In 2006, new legislation was enacted in the State of New Jersey that changed the way New Jersey municipal and government county agencies acquire certain goods and services. Known as the “Pay-to-Play” law, these statutes are designed to regulate political contributions made by for-profit businesses that have or are seeking government contracts.
In essence, the law stipulates that a local government entity cannot award a contract of more than $17,500 to a vendor who has made a political contribution in the past year unless a fair and open contract bidding process has been used. Additionally, vendors that are awarded such contracts are prohibited from making political contributions during the term of the contract, beginning at the award date.
Furthermore, for-profit business entities that have received $50,000 or more through government contracts in a calendar year must file a Business Entity Annual Statement (Form BE) electronically with the New Jersey Campaign Financing and Lobbying Disclosure Election Law Enforcement Commission (ELEC) to report contract information and reportable contributions it has made. These annual disclosure reports are due each year on March 30th.
Contracts that are awarded through fair and open processes – that is, that are publically advertised in newspapers or online sufficiently in advance of the contract and that are awarded as part of a process that provides for public solicitation – are not bound by the pay-to-play restrictions.
The New Jersey Department of Community Affairs has produced a comprehensive guide to the Pay-to-Play law, available for download here
The New Jersey Division of Local Government Services
also maintains a website devoted to the pay-to-play law.