« PreviousContinue »
eral Provisions (Construction Contract); and as clause 20 of Standard Form 32, General Provisions (Supply Contract)):
COVENANT AGAINST CONTINGENT FEES
The Contractor warrants that no person or selling agency has been employed or retained to solicit or secure this contract upon an agreement or understanding for a commission, percentage, brokerage, or contingent fee, excepting bona fide employees or bona fide established commercial or selling agencies maintained by the Contractor for the purpose of securing business. For breach or violation of this warranty the Government shall have the right to annul this contract without liability or in its discretion to deduct from the contract price or consideration, or otherwise recover, the full amount of such commission, percentage, brokerage, or contingent fee.
[31 FR 5880, Apr. 16, 1966]
§ 1-1.504 General principles and standards applicable to the covenant.
§ 1-1.504-1 Use of principles and standards.
The principles and standards set forth in this subpart are intended to be used as a guide in the negotiation, awarding, administration, and enforcement of Government contracts.
§ 1-1.504-2 Contingent character of the fee.
Any fee whether called commission, percentage, brokerage, or contingent fee, or otherwise denominated, is within the purview of the covenant if, in fact, any portion thereof is dependent upon success in obtaining or securing the Government contract or contracts involved. The fact, however, that a fee of a contingent nature is involved does not preclude a relationship which qualifies under the exceptions to the prohibition of the covenant.
§ 1-1.504-3 Exceptions to the prohibition.
There are excepted from the prohibition of the covenant "bona fide employees" and "bona fide established commercial or selling agencies maintained by the contractor for the purpose of securing business."
§ 1-1.504-4 Bona fide employee.
(a) The term "bona fide employee," for the purpose of the exception to the prohibition of the covenant, means an individual (including a corporate officer) employed by a concern in good faith to devote his full time to such concern and no other concern and over whom the concern has the right to exercise supervision and control as to time, place, and manner of performance of work. It is recognized that a concern, especially a small business concern, may employ an individual who represents other concerns. The factors set forth in § 1-1.504-5(b), except (4) thereof, shall be applied to determine whether such an individual comes within the exception to the prohibition of the covenant.
(b) The hiring must contemplate some continuity and it may not be related only to the obtaining of one or more specific Government contracts.
(c) An employee is not "bona fide" who seeks to obtain any Government contract or contracts for his employer through the use of improper influence or who holds himself out as being able to obtain any Government contract or contracts through improper influence.
(d) A person may be a bona fide employee whether his compensation is on a fixed salary basis or, when customary in the trade, on a percentage, commission or other contingent basis, or a combination of the foregoing.
Bona fide established commercial or selling agency maintained by the contractor for the purpose of securing business.
(a) An agency or agent is not "bona fide" which seeks to obtain any Government contract or contracts for its principals through the use of improper influence or which holds itself out as being able to obtain any Government contract or contracts through improper influence.
(b) In determining whether an agency is a "bona fide established commercial or selling agency maintained by the contractor for the purpose of securing business," the factors set forth below shall be considered. They are necessarily incapable of exact measurement or precise definition and it is neither possible nor de
sirable to prescribe the relative weight to be given any single factor as against any other factor or as against all other factors. The conclusions to be reached in a given case will necessarily depend upon a careful evaluation of the agreement and other attendant facts and circumstances.
(1) The fees charged should not be inequitable and exhorbitant in relation to the services actually rendered. That is, the compensation should be commensurate with the nature and extent of the services and should not be excessive as compared with the fees customarily allowed in the trade concerned for similar services related to commercial (non-Government) business. In evaluating reasonableness of the fee, there should be considered services of the agent other than actual solicitation, as for example, technical, consultant or managerial services, and assistance in the procurement of essential personnel, facilities, equipment, materials, or subcontractors for performance of the contract.
(2) The selling agency should have adequate knowledge of the products and the business of the concern represented, as well as other qualifications necessary to sell the products or services on their merits.
(3) There should ordinarily be a continuity of relationship between the contractor and the agency. The fact that the agency has represented the contractor over a considerable period of time is a factor for favorable consideration. It is not intended, however, to disqualify newly established contractor-agent relationships where a continuing relationship is contemplated by the parties.
(4) It should appear that the agency is an established concern. The agency may be either one which has been in business for a considerable period of time or a new agency which is a presently going concern and which is likely to continue in business as a commercial or selling agency in the future. The business of the agency should be conducted in the agency name and characterized by the customary indicia of the conduct of a regular business.
(5) The fact that a selling agency confines its selling activities to the field of Government contracts does
not, in and of itself, disqualify it under the covenant. The fact, however, that the selling agency is employed to secure business generally, that is, to represent the concern in connection with sales to the Government as well as regular commercial sales to nonGovernment activities is a factor entitled to favorable consideration in evaluating the case as one coming within the authorized exception. Arrangements confined, however, to obtaining Government contracts, particularly those involving a selling agency organized immediately prior to or during periods of expanded procurement resulting from conditions of national emergency, must be closely scrutinized.
§ 1-1.504-6 Fees for "information."
Contingent fees paid for “information" leading to obtaining a Government contract or contracts are included in the prohibition and, accordingly, are in breach of the covenant unless the agent qualifies under the exception as a bona fide employee or a bona fide established commercial or selling agency maintained by the contractor for the purpose of securing business.
§ 1-1.505 Representation and agreement required from prospective contractors. Except as provided in § 1-1.507-3, each executive agency shall inquire of and secure a written representation from prospective contractors as to whether they have employed or retained any company or person (other than a full-time employee working solely for the prospective contractor) to solicit or secure the contract, and shall secure a written agreement to furnish information relating thereto as required by the contracting officer. Where an invitation for bids is issued, this inquiry shall be made (and written representation and agreement secured) by requiring the bidder (or contractor) to check the appropriate box in the following statement (which appears on Standard Form 21, Bid Form (Construction Contract), Standard Form 30, Invitation and Bid (Supply Contract), and Standard Form 33, Invitation, Bid and Award (Supply Contract)) to be included in the invitation or bid form:
The bidder represents: (a) That he has, has not, employed or retained any company or person (other than a full-time bona fide employee working solely for the bidder) to solicit or secure this contract, and (b) that he has, has not, paid or agreed to pay any company or person (other than a full-time bona fide employee working solely for the bidder) any fee, commission, percentage or brokerage fee, contingent upon or resulting from the award of this contract; and agrees to furnish information relating to (a) and (b) above as requested by the Contracting Officer. (Note: For interpretation of the representation, including the term "bona fide employee," see Code of Federal Regulations, Title 41, Chapter I, Subpart 1-1.5.)
§ 1-1.506 Interpretation of the representation.
(a) For the purpose of the representation and agreement required from the prospective contractor, as described in § 1-1.505, the definition of "bona fide employee" is as specified in § 1-1.504-4.
(b) The fact that the prospective contractor retains a person who does not devote his full time solely to the prospective contractor does not necessarily mean that the relationship involved is in violation of the covenant against contingent fees or that there is any stigma attached to the contractoragent relationship. It does mean, however, that the prospective contractor must fill out the representation in the affirmative and, as required, furnish information with respect to such employment of retention.
(c) If the representation would otherwise be answered in the affirmative, the fact that the person employed or retained by the bidder or contractor is an attorney, or a public relations consultant, or has any other special or professional title, does not permit answer in the negative.
§ 1-1.507 Use of Standard Form 119.
§ 1-1.507-1 Form prescribed.
Pursuant to the Act and in furtherance of the objectives stated in § 11.500, Standard Form 119 (December 1952), Contractor's Statement of Contingent or Other Fees for Soliciting or Securing or Resulting from Award of Contract, is hereby prescribed and shall be used in accordance with the
provisions of this subpart. Except as provided in § 1-1.507-3, this form shall be used without deviation by executive agencies whenever either part of the inquiry provided for in § 1-1.505 is answered in the affirmative. The form shall be used also, without deviation, in any other case where an executive agency desires to obtain such information. When, after use of the form, further information is required, it may be obtained in any appropriate manner. Submission of the form shall be required, normally, only of successful bidders and contractors.
§ 1-1.507-2 Statement in lieu of form.
Any bidder or proposed contractor who has previously furnished a Standard Form 119 to the office issuing the invitation or negotiating the contract may be permitted to accompany his bid, or submit in connection with the proposed contract, a signed statement (a) indicating when such completed form was previously furnished, (b) identifying by number the previous invitation or contract in connection with which such form was submitted, and (c) representing that the statements in such previously furnished form are applicable to such subsequent bid or contract. In such case, submission of an additional completed Standard Form 119 need not be required.
§ 1-1.507-3 Exceptions.
The inquiry and agreement specified in § 1-1.505 need not be made and submission of Standard Form 119 need not be requested in connection with the following:
(a) Any advertised contract in which the aggregate amount involved does not exceed $25,000.
(b) Any negotiated contract in which the aggregate amount involved does not exceed $10,000.
(c) Any negotiated contract for perishable subsistence supplies in which the aggregate amount involved does not exceed $25,000.
(d) Any contract for services which are required to be performed by an individual contractor in person under Government supervision and paid for on a time basis.
(e) Any contract for public utility services furnished by a public utility
company where the utility company's rates for the services furnished are subject to regulation by Federal, State, or other regulatory body and the public utility company is the sole source of supply.
(f) Contracts to be made in foreign countries.
(g) Any other contracts, individually or by class, of the Department of Defense, designated by the Secretary. Reports of any such exceptions shall be filed promptly with the Administrator of General Services.
[29 FR 10104, July 24, 1964, as amended at 39 FR 28437, Aug. 7, 1974; 40 FR 44137, Sept. 25, 1975]
§ 1-1.508 Enforcement.
§ 1-1.508-1 Failure or refusal to furnish representation and agreement.
Each executive agency shall take the necessary steps to assure that the indicated successful bidder or proposed contractor has furnished a representation (negative or affirmative) and agreement as described in § 1-1.505.
(a) If the indicated successful bidder or proposed contractor makes such representation in the negative, such representation may be accepted and award made or offer accepted in accordance with established procedure.
(b) If the indicated successful bidder or proposed contractor makes such representation in the affirmative, a completed Standard Form 119 shall be requested from the bidder or proposed contractor. In the case of formal advertising, the making of an award in accordance with established procedure need not be delayed pending receipt of the form. In the case of negotiation, if the proposed contractor makes such representation in the affirmative, he shall be required to file a completed Standard Form 119 prior to acceptance of the offer or execution of the contract unless the head of the executive agency concerned, or his authorized representative, considers that the interest of the Government will be prejudiced by the suspension of negotiations pending receipt and consideration of an executed Standard Form 119.
(c) If the indicated successful bidder or proposed contractor fails to furnish
the representation and agreement as described in § 1-1.505, such failure shall be considered a minor informality and, prior to award, such bidder or proposed contractor shall be afforded a further opportunity to furnish such representation and agreement. A refusal or failure to furnish such representation and agreement, after such opportunity has been afforded, shall require rejection of the bid or offer.
§ 1-1.508-2 Failure or refusal to furnish Standard Form 119.
If the successful bidder or contractor, upon request, refuses or fails to furnish a completed Standard Form 119, or a statement in lieu thereof as provided in § 1-1.507-2, the executive agency concerned shall take one or more of the following actions, or other action, as may be appropriate:
(a) If an award has not been made or offer accepted, determine whether the bid or offer should be rejected.
(b) If the contract has been awarded or offer accepted, determine what action shall be taken, such as making an independent investigation or considering the eligibility of the contractor as a future contractor in accordance with established procedure.
§ 1-1.508-3 Misrepresentations or violations of the covenant against contingent fees.
In case of misrepresentation, or violation or breach of the covenant against contingent fees, or some other relevant impropriety, the executive agency concerned shall take one or more of the following actions, or other action, as may be appropriate:
(a) If an award has not been made, or offer has not been accepted, determine whether the bid or offer should be rejected.
(b) If an award has been made or offer has been accepted, take action to enforce the covenant in accordance with its terms; that is, as the best interests of the Government may appear, annul the contract without liability or recover the amount of the fee involved.
(c) Consider the future eligibility as a contractor of the bidder or contractor in accordance with established procedure.
(d) Determine whether the case should be referred to the Department of Justice in accordance with established procedure with respect to determining matters of fraud or criminal conduct.
§ 1-1.509 Preservation of records.
Executive agencies shall preserve, for enforcement or report purposes, at least one executed copy of any representation and completed Standard Form 119 (or statement in lieu of form) together with a record of any other pertinent data, including data as to action taken.
Subpart 1-1.6—Debarred, Suspended, and Ineligible Bidders
§ 1-1.600 Scope of subpart.
This subpart prescribes policies and procedures relating to: (a) The debarment of bidders for cause, (b) the suspension of bidders for cause under prescribed conditions, and (c) the placement of bidders in ineligibility status for violations of the provisions of the Equal Opportunity clause. It is directly applicable to the advertised and negotiated purchases and contracts of executive agencies, including contracts for construction, repair, alteration, destruction, or dismantlement of public works or buildings. Other Federal agencies are requested to comply therewith in conducting their purchasing and contracting operations.
[37 FR 23337, Nov. 2, 1972]
§ 1-1.601 General.
Debarment, suspension, and placement in ineligibility status are measures which may be invoked by the Government either to exclude or to disqualify bidders and contractors from participation in Government contracting or subcontracting. These measures should be used for the purpose of protecting the interests of the Government and not for punishment. To assure the Government the benefits to be derived from the full and free competition of interested bidders, these measures should not be instituted for any time longer than deemed necessary to protect the interests of the Government, and should preclude
awards only for the probable duration of the period of non-responsibility.
§ 1-1.601-1 Definitions.
(a) "Debarment" means, in general, an exclusion from Government contracting and subcontracting for a reasonable, specified period of time commensurate with the seriousness of the offense or failure or the inadequacy of performance. However, in connection with Executive Order 11246 of September 24, 1965, as implemented by the rules, regulations, and relevant orders of the Secretary of Labor in 41 CFR Part 60, the term "debarment" also means an exclusion by reason of ineligibility under the Secretary's rules from Government contracting or subcontracting for an indefinite period of time pending the elimination of the circumstances for which the exclusion was imposed.
(b) "Suspension" means a disqualification from Government contracting and subcontracting for a temporary period of time because a concern or individual is suspected upon adequate evidence (see § 1-1.605) of engaging in criminal, fraudulent, or seriously improper conduct.
(c) A “debarment list” or “debarred bidders list" means a list of names of concerns or individuals against whom any or all of the measures referred to in this section have been invoked.
(d) "Bidders" means, wherever the term is used in this subpart, any offerors bidding pursuant to an invitation for bids or a request for proposals.
(e) "Affiliates" means business concerns which are affiliates of each other when either directly or indirectly one concern or individual controls or has the power to control another, or when a third party controls or has the power to control both.
[37 FR 23337, Nov. 2, 1972]
§ 1-1.602 Establishment and maintenance of a list of concerns or individuals debarred, suspended, or declared ineligible.
(a) Each executive agency shall establish and maintain, on the bases contained in § 1-1.602-1, a consolidated list of concerns and individuals to whom contracts will not be awarded and from whom bids or proposals will