Bill Summary
The "No Federal Payments to Companies Controlled by Special Government Employees Act of 2025" is legislation aimed at preventing conflicts of interest in government contracting. It prohibits executive agencies from awarding contracts, grants, or cooperative agreements to companies that are beneficially owned by special government employees (SGEs). An SGE is defined as an individual who is temporarily employed by the government and has a specific role, often with particular responsibilities or authority.
Under this Act, if an individual is identified as a beneficial owner of a company and has been an SGE, that company cannot receive federal funding unless the individual resigns from their position and remains out of that role for at least 365 days following the enactment of the law. The legislation defines key terms such as "company," "covered beneficial owner," and "equity security" to clarify its scope and application. Overall, the Act seeks to enhance transparency and integrity in federal financial dealings by limiting the influence of government employees over companies they may financially benefit from.
Possible Impacts
The proposed legislation, the "No Federal Payments to Companies Controlled by Special Government Employees Act of 2025," could affect people in several significant ways:
1. **Impact on Employment and Business Ownership**: Individuals who are currently special government employees may have to divest or sell their stakes in companies to continue working in their government roles. This could result in financial losses for these employees, particularly if they own significant portions of a business. Additionally, it could deter talented individuals from pursuing positions in government service due to potential conflicts with their business interests.
2. **Changes in Contract Award Processes**: Companies that are owned or partially owned by special government employees will be excluded from receiving federal contracts and grants. This could lead to a loss of revenue for these companies, which may affect their ability to hire employees, pay salaries, or invest in growth. Conversely, it may open up opportunities for other companies that are not owned by special government employees to secure federal contracts.
3. **Increased Scrutiny and Compliance Burdens**: The legislation may lead to increased scrutiny of company ownership structures, prompting companies to reevaluate their governance and ownership disclosures. This could create additional compliance burdens for businesses, particularly smaller firms that may lack the resources to navigate new regulatory requirements. The need for transparency in ownership could also lead to potential legal challenges or disputes regarding the classification of ownership.
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 1365 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
1st Session
S. 1365
To prohibit the awarding of contracts and grants to companies
beneficially owned by special Government employees, and for other
purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
April 9, 2025
Mrs. Shaheen introduced the following bill; which was read twice and
referred to the Committee on Homeland Security and Governmental Affairs
_______________________________________________________________________
A BILL
To prohibit the awarding of contracts and grants to companies
beneficially owned by special Government employees, and for other
purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``No Federal Payments to Companies
Controlled by Special Government Employees Act of 2025''.
SEC. 2. PROHIBITION ON AWARDING OF CONTRACTS AND GRANTS TO COMPANIES
BENEFICIALLY OWNED BY SPECIAL GOVERNMENT EMPLOYEES.
(a) In General.--An executive agency may not award a contract,
grant, or cooperative agreement, or make any payment related to a
contract, grant, or cooperative agreement, to a company of which any
covered beneficial owner was a special Government employee on or after
January 1, 2025, unless the individual who is such a beneficial owner
of such company immediately ceases to be a special Government employee
and is not a special Government employee at any time during the 365
days following the date of the enactment of this Act.
(b) Definitions.--In this section:
(1) Company.--The term ``company'' means any--
(A) corporation, company, limited liability
company, limited partnership, business trust, or
business association; or
(B) entity that is similar to an entity described
in subparagraph (A).
(2) Covered beneficial owner.--The term ``covered
beneficial owner'' means an individual who, with respect to a
company--
(A) is a beneficial owner of the company, as
determined pursuant to section 240.13d-3 of title 17,
Code of Federal Regulations, as in effect on December
20, 2019; and
(B) owns, directly or indirectly, 5 percent or more
of the equity securities of the company.
(3) Equity security.--The term ``equity security'' has the
meaning given the term in section 3(a) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)).
(4) Executive agency.--The term ``executive agency'' has
the meaning given the term in section 133 of title 41, United
States Code.
(5) Special government employee.--The term ``special
Government employee'' has the meaning given the term in section
202(a) of title 18, United States Code.
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