HB 5976 Summary — State management: purchasing; awarding contracts to entities that donate or contribute to certain political candidates or committees; prohibit (Sec. 264b)
Overview
- Purpose: To bar state contracts from being awarded to contractors whose principals made political donations or contributions to specified candidates or committees within a defined window, unless certain conditions are met. The bill adds new Sec. 264b to the Michigan "Management and Budget Act" (1984 PA 431, MCL 18.1101 - 18.1594).
- Key aim: Increase procurement integrity and reduce potential improper influence by donors in state contracting.
Legislative Status and Timeline
- Introduced: September 26, 2024 (Rep. Donavan McKinney and cosponsors)
- Initial action: Read a first time and referred to the Committee on Elections (Sept. 26, 2024)
- Subsequent actions: Bill electronically reproduced on Sept. 26, 2024; later actions include a referral on January 22, 2025 to the Joint Committee on Finance, Revenue and Bonding
- Effective date and applicability: The provision applies to contracts that take effect, are extended, renewed, or modified after the amendatory act’s effective date.
What the bill would do (Sec. 264b)
1) Prohibited contracts (18-month window)
- For contracts signed (or proposed to be signed) 18 months after the act’s effective date, the department or any state agency cannot enter into a contract with a principal who, within 18 months before signing, donated or contributed to:
- A candidate committee for statewide, state legislative, or local government office
- A state or local party committee
- A 527 committee
- A candidate-affiliated 501(c)(4) committee
- A contractor-affiliated 501(c)(4) committee
2) Required contractor attestation (contract clauses)
- Any contract awarded must include a provision requiring the contractor to attest that its principals did not donate or contribute (as described in (1)) during:
- 18 months before signing
- During the contract term
- 18 months after the contract ends or terminates
3) Consequences of violation
- If violated, the contract is unenforceable and void.
- The violator is barred from future state contracts for 3 years from the date of the violation.
4) Exceptions for timely donations
- Donations returned by:
- The date of the proposal for the contract, or
- Within 30 days after receipt by the recipient committee treasurer
- In such cases, the donation is not considered a violation for purposes of (3)
5) Exclusions (who/what is not covered)
- Loans or loan guarantees
- Subsidies or grants allocated through the state budget process
- Collective bargaining agreements
- Agreements between public universities
- Agreements between political subdivisions of the state
- Contractors and prospective contractors with aggregate state contracts under $250,000
6) Applicability timing
- Applies only to agreements that take effect, are extended, renewed, or modified after the act’s effective date.
7) Definitions of key terms
- Candidate affiliated 501(c)(4) committee: A 501(c)(4) civic league/organization established by or connected to a candidate or elected/state official, or their staff, or a state/ local party committee.
- Contractor affiliated 501(c)(4) committee: A 501(c)(4) group that receives at least half its funding from the contractor or is established/controlled by the contractor or related persons.
- 527 committee: A political organization under IRC 527.
- Principal: The contractor’s executive or officer, board member, person with 5% ownership, individuals with governance or government-contract responsibilities, certain employees, related family members, subsidiaries, or political committees controlled by the contractor.
Definitions also include a broad list of who counts as a “family member” for purposes of affiliation.
Impact and Considerations
- Procurement integrity: The bill creates a sanctions-based framework to deter political donations by entities seeking state contracts.
- Vendor risk: Could affect contractors with political ties or complex ownership structures; the 250k threshold provides some relief for smaller contractors.
- Compliance burden: Requires contract language attestation and ongoing monitoring of donations; potential disputes over what constitutes donations, timing, and control.
- Scope limitations: Excludes certain categories (loans, subsidies, bargaining agreements, university or intergovernmental agreements) and applies only to newer or modified agreements post-enactment.
Note
- This summary reflects the bill text provided for HB 5976 and current legislative actions as listed. For precise language, timelines, and status, consult the official bill text and legislative trackers.
