Wednesday, September 29, 2004
State Government throws another roadblock in front of small business
Government contracting has always been difficult for independent businesses. New Jersey’s new “pay-to-play” rules further tilt the government contracting playing field in favor of big business.
In September, New Jersey’s governor issued an executive order placing certain limitations on the political activities of state government contractors. (For details, see “Ask the Attorney” on this site)“Pay-to-play" rules Unfortunately, the executive order does not apply equally to small business and to big business.
While small businesses certainly benefit from smaller, more efficient and less corrupt state government, it does not benefit from a government contracting system that favors large business. Under the new rules, a firm can not enter into a transaction with the state worht more than $17, 500 if someone owning more than a 10% stake in the firm either solicits or makes contributions of $300 or more to political committees or gubernatorial campaigns.
Therefore, a firm with two prinicipals can not contract with the state government if one of the partners solicits or makes prohibited contributions. However, a large firm, one with 100 partners (such as large engineering firms, law firms or accounting firms) can still enter into contracts with the state government even if all of their partners make contributions.
In other words, the large firms can still buy influence, if they are so inclined. We are not suggesting that big business is evil. It is not. However, an unscrupulous large firm now has one more competitive advantage over a small one.
If you have questions regarding the Pay-to-Play rules, then you should contact Howes & Howes.