments to Companies Controlled by Special Government Employees Act of 2025," aims to prevent conflicts of interest in federal contracting by prohibiting executive agencies from awarding contracts, grants, or related payments to companies owned or controlled by individuals who have recently served as special government employees. Special government employees are part-time or temporary federal workers, such as consultants or advisors, who serve less than 130 days in a year.
Key Provisions
- Prohibition on Awards and Payments: Executive agencies (federal departments and agencies like the Department of Defense or Health and Human Services) cannot award contracts, grants, cooperative agreements, or make any related payments to a "company" if a "covered beneficial owner" of that company was a special government employee on or after January 1, 2025.
- Exception Condition: The prohibition does not apply if the individual immediately stops being a special government employee upon the bill's enactment and remains one for none of the 365 days following enactment.
- Definitions:
- Company: Includes corporations, limited liability companies, partnerships, business trusts, or similar entities.
- Covered Beneficial Owner: An individual who beneficially owns (has significant control or economic interest in) 5% or more of the company's equity securities (ownership shares), as defined under federal securities regulations.
- Equity Security: Shares or similar interests in a company that represent ownership.
- Executive Agency: Any federal executive branch department or agency involved in procurement.
- Special Government Employee: Defined under federal ethics law as a temporary or intermittent federal worker serving in a non-full-time capacity.
Significant Changes to Existing Law
- This introduces a new, specific ban on federal funding to companies linked to recent special government employees, building on existing federal ethics rules (like those in 18 U.S.C. § 202) that already restrict conflicts of interest for government workers.
- It extends beyond current post-employment restrictions (e.g., "cooling-off" periods for lobbying) by directly targeting ownership in companies receiving federal funds, rather than just individual actions.
- The 365-day post-enactment grace period and the January 1, 2025, cutoff date create a targeted timeline not present in prior law.
Potential Impacts
- On Government Agencies: Agencies will need to screen contractors and grantees for ownership by recent special government employees, potentially increasing administrative burdens in procurement processes and delaying awards.
- On Citizens and Businesses: Companies owned by special government employees (e.g., consultants who advise on policy) may lose access to federal funds, affecting their revenue and operations. This could discourage individuals from serving in temporary government roles due to financial repercussions.
- On International Relations: Minimal direct impact, though it may indirectly affect U.S. companies involved in international aid or defense contracts if ownership ties trigger the prohibition.
- Broader effects include promoting transparency in federal spending, potentially saving taxpayer money by reducing perceived favoritism.
Main Stakeholders Affected
- Special Government Employees: Individuals like experts, scientists, or industry advisors serving temporarily in government, who may face restrictions on their business interests.
- Companies: Businesses (especially small or medium-sized ones) with 5%+ ownership by such employees, potentially barred from federal opportunities.
- Executive Agencies: Responsible for compliance, including verification of ownership during bidding.
- Taxpayers and the Public: Benefit from reduced risk of insider influence on federal contracts.
Notable Legal, Constitutional, or Political Implications
- Legal: Strengthens enforcement of federal ethics laws by adding a clear funding prohibition, enforceable through agency procurement rules. It relies on existing securities definitions, reducing ambiguity, but may require new regulations for implementation.
- Constitutional: No major challenges anticipated; it aligns with Congress's spending power under Article I and does not infringe on free speech or due process, though companies could argue it burdens commerce if overly broad.
- Political: Positions as an anti-corruption measure to enhance public trust in government contracting, potentially appealing across party lines by addressing revolving-door concerns between government service and private business. It was introduced by Sen. Jeanne Shaheen (D-NH) and referred to the Senate Committee on Homeland Security and Governmental Affairs for review.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (1)
Sen. Alsobrooks, Angela D. [D-MD]
Recent Actions
- 2025-04-09: Read twice and referred to the Committee on Homeland Security and Governmental Affairs.
- 2025-04-09: Introduced in Senate
Bill Versions
- No Federal Payments to Companies Controlled by Special Government Employees Act of 2025 — issued 2025-04-09 — PDF (3 pages)