No Federal Payments to Companies Controlled by Special Government Employees Act of 2025
This bill, the No Federal Payments to Companies Controlled by Special Government Employees Act of 2025, would bar executive federal agencies from awarding contracts, grants, cooperative agreements, or any payments related to those arrangements to any company that has a “covered beneficial owner” who is a Special Government Employee (SGE). The restriction applies to awards made on or after January 1, 2025, unless the individual who is the SGE ceases to be an SGE and remains not an SGE for the 365 days following the date of enactment. In other words, if an SGE owns 5% or more of a company (as defined), that company would generally be ineligible for federal funding unless and until the owner leaves SGE status and stays off SGE status for a full year after the bill becomes law. The bill relies on existing definitions of “company,” “beneficial owner,” and related terms drawn from securities law and federal procurement rules. In short, the bill creates a one-year post-enactment waiting period for ownership by SGEs before their companies can receive federal contracts, grants, or related payments.
Key Points
- 1Prohibition: Executive agencies may not award contracts, grants, cooperative agreements, or any related payments to a company that has a covered beneficial owner who is an SGE as of 1/1/2025, unless that owner leaves SGE status and stays non-SGE for 365 days after enactment.
- 2Covered beneficial owner: An individual who is a beneficial owner of a company (per the SEC 13D rule) and who owns 5% or more of the company’s equity securities.
- 3Definitions tied to existing law: The bill uses established terms such as “company,” “equity security,” and “special government employee” from securities and federal procurement law (e.g., 17 CFR 240.13d-3, Securities Act, and 18 U.S.C. 202(a)).
- 4Scope of entities: Applies to corporations, LLCs, limited partnerships, business trusts, and similar entities that could be awarded federal funds.
- 5Timing and enforceability: The prohibition takes effect for awards made on or after January 1, 2025, with the divestiture and cooling-off requirement applying from the enactment date forward for affected owners.