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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)

$ 1-1.504-4 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.

$ 1-1.504 General principles and standards

applicable to the covenant. § 1-1.504-1 Use of principles and stand

ards. 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 coyenant.

$ 1-1.504-5 Bona fide established commer

cial or selling agency maintained by the contractor for the purpose of se

curing 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

§ 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 main. tained by the contractor for the purpose of securing business.”

sirable to prescribe the relative weight not, in and of itself, disqualify it under to be given any single factor as against the covenant. The fact, however, that any other factor or as against all other the selling agency is employed to factors. The conclusions to be reached secure business generally, that is, to in a given case will necessarily depend represent the concern in connection upon a careful evaluation of the agree with sales to the Government as well ment and other attendant facts and as regular commercial sales to noncircumstances.

Government activities is a factor enti (1) The fees charged should not be tled to favorable consideration in eval. inequitable and exhorbitant in rela uating the case as one coming within tion to the services actually rendered. the authorized exception. ArrangeThat is, the compensation should be ments confined, however, to obtaining commensurate with the nature and Government contracts, particularly extent of the services and should not those involving a selling agency orgabe excessive as compared with the fees nized immediately prior to or during customarily allowed in the trade con

periods of expanded procurement recerned for similar services related to sulting from conditions of national commercial (non-Government) busi emergency, must be closely scrutiness. In evaluating reasonableness of nized. the fee, there should be considered services of the agent other than actual $ 1-1.304-6 fees for

§ 1-1.504–6 Fees for “information." solicitation, as for example, technical, Contingent fees paid for “informaconsultant or managerial services, and tion" leading to obtaining a Governassistance in the procurement of es ment contract or contracts are includsential personnel, facilities, equip ed in the prohibition and, accordingly, ment, materials, or subcontractors for are in breach of the covenant unless performance of the contract.

the agent qualifies under the excep(2) The selling agency should have tion as a bona fide employee or a bona adequate knowledge of the products fide established commercial or selling and the business of the concern repre- agency maintained by the contractor sented, as well as other qualifications for the purpose of securing business. necessary to sell the products or services on their merits.

$ 1-1.505 Representation and agreement (3) There should ordinarily be a con

required from prospective contractors. tinuity of relationship between the Except as provided in § 1-1.507-3, contractor and the agency. The fact each executive agency shall inquire of that the agency has represented the and secure a written representation contractor over a considerable period from prospective contractors as to of time is a factor for favorable consid- whether they have employed or reeration. It is not intended, however, to tained any company or person (other disqualify newly established contrac than a full-time employee working tor-agent relationships where a con- solely for the prospective contractor) tinuing relationship is contemplated to solicit or secure the contract, and by the parties.

shall secure a written agreement to (4) It should appear that the agency furnish information relating thereto is an established concern. The agency as required by the contracting officer. may be either one which has been in Where an invitation for bids is issued, business for a considerable period of this inquiry shall be made (and writtime or a new agency which is a pres ten representation and agreement seently going concern and which is cured) by requiring the bidder (or conlikely to continue in business as a com tractor) to check the appropriate box mercial or selling agency in the future. in the following statement (which apThe business of the agency should be pears on Standard Form 21, Bid Form conducted in the agency name and (Construction Contract), Standard characterized by the customary indicia Form 30, Invitation and Bid (Supply of the conduct of a regular business. Contract), and Standard Form 33, In

(5) The fact that a selling agency vitation, Bid and Award (Supply Conconfines its selling activities to the tract)) to be included in the invitation field of Government contracts does or bid form:

The bidder represents: (a) That he has, provisions of this subpart. Except as O has not, employed or retained any compa provided in § 1-1.507-3, this form shall ny or person (other than a full-time bona

be used without deviation by executive fide employee working solely for the bidder)

agencies whenever either part of the to solicit or secure this contract, and (b) that he has, has not, paid or agreed to

inquiry provided for in § 1-1.505 is anpay any company or person (other than a

swei ed in the affirmative. The form full-time bona fide employee working solely

shall be used also, without deviation, for the bidder) any fee, commission, per in any other case where an executive centage or brokerage fee, contingent upon agency desires to obtain such informaor resulting from the award of this contract;

tion. When, after use of the form, furand agrees to furnish information relating

ther information is required, it may be to (a) and (b) above as requested by the

obtained in any appropriate manner. Contracting Officer. (Note: For interpretation of the representation, including the

Submission of the form shall be reterm "bona fide employee," see Code of Fed

quired, normally, only of successful eral Regulations, Title 41, Chapter I, Sub bidders and contractors. part 1-1.5.)

§ 1-1.507-2 Statement in lieu of form. § 1-1.506 Interpretation of the representa Any bidder or proposed contractor tion.

who has previously furnished a Stand(a) For the purpose of the represen- ard Form 119 to the office issuing the tation and agreement required from invitation or negotiating the contract the prospective contractor, as de may be permitted to accompany his scribed in § 1-1.505, the definition of bid, or submit in connection with the "bona fide employee" is as specified in proposed contract, a signed statement § 1-1.504-4.

(a) indicating when such completed (b) The fact that the prospective form was previously furnished, (b) contractor retains a person who does identifying by number the previous innot devote his full time solely to the vitation or contract in connection with prospective contractor does not neces- which such form was submitted, and sarily mean that the relationship in (c) representing that the statements in volved is in violation of the covenant such previously furnished form are apagainst contingent fees or that there is plicable to such subsequent bid or conany stigma attached to the contractor- tract. In such case, submission of an agent relationship. It does mean, how additional completed Standard Form ever, that the prospective contractor 119 need not be required. must fill out the representation in the affirmative and, as required, furnish

§ 1-1.507-3 Exceptions. information with respect to such em The inquiry and agreement specified ployment of retention.

in § 1-1.505 need not be made and sub(c) If the representation would oth mission of Standard Form 119 need erwise be answered in the affirmative, not be requested in connection with the fact that the person employed or the following: retained by the bidder or contractor is (a) Any advertised contract in which an attorney, or a public relations con- the aggregate amount involved does sultant, or has any other special or not exceed $25,000. professional title, does not permit (b) Any negotiated contract in which answer in the negative.

the aggregate amount involved does

not exceed $10,000. § 1-1.507 Use of Standard Form 119.

(c) Any negotiated contract for per

ishable subsistence supplies in which § 1-1.507-1 Form prescribed.

the aggregate amount involved does Pursuant to the Act and in further- not exceed $25,000. ance of the objectives stated in 81- (d) Any contract for services which 1.500, Standard Form 119 (December are required to be performed by an in1952), Contractor's Statement of Con dividual contractor in person under tingent or Other Fees for Soliciting or Government supervision and paid for Securing or Resulting from Award of on a time basis. Contract, is hereby prescribed and (e) Any contract for public utility shall be used in accordance with the services furnished by a public utility

company where the utility company's the representation and agreement as rates for the s'rvices furnished are described in § 1-1.505, such failure subject to regulation by Federal, shall be considered a minor informalState, or other regulatory body and ity and, prior to award, such bidder or the public utility company is the sole proposed contractor shall be afforded source of supply

a further opportunity to furnish such (f) Contracts to be made in foreign representation and agreement. A recountries.

fusal or failure to furnish such repre(g) Any other contracts, individually sentation and agreement, after such or by class, of the Department of De opportunity has been afforded, shall fense, designated by the Secretary. require rejection of the bid or offer. Reports of any such exceptions shall be filed promptly with the Administra- 1-1.508-2 Failure or refusal to furnish tor of General Services.

Standard Form 119. [29 FR 10104, July 24, 1964, as amended at

If the successful bidder or contracR 28437. Aug. 7. 1974: 40 FR 44137 tor, upon request, refuses or fails to Sept. 25, 1975)

furnish a completed Standard Form

119, or a statement in lieu thereof as $ 1-1.508 Enforcement.

provided in § 1-1.507-2, the executive

agency concerned shall take one or $ 1-1.508-1 Failure or refusal to furnish

more of the following actions, or other representation and agreement.

action, as may be appropriate: Each executive agency shall take the (a) If an award has not been made or necessary steps to assure that the indi offer accepted, determine whether the cated successful bidder or proposed bid or offer should be rejected. contractor has furnished a representa (b) If the contract has been awarded tion (negative or affirmative) and or offer accepted, determine what agreement as described in § 1-1.505. action shall be taken, such as making

(a) If the indicated successful bidder an independent investigation or conor proposed contractor makes such sidering the eligibility of the contracrepresentation in the negative, such tor as a future contractor in accordrepresentation may be accepted and ance with established procedure. award made or offer accepted in accordance with established procedure.

§ 1-1.508-3 Misrepresentations or viola(b) If the indicated successful bidder

tions of the covenant against continor proposed contractor makes such gent fees. representation in the affirmative, a In case of misrepresentation, or viocompleted Standard Form 119 shall be lation or breach of the covenant requested from the bidder or proposed against contingent fees, or some other contractor. In the case of formal ad relevant impropriety, the executive vertising, the making of an award in agency concerned shall take one or accordance with established procedure more of the following actions, or other need not be delayed pending receipt of action, as may be appropriate: the form. In the case of negotiation, if (a) If an award has not been made, the proposed contractor makes such or offer has not been accepted, deterrepresentation in the affirmative, he mine whether the bid or offer should shall be required to file a completed be rejected. Standard Form 119 prior to accept (b) If an award has been made or ance of the offer or execution of the offer has been accepted, take action to contract unless the head of the execu- enforce the covenant in accordance tive agency concerned, or his author with its terms; that is, as the best inized representative, considers that the terests of the Government may interest of the Government will be appear, annul the contract without liaprejudiced by the suspension of nego bility or recover the amount of the fee tiations pending receipt and considera- involved. tion of an executed Standard Form (c) Consider the future eligibility as 119.

a contractor of the bidder or contrac(c) If the indicated successful bidder tor in accordance with established proor proposed contractor fails to furnish cedure.

(d) Determine whether the case awards only for the probable duration should be referred to the Department of the period of non-responsibility. of Justice in accordance with established procedure with respect to deter- § 1-1.601-1 Definitions. mining matters of fraud or criminal (a) “Debarment” means, in general, conduct.

an exclusion from Government con

tracting and subcontracting for a rea$ 1-1.509 Preservation of records.

sonable, specified period of time comExecutive agencies shall preserve, mensurate with the seriousness of the for enforcement or report purposes, at offense or failure or the inadequacy of least one executed copy of any repre performance. However, in connection sentation and completed Standard with Executive Order 11246 of SepForm 119 (or statement in lieu of tember 24, 1965, as implemented by form) together with a record of any the rules, regulations, and relevant other pertinent data, including data as orders of the Secretary of Labor in 41 to action taken.

CFR Part 60, the term “debarment"

also means an exclusion by reason of Subpart 1-1.6-Debarred, Suspended, ineligibility under the Secretary's and Ineligible Bidders

rules from Government contracting or

subcontracting for an indefinite period $ 1-1.600 Scope of subpart.

of time pending the elimination of the

circumstances for which the exclusion This subpart prescribes policies and

was imposed. procedures relating to: (a) The debar

(b) “Suspension" means a disqualifiment of bidders for cause, (b) the sus

cation from Government contracting pension of bidders for cause under pre

and subcontracting for a temporary scribed conditions, and (c) the place

period of time because a concern or inment of bidders in ineligibility status

dividual is suspected upon adequate for violations of the provisions of the

evidence (see § 1-1.605) of engaging in Equal Opportunity clause. It is direct

criminal, fraudulent, or seriously imly applicable to the advertised and ne

proper conduct. gotiated purchases and contracts of

(c) A "debarment list” or “debarred executive agencies, including contracts bidders list" means a list of names of for construction, repair, alteration, de

concerns or individuals against whom struction, or dismantlement of public any or all of the measures referred to works or buildings. Other Federal in this section have been invoked. agencies are requested to comply (d) “Bidders" means, wherever the therewith in conducting their purchas term is used in this subpart, any offering and contracting operations.

ors bidding pursuant to an invitation [37 FR 23337, Nov. 2, 1972)

for bids or a request for proposals.

(e) "Affiliates" means business con§ 1-1.601 General.

cerns which are affiliates of each Debarment, suspension, and place

other when either directly or indirect

ly one concern or individual controls ment in ineligibility status are measures which may be invoked by the

or has the power to control another, Government either to exclude or to

or when a third party controls or has disqualify bidders and contractors

the power to control both. from participation in Government (37 FR 23337, Nov. 2, 1972) contracting or subcontracting. These measures should be used for the pur

$ 1-1.602 Establishment and maintenance pose of protecting the interests of the

of a list of concerns or individuals deGovernment and not for punishment.

barred, suspended, or declared ineligiTo assure the Government the bene

ble. fits to be derived from the full and (a) Each executive agency shall esfree competition of interested bidders, tablish and maintain, on the bases these measures should not be institut. contained in § 1-1.602-1, a consolidated ed for any time longer than deemed list of concerns and individuals to necessary to protect the interests of whom contracts will not be awarded the Government, and should preclude and from whom bids or proposals will

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