Texas Law Pushback

A controversial law has surfaced in Texas that requires full disclosure about exactly who is profiting from government contracts. On the first day of the new year, this law was put into effect, making it mandatory for vendors being contracted by the government to share the identity of their owners, as well as of anyone else who took part in negotiating the contract. They must fill out forms to be given to the Texas Ethics Commission so citizens can track who is making a profit from each contract. The intent of this law is to keep citizens as informed as possible about the inner workings of government contracting. However, now financial firms and law firms are pushing to get the law amended.

Apparently, the institution of this new disclosure law has many government contractors confused. The law states that it is meant for contracts with a value above or equal to $1 million. There is no agreement as to whether the disclosure is meant for everyone who works on a contract, or just those who pay for the contract, for example. There are a slew of different forms for separate levels of information, which only adds to the confusion. Either the government will be bombarded by useful information they will have to sort through, or they will be made to read through information that is not useful to their original mission.

Without clarification, some government contractors are choosing to be safe by filing all of the forms regardless of the project, but others refuse to fill out any paperwork until the forms process is demystified. The contractors need more transparent rules in order to be more transparent about their profits.

This law affects more than just the typical firm that comes to mind with ‘government contractor;’ it has also become problematic for school districts. Most contracts for the districts involve contracts that are $50,000 and over, which means that they would have to fill out forms, or wait for a vote, for every one of their contracts. This seems particularly extreme.

What needs to happen from this point forward is a more clear definition of what constitutes a $1 million contract. Clarifying this point will take care of the main confusion surrounding the law, and it will make way for more targeted changes to the law. Thankfully, the Ethics Commission is scheduled to make changes to the law in 2017, however, contractors are not sure what they should do until then.

My advice is to use your best judgment. No matter what facet of government a company is working with, disclosure forms must be filled out at the discretion of everyone involved in a contract. Of course, err on the side of caution; if there is any doubt, I would suggest filling out the forms anyway to be safe.