FAR 52.203-12—Limitation on Payments to Influence Certain Federal Transactions.
Plain-English Summary
FAR 52.203-12 implements the statutory ban in 31 U.S.C. 1352 on using appropriated funds to pay for lobbying or other attempts to influence certain Federal actions. This clause covers the definitions needed to apply the rule, including agency, covered Federal action, influencing or attempting to influence, officer or employee of an agency, person, recipient, reasonable compensation, reasonable payment, regularly employed, State, local government, Indian tribe, and tribal organization. It also states the core prohibition on using appropriated funds to pay anyone to influence Federal contract, grant, loan, or cooperative agreement decisions, including awards and later extensions, continuations, renewals, amendments, or modifications. The clause then lays out exceptions, beginning with agency and legislative liaison activities by contractor employees, and it is designed to distinguish prohibited lobbying from legitimate contract administration, communications, and allowable professional services. In practice, the clause matters because contractors must track the source of funds used for lobbying-related activities, certify compliance through disclosure requirements elsewhere in the FAR, and avoid charging unallowable political or influence costs to Federal awards. Contracting officers use it to protect the integrity of procurement and assistance decisions and to ensure contractors understand that improper lobbying costs are not reimbursable.
Key Rules
Statutory anti-lobbying ban
The clause implements 31 U.S.C. 1352, which bars recipients of Federal contracts, grants, loans, and cooperative agreements from using appropriated funds to pay for influencing or attempting to influence covered Federal actions. The rule applies to both direct lobbying and attempts to influence decisionmakers in connection with awards and related modifications.
Covered Federal actions
The prohibition applies to actions involving awards and post-award changes to Federal contracts, grants, loans, and cooperative agreements, including extensions, continuations, renewals, amendments, and modifications. This means the rule is not limited to initial award competition; it also reaches later efforts to affect the Government’s decision on an existing instrument.
Broad definition of influence
Influencing or attempting to influence includes communications or appearances made with intent to influence an agency official, Member of Congress, congressional staff, or related personnel. The definition is broad enough to capture both direct contact and indirect advocacy when tied to a covered Federal action.
Appropriated funds limitation
The clause prohibits use of appropriated funds for these activities, but it does not bar all lobbying-related spending from non-Federal sources. If the contractor can show it had sufficient non-appropriated funds, the Government may presume those funds were used for the influencing activity.
Profit and fee are not appropriated funds
Profit or fee earned from a covered Federal action is excluded from the definition of appropriated funds for purposes of this clause. That exclusion matters because contractors sometimes mistakenly assume all contract-derived money is treated the same; the clause focuses on the source of the money used to pay the lobbying cost.
Agency and legislative liaison exception
The prohibition does not apply to certain agency and legislative liaison activities performed by contractor employees when paid as reasonable compensation. This exception is narrow and does not protect direct lobbying that goes beyond legitimate liaison work.
Reasonable compensation and payment standards
The clause uses market-based standards for allowable compensation and payments, requiring amounts consistent with normal private-sector compensation or payment for similar professional and technical services. Excessive or inflated payments can fall outside the exception and become unallowable.
Special treatment for tribes and tribal organizations
Indian tribes, tribal organizations, and certain Indian organizations are excluded from the definition of recipient for specified expenditures that are permitted by other Federal law. This preserves tribal rights and recognizes that some expenditures by these entities are governed by separate legal authorities.
Responsibilities
Contractor
Must not use appropriated funds to pay any person to influence or attempt to influence covered Federal actions. The contractor must segregate funding sources, ensure lobbying-related costs are not charged to appropriated funds, and comply with the clause’s exceptions only when the activity truly fits within them.
Subcontractors
Are included within the definition of recipient and must follow the same funding and lobbying restrictions. Prime contractors should flow down controls and monitor subcontractor conduct where subcontractor lobbying costs could affect allowability or disclosure obligations.
Contracting Officer
Must include the clause when prescribed and use it to enforce compliance with statutory restrictions on lobbying-related payments. The contracting officer should review disclosures and cost issues when there is a risk that influence activities may have been funded with appropriated money.
Agency
Must administer the statutory prohibition consistently and distinguish prohibited influence activities from permissible communications and liaison functions. Agencies also rely on the clause to protect procurement integrity and to support enforcement when improper lobbying costs are identified.
Employees of the Contractor
May perform agency and legislative liaison activities only within the narrow exception and only if compensation is reasonable and otherwise allowable. They must avoid using appropriated funds, directly or indirectly, for prohibited influence efforts.
Tribes and Tribal Organizations
May be excluded from the recipient definition for certain expenditures permitted by other Federal law, but only for those specific purposes. They must still comply with any applicable funding restrictions and cannot assume a blanket exemption from all lobbying-related limits.
Practical Implications
Contractors need a real accounting control for lobbying-related costs, not just a policy statement. If funds are mixed or poorly tracked, the Government may presume non-appropriated money was used, but that presumption can still create audit and disclosure risk.
The biggest mistake is treating all communications with Congress or agency officials as prohibited. The clause allows narrow liaison activity, so contractors should separate legitimate status updates, contract administration, and technical communications from advocacy intended to influence a covered decision.
This clause often works together with disclosure requirements and cost principles, so compliance is not just about avoiding direct payment. Contractors should also watch for consultant fees, trade association dues, and subcontractor charges that may indirectly fund lobbying.
Post-award changes matter. Contractors sometimes focus only on winning the contract, but efforts to extend, renew, amend, or modify an existing award are also covered and can trigger the same restrictions.
Reasonableness matters. Even when an exception applies, excessive compensation or inflated professional service payments can make the cost unallowable and create repayment, audit, or False Claims Act exposure if the contractor mischarges the Government.
Official Regulatory Text
As prescribed in 3.808 (b) , insert the following clause: Limitation on Payments to Influence Certain Federal Transactions (Jun 2020) (a) Definitions . As used in this clause- Agency means " executive agency " as defined in Federal Acquisition Regulation (FAR) 2.101 . Covered Federal action means any of the following actions: (1) Awarding any Federal contract. (2) Making any Federal grant. (3) Making any Federal loan. (4) Entering into any cooperative agreement. (5) Extending, continuing, renewing, amending, or modifying any Federal contract, grant, loan, or cooperative agreement. Indian tribe and "tribal organization" have the meaning provided in section 4 of the Indian Self-Determination and Education Assistance Act ( 25 U.S.C. 450b ) and include Alaskan Natives. Influencing or attempting to influence means making, with the intent to influence, any communication to or appearance before an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with any covered Federal action. Local government means a unit of government in a State and, if chartered, established, or otherwise recognized by a State for the performance of a governmental duty, including a local public authority, a special district, an intrastate district, a council of governments, a sponsor group representative organization, and any other instrumentality of a local government. Officer or employee of an agency includes the following individuals who are employed by an agency: (1) An individual who is appointed to a position in the Government under Title 5, United States Code, including a position under a temporary appointment. (2) A member of the uniformed services, as defined in subsection 101(3), Title 37, United States Code. (3) A special Government employee, as defined in section 202, Title 18, United States Code. (4) An individual who is a member of a Federal advisory committee, as defined by the Federal Advisory Committee Act, Title 5, United States Code, appendix 2. Person means an individual, corporation, company, association, authority, firm, partnership, society, State, and local government, regardless of whether such entity is operated for profit, or not for profit. This term excludes an Indian tribe, tribal organization, or any other Indian organization eligible to receive Federal contracts, grants, cooperative agreements, or loans from an agency, but only with respect to expenditures by such tribe or organization that are made for purposes specified in paragraph (b) of this clause and are permitted by other Federal law. Reasonable compensation means, with respect to a regularly employed officer or employee of any person, compensation that is consistent with the normal compensation for such officer or employee for work that is not furnished to, not funded by, or not furnished in cooperation with the Federal Government. Reasonable payment means, with respect to professional and other technical services, a payment in an amount that is consistent with the amount normally paid for such services in the private sector. Recipient includes the Contractor and all subcontractors. This term excludes an Indian tribe, tribal organization, or any other Indian organization eligible to receive Federal contracts, grants, cooperative agreements, or loans from an agency, but only with respect to expenditures by such tribe or organization that are made for purposes specified in paragraph (b) of this clause and are permitted by other Federal law. Regularly employed means, with respect to an officer or employee of a person requesting or receiving a Federal contract, an officer or employee who is employed by such person for at least 130 working days within 1 year immediately preceding the date of the submission that initiates agency consideration of such person for receipt of such contract. An officer or employee who is employed by such person for less than 130 working days within 1 year immediately preceding the date of the submission that initiates agency consideration of such person shall be considered to be regularly employed as soon as he or she is employed by such person for 130 working days. State means a State of the United States, the District of Columbia, or an outlying area of the United States, an agency or instrumentality of a State, and multi-State, regional, or interstate entity having governmental duties and powers. (b) Prohibition . 31 U.S.C. 1352 prohibits a recipient of a Federal contract, grant, loan, or cooperative agreement from using appropriated funds to pay any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with any covered Federal actions. In accordance with 31 U.S.C. 1352 the Contractor shall not use appropriated funds to pay any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the award of this contractor the extension, continuation, renewal, amendment, or modification of this contract. (1) The term appropriated funds does not include profit or fee from a covered Federal action. (2) To the extent the Contractor can demonstrate that the Contractor has sufficient monies, other than Federal appropriated funds, the Government will assume that these other monies were spent for any influencing activities that would be unallowable if paid for with Federal appropriated funds. (c) Exceptions . The prohibition in paragraph (b) of this clause does not apply under the following conditions: (1) Agency and legislative liaison by Contractor employees . (i) Payment of reasonable compensation made to an officer or employee of the Contractor if the payment is for agency and legislative liaison activities not directly related to this contract. For purposes of this paragraph, providing any information specifically requested by an agency or Congress is permitted at any time. (ii) Participating with an agency in discussions that are not related to a specific solicitation for any covered Federal action, but that concern- (A) The qualities and characteristics (including individual demonstrations) of the person’s products or services, conditions or terms of sale, and service capabilities; or (B) The application or adaptation of the person’s products or services for an agency’s use. (iii) Providing prior to formal solicitation of any covered Federal action any information not specifically requested but necessary for an agency to make an informed decision about initiation of a covered Federal action; (iv) Participating in technical discussions regarding the preparation of an unsolicited proposal prior to its official submission; and (v) Making capability presentations prior to formal solicitation of any covered Federal action by persons seeking awards from an agency pursuant to the provisions of the Small Business Act, as amended by Pub. L. 95-507, and subsequent amendments. (2) Professional and technical services . (i) A payment of reasonable compensation made to an officer or employee of a person requesting or receiving a covered Federal action or an extension, continuation, renewal, amendment, or modification of a covered Federal action, if payment is for professional or technical services rendered directly in the preparation, submission, or negotiation of any bid, proposal, or application for that Federal action or for meeting requirements imposed by or pursuant to law as a condition for receiving that Federal action. (ii) Any reasonable payment to a person, other than an officer or employee of a person requesting or receiving a covered Federal action or an extension, continuation, renewal, amendment, or modification of a covered Federal action if the payment is for professional or technical services rendered directly in the preparation, submission, or negotiation of any bid, proposal, or application for that Federal action or for meeting requirements imposed by or pursuant to law as a condition for receiving that Federal action. Persons other than officers or employees of a person requesting or receiving a covered Federal action include consultants and trade associations. (iii) As used in paragraph (c)(2) of this clause, "professional and technical services" are limited to advice and analysis directly applying any professional or technical discipline (for examples, see FAR 3.803 (a)(2)(iii)). (iv) Requirements imposed by or pursuant to law as a condition for receiving a covered Federal award include those required by law or regulation and any other requirements in the actual award documents. (3) Only those communications and services expressly authorized by paragraphs (c)(1) and (2) of this clause are permitted. (d) Disclosure . (1) If the Contractor did not submit OMB Standard Form LLL, Disclosure of Lobbying Activities, with its offer, but registrants under the Lobbying Disclosure Act of 1995 have subsequently made a lobbying contact on behalf of the Contractor with respect to this contract, the Contractor shall complete and submit OMB Standard Form LLL to provide the name of the lobbying registrants, including the individuals performing the services. (2) If the Contractor did submit OMB Standard Form LLL disclosure pursuant to paragraph (d) of the provision at FAR 52.203-11 , Certification and Disclosure Regarding Payments to Influence Certain Federal Transactions, and a change occurs that affects Block 10 of the OMB Standard Form LLL (name and address of lobbying registrant or individuals performing services), the Contractor shall, at the end of the calendar quarter in which the change occurs, submit to the Contracting Officer within 30 days an updated disclosure using OMB Standard Form LLL. (e) Penalties . (1) Any person who makes an expenditure prohibited under paragraph (b) of this clause or who fails to file or amend the disclosure to be filed or amended by paragraph (d) of this clause shall be subject to civil penalties as provided for by 31 U.S.C. 1352 . An imposition of a civil penalty does not prevent the Government from seeking any other remedy that may be applicable. (2) Contractors may rely without liability on the representation made by their subcontractors in the certification and disclosure form. (f) Cost allowability . Nothing in this clause makes allowable or reasonable any costs which would otherwise be unallowable or unreasonable. Conversely, costs made specifically unallowable by the requirements in this clause will not be made allowable under any other provision. (g) Subcontracts . (1) The Contractor shall obtain a declaration, including the certification and disclosure in paragraphs (c) and (d) of the provision at 52.203-11 , Certification and Disclosure Regarding Payments to Influence Certain Federal Transactions, from each person requesting or receiving a subcontract under this contract that exceeds the threshold specified in FAR 3.808 on the date of subcontract award. The Contractor or subcontractor that awards the subcontract shall retain the declaration. (2) A copy of each subcontractor disclosure form (but not certifications) shall be forwarded from tier to tier until received by the prime Contractor. The prime Contractor shall, at the end of the calendar quarter in which the disclosure form is submitted by the subcontractor, submit to the Contracting Officer within 30 days a copy of all disclosures. Each subcontractor certification shall be retained in the subcontract file of the awarding Contractor. (3) The Contractor shall include the substance of this clause, including this paragraph (g), in any subcontract that exceeds the threshold specified in FAR 3.808 on the date of subcontract award. (End of clause)