HomeMy WebLinkAbout08-1001 ConfidentialThis Opinion is issued in response to your advisory request dated March 3, 2008.
I. ISSUE:
OPINION OF THE COMMISSION
Before: Louis W. Fryman, Chair
John J. Bolger, Vice Chair
Donald M. McCurdy
Raquel K. Bergen
Nicholas A. Colafella
DATE DECIDED: 4/28/08
DATE MAILED: 5/15/08
08 -1001
Whether, pursuant to Pennsylvania's lobbying disclosure law ( "Lobbying Disclosure
Law "), 65 Pa.C.S. § 1301- A/13A01 et seq., a registered lobbyist may use a "success fee"
for lobbying engagements related to procurement.
II. FACTUAL BASIS FOR DETERMINATION:
As a registered lobbyist in Pennsylvania, you have requested a confidential
advisory from this Commission regarding the propriety of your prospective use of a
"success fee" for lobbying engagements related to procurement. You have submitted facts
that may be fairly summarized as follows.
Firm A ( "the Firm ") offers services that constitute "lobbying" as that term is defined
by the Lobbying Disclosure Law. You are a member of the Firm's state government
relations unit ( "Lobbying Unit "), which includes both attorneys and non - attorneys.
Among the lobbying services provided by the Lobbying Unit are services involving
procurement ( "procurement lobbying services ") under the Commonwealth Procurement
Code, 62 Pa.C.S. § 101 et seq. You state that these procurement lobbying services
include arranging meetings for clients with agency officials responsible for procurement;
monitoring requests for proposals, bid opportunities, requests for qualifications and various
other procurement opportunities with agencies; and providing assistance in the preparation
of appropriate responses to procurement opportunities.
The Firm's current compensation structure is as follows. Fees for procurement
lobbying services are billed to clients either on the basis of the hourly rate assigned by the
Firm to attorneys and government relations professionals or on the basis of a retainer.
Confidential Opinion, 08 -1001
May 15, 2008
Page 2
Hourly rate clients are sent monthly bills reflecting the rate and hours or portions of hours
worked. Retainer clients pay a specific set fee for all procurement lobbying services
during the period covered by the retainer. Retainer clients are normally billed monthly or
quarterly. Expenses are billed separately and are in addition to the hourly rate or the
retainer amount.
The Firm does not provide any procurement lobbying services to a client until the
client has signed the Firm's engagement letter, agreeing to the nature and scope of the
procurement lobbying services to be provided, the attorneys and government relations
professionals who will work on the engagement, and the hourly rates or retainer to be paid
for such services.
Members of the Lobbying Unit desire to add as an option to the Firm's aforesaid
current compensation structure a "success fee" for the provision of procurement lobbying
services. You have described a success fee as compensation for procurement lobbying
services that would be contingent upon the achievement of a specific result. A client for
whom the success fee option would be utilized would continue to either be an hourly client
or retainer client but would also pay an additional success fee if specific procurement
opportunities would be realized. You state that these procurement opportunities would be
delineated in the engagement letter. The engagement letter might encompass only the
attainment of the specific procurement opportunity to which the success fee would be
applicable, or it might encompass various procurement issues and opportunities while
specifying one or more specific procurement opportunities that would be subject to a
success fee if achieved.
You state that although the Lobbying Disclosure Law generally prohibits the use of
contingent compensation for lobbying services, the prohibition does not apply to contingent
compensation for procurement lobbying. Noting that the Lobbying Disclosure Law and
proposed regulations do not define the term "contingent compensation, you state your view
that a success fee is "contingent compensation" because it is "contingent" upon obtaining
the desired result. You contend that as contingent compensation, a success fee may be
used for procurement lobbying services.
You request a confidential advisory from this Commission as to whether, pursuant to
the Lobbying Disclosure Law, you would be permitted to use a success fee as described
above for lobbying engagements related to procurement.
By letter dated March 10, 2008, you were notified of the date, time and location of
the executive meeting at which your request would be considered.
III. DISCUSSION:
It is initially noted that pursuant to Section 1308- A(a) /13A08(a) of the Lobbying
Disclosure Law, in conjunction with Sections 1107(10) and 1107(11) of the Public Official
and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. §§ 1107(10), (11), advisories are
issued to the requester based upon the facts that the requester has submitted. In issuing
the advisory based upon the facts that the requester has submitted, this Commission does
not engage in an independent investigation of the facts, nor does it speculate as to facts
that have not been submitted. It is the burden of the requester to truthfully disclose all of
the material facts relevant to the inquiry. 65 Pa.C.S. §§ 1107(10), (11). An advisory only
affords a defense to the extent the requester has truthfully disclosed all of the material
facts.
As a registered lobbyist in Pennsylvania, you are subject to the prohibitions,
restrictions and requirements imposed upon lobbyists by the Lobbying Disclosure Law.
The following terms are relevant to your inquiry and are defined in the Lobbying
Confidential Opinion, 08 -1001
May 15, 2008
Page 3
Disclosure Law as follows:
§ 1303 -A. Definitions.
"Lobbying." An effort to influence legislative action or administrative
action in this Commonwealth. The term includes:
(1) direct or indirect communication;
(2) office expenses; and
(3)
providing any gift, hospitality, transportation or lodging to a
State official or employee for the purpose of advancing the
interest of the lobbyist or principal.
"Administrative action." Any of the following:
(1) An agency's:
(iv) procurement of supplies, services and construction under 62
Pa.C.S. (relating to procurement).
65 Pa.C.S. § 1303- A/13A03.
The following provisions of the Lobbying Disclosure Law are also relevant to your
inquiry:
§ 1307 -A. Prohibited activities.
(e) Contingent compensation.- -
(1) A person may not compensate or incur an obligation to
compensate a person to engage in lobbying for compensation
contingent in whole or in part upon any of the following:
(i)
Occurrence, nonoccurrence or amendment of
legislative action.
(ii) Occurrence, nonoccurrence or amendment of an
administrative action other than procurement described
in paragraph (1)(iv) of the definition of "administrative
action" under section 1303 -A (relating to definitions).
(2) A person may not engage in or agree to engage in lobbying for
compensation contingent in whole or in part upon any ...
(i)
Occurrence, nonoccurrence or amendment of
legislative action.
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May 15, 2008
Page 4
IV. CONCLUSION:
(ii) Occurrence, nonoccurrence or amendment of an
administrative action other than procurement described
in paragraph (1)(iv) of the definition of "administrative
action" under section 1303 -A.
(3) This subsection shall not apply to vendors.
65 Pa.C.S. § 1307- A(e) /13A07(e) (Emphasis added).
In applying the above provisions of the Lobbying Disclosure Law to your inquiry, we
note that the Lobbying Disclosure Law defines "lobbying" as an effort to influence
"legislative action" or "administrative action" in this Commonwealth. The term
"administrative action" is defined to include, inter alia, an agency's procurement of
supplies, services and construction under the Commonwealth Procurement Code, 62
Pa.C.S. § 101 et seq.
You have asked whether, pursuant to the Lobbying Disclosure Law, you would be
permitted to use a "success fee" for lobbying engagements related to procurement. You
have described a success fee as compensation for procurement lobbying services that
would be contingent upon the achievement of a specific result.
We shall first address the meaning of the term "contingent compensation." In the
absence of a statutory or regulatory definition of the term, and based upon the common
and approved usage of the term "contingent" (see, 1 Pa.C.S. § 1903; MERRIAM - WEBSTER
ONLINE DICTIONARY (2008)), we determine that "contingent compensation" in the context of
the Lobbying Disclosure Law is compensation that is dependent on the fulfillment of certain
conditions.
Although Section 1307- A(e) /13A07(e) of the Lobbying Disclosure Law generally
prohibits compensation arrangements whereby a lobbyist would receive compensation for
lobbying contingent in whole or in part upon the occurrence, nonoccurrence or amendment
of "legislative action" or "administrative action" as defined by the Lobbying Disclosure Law,
it is clear that the prohibition does not apply where the administrative action consists of
procurement by an agency of supplies, services or construction pursuant to the
Commonwealth Procurement Code. 65 Pa. C. S. §1307- A(e)(1)(ii) and (2)(ii) /13A07(e)(1)(ii)
and (2)(ii).
It is also clear that the statutory exception pertaining to contingent compensation for
procurement lobbying does not apply to any other type of lobbying. Id. (See also, 1
Pa.C.S. § 1924: "Exceptions expressed in a statute shall be construed to exclude all
others. ")
You are advised that you would be permitted to use a "success fee" for lobbying
engagements related to procurement where the success fee would consist of
compensation for lobbying services directly related to procurement and would be
contingent upon the realization of specific procurement opportunities.
As a registered lobbyist, you would be required to retain all engagement letters and
other documents reasonably necessary to substantiate filings under the Lobbying
Disclosure Law for four years from the respective dates of such filings. 65 Pa.C.S. § 1305 -
A(c) /13A05(c).
The request for an advisory has only been addressed under the Lobbying
Disclosure Law and, derivatively, the Ethics Act to the extent applicable.
Confidential Opinion, 08 -1001
May 15, 2008
Page 5
As a registered lobbyist in Pennsylvania, you are subject to the prohibitions,
restrictions and requirements imposed upon lobbyists by Pennsylvania's lobbying
disclosure law ( "Lobbying Disclosure Law "), 65 Pa.C.S. § 1301- A/13A01 et seq. In the
context of the Lobbying Disclosure Law, "contingent compensation" is compensation that is
dependent on the fulfillment of certain conditions. Although Section 1307- A(e) /13A07(e) of
the Lobbying Disclosure Law, 65 Pa.C.S. § 1307- A(e) /13A07(e), generally prohibits
compensation arrangements whereby a lobbyist would receive compensation for lobbying
contingent in whole or in part upon the occurrence, nonoccurrence or amendment of
"legislative action" or "administrative action" as defined by the Lobbying Disclosure Law,
that prohibition specifically does not apply where the administrative action consists of
procurement by an agency of supplies, services or construction pursuant to the
Commonwealth Procurement Code. The statutory exception pertaining to contingent
compensation for procurement lobbying does not apply to any other type of lobbying.
You would be permitted to use a "success fee" for lobbying engagements related to
procurement where the success fee would consist of compensation for lobbying services
directly related to procurement and would be contingent upon the realization of specific
procurement opportunities. As a registered lobbyist, you would be required to retain all
engagement letters and other documents reasonably necessary to substantiate filings
under the Lobbying Disclosure Law for four years from the respective dates of such filings.
Pursuant to Section 1308- A(a) /13A08(a) of the Lobbying Disclosure Law, a
requester who truthfully discloses all material facts in a request for an advisory and who
acts in good faith based upon a written Opinion of this Commission issued to the requester
shall not be held liable for a violation of the Lobbying Disclosure Law. The protection
afforded for reliance upon this Opinion will remain in effect until such time as any
regulation, statutory enactment, or ruling precludes further reliance upon this
Opinion.
This letter is a public record and will be made available as such.
Finally, a party may request this Commission to reconsider its Opinion. The
reconsideration request must be received at this Commission within thirty days of the
mailing date of this Opinion. The party requesting reconsideration must include a detailed
explanation of the reasons as to why reconsideration should be granted in conformity with
51 Pa. Code § 21.29(b).
By the Commission,
Louis W. Fryman
Chair