U.S. flag
          An official website of the United States Government  Main navigation
  

        

              Data Initiatives
                              Regulations
                                                                        Row 1
                                              FAR FAR
                              Smart Matrix Smart Matrix
                              Chapter 99 (CAS) Chapter 99 (CAS)
                              Row 2
                                              DFARS DFARS
                              DFARSPGI DFARSPGI
                              AFARS AFARS
                              DAFFARS DAFFARS
                              DAFFARS MP DAFFARS MP
                              DARS DARS
                              DLAD DLAD
                              NMCARS NMCARS
                              Row 3
                                              SOFARS SOFARS
                              TRANSFARS TRANSFARS
                              AGAR AGAR
                              AIDAR AIDAR
                              CAR CAR
                              DEAR DEAR
                              DIAR DIAR
                              DOLAR DOLAR
                              Row 4
                                              DOSAR DOSAR
                              DTAR DTAR
                              EDAR EDAR
                              EPAAR EPAAR
                              FEHBAR FEHBAR
                              GSAM/R GSAM/R
                              HHSAR HHSAR
                              HSAR HSAR
                              Row 5
                                              HUDAR HUDAR
                              IAAR IAAR
                              JAR JAR
                              LIFAR LIFAR
                              NFS NFS
                              NRCAR NRCAR
                              TAR TAR
                              VAAR VAAR
                              Tools
                                                                        Archives
                              Smart Matrix
                              Regulations Search
                              Acquisition Regulation Comparator (ARC)
                              Policy Network
                                                                        CAOC
                              CAAC
                              FAR Council
                              ISDC
 Breadcrumb
        Home
                            Regulations
                            FAR
                            Subpart 3.4 - Contingent Fees
        
                  FAR
FAR
FAC Number: 2024-03 Effective Date: 02/23/2024
PartPart 1Part 2Part 3Part 4Part 5Part 6Part 7Part 8Part 9Part 10Part 11Part 12Part 13Part 14Part 15Part 16Part 17Part 18Part 19Part 20Part 21Part 22Part 23Part 24Part 25Part 26Part 27Part 28Part 29Part 30Part 31Part 32Part 33Part 34Part 35Part 36Part 37Part 38Part 39Part 40Part 41Part 42Part 43Part 44Part 45Part 46Part 47Part 48Part 49Part 50Part 51Part 52Part 53
Subpart3.03.13.23.33.43.53.63.73.83.93.103.11
Section3.4003.4013.4023.4033.4043.4053.406
Leave this field blank
        
                  

                                
                  
        « PreviousNext »
Subpart 3.4 - Contingent FeesSubpart 3.4 - Contingent Fees    **Parent topic:**  Part 3 - Improper Business Practices and Personal Conflicts of Interest3.400 Scope of subpart.       This subpart prescribes policies and procedures that restrict contingent fee arrangements for soliciting or obtaining Government contracts to those permitted by                   10 U.S.C. 3321(b)(1)                              and   41 U.S.C.3901.3.401 Definitions.       As used in this subpart-          *Bona fide agency* means an established commercial or selling agency, maintained by a contractor for the purpose of securing business, that neither exerts nor proposes to exert improper influence to solicit or obtain Government contracts nor holds itself out as being able to obtain any Government contract or contracts through improper influence.          *Bona fide employee* means a person, employed by a contractor and subject to the contractor’s supervision and control as to time, place, and manner of performance, who neither exerts nor proposes to exert improper influence to solicit or obtain Government contracts nor holds out as being able to obtain any Government contract or contracts through improper influence.          *Contingent fee* means any commission, percentage, brokerage, or other fee that is contingent upon the success that a person or concern has in securing a Government contract.          *Improper influence* means any influence that induces or tends to induce a Government employee or officer to give consideration or to act regarding a Government contract on any basis other than the merits of the matter.3.402 Statutory requirements.       Contractors’ arrangements to pay contingent fees for soliciting or obtaining Government contracts have long been considered contrary to public policy because such arrangements may lead to attempted or actual exercise of improper influence. In                   10 U.S.C. 3321(b)                              and   41 U.S.C.3901, Congress affirmed this public policy but permitted certain exceptions. These statutes-                                       (a)                    						            Require in every negotiated contract a warranty by the contractor against contingent fees;                                          (b)                    						            Permit, as an exception to the warranty, contingent fee arrangements between contractors and bona fide employees or bona fide agencies; and                                          (c)                    						            Provide that, for breach or violation of the warranty by the contractor, the Government may annul the contract without liability or deduct from the contract price or consideration, or otherwise recover, the full amount of the contingent fee.3.403 Applicability.       This subpart applies to all contracts. Statutory requirements for negotiated contracts are, as a matter of policy, extended to sealed bid contracts.3.404 Contract clause.       The contracting officer shall insert the clause at  52.203-5, Covenant Against Contingent Fees, in all solicitations and contracts exceeding the simplified acquisition threshold, other than those for commercial products or commercial services (see  parts  2 and  12).3.405 Misrepresentations or violations of the Covenant Against Contingent Fees.       (a)                    						            Government personnel who suspect or have evidence of attempted or actual exercise of improper influence, misrepresentation of a contingent fee arrangement, or other violation of the Covenant Against Contingent Fees shall report the matter promptly to the contracting officer or appropriate higher authority in accordance with agency procedures.                                          (b)                    						            When there is specific evidence or other reasonable basis to suspect one or more of the violations in paragraph (a) of this section, the chief of the contracting office shall review the facts and, if appropriate, take or direct one or more of the following, or other, actions:                                                         (1)                          								                If before award, reject the bid or proposal.                                                            (2)                          								                If after award, enforce the Government’s right to annul the contract or to recover the fee.                                                            (3)                          								                Initiate suspension or debarment action under  subpart  9.4.                                                            (4)                          								                Refer suspected fraudulent or criminal matters to the Department of Justice, as prescribed in agency regulations.3.406 Records.       For enforcement purposes, agencies shall preserve any specific evidence of one or more of the violations in  3.405(a), together with all other pertinent data, including a record of actions taken. Contracting offices shall not retire or destroy these records until it is certain that they are no longer needed for enforcement purposes. If the original record is maintained in a central file, a copy must be retained in the contract file.
« PreviousNext »
FavoriteX

      Far Parts
            Regulations FAR Menu
  

        
      Index
                              List of Sections Affected
                              DOD Deviations
                              CAAC Deviations
                              1
                              2
                              3
                              4
                              5
                              6
                              7
                              8
                              9
                              10
                              11
                              12
                              13
                              14
                              15
                              16
                              17
                              18
                              19
                              20
                              21
                              22
                              23
                              24
                              25
                              26
                              27
                              28
                              29
                              30
                              31
                              32
                              33
                              34
                              35
                              36
                              37
                              38
                              39
                              40
                              41
                              42
                              43
                              44
                              45
                              46
                              47
                              48
                              49
                              50
                              51
                              52
                              53
                              Chapter 99 (CAS)Definitions
    Toggle
FAC Changes
    Toggle
Style Formatter
    Toggle

      ×
        Data Initiatives
                                                              Regulations
                                                              Tools
                                              Archives
                                                              Smart Matrix
                                                              Regulations Search
                                                              Acquisition Regulation Comparator (ARC)
                                                              Policy Network
                                              CAO.gov
                                                        CAO Home
                                                              Council Member
                                                                    Large Agencies
                                                              Small Agencies
                                                              Council Defining Documents
                                                                    CAOC History
                                                              CAOC Charter
                                                              Civilian Agency Acquisition Council (CAAC)
                                                              Federal Acquisition Regulatory Council
                                                              Interagency Suspension and Debarment Committee (ISDC)
                                                              Search
 ˄ Top Sign up for FAR News

                            Share the FAR
                        Upper Footer Menu
  

        
      Useful Links
                              FAR Resources
                              Training
                              Acquisition Systems
            
                            **Contact Us/FAQs**
                        **Privacy and Security Notice**
                        **Accessibility Aids**
                        **Last Updated 03/29/2024**
 ACQUISITION.GOV
                An official website of the General Services Administration About GSA
                Accessibility support
                FOIA requests
                No FEAR Act data
                Office of the Inspector General
                Performance reports
                Privacy policy Looking for U.S. government information and services?
            Visit USA.gov
 «
    
    Tt