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Excepted from the prohibition of the covenant are "bona fide employees" and "bona fide established commercial or selling agencies maintained by the contractor for the purpose of securing business."

§ 1.505-3 Bona fide employee.

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 § 1.505-4, except paragraph (d) of § 1.505-4, shall be applied to determine whether such an individual comes within the exception to the prohibition of the covenant.

(a) 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.

(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. § 1.505-4 Bona fide established commercial or selling agency maintained by the Contractor for the purpose of securing business.

In determining whether an agency is a "bona fide established commer

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cial or selling agency maintained by the Contractor for the purpose of securing business," the factors set forth in paragraphs (a) through (e) of this section shall be considered. They are necessarily incapable of exact measurement or precise definition and it is neither possible nor desirable 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.

(a) The fees charged should not be inequitable and exorbitant 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 (nonGovernment) 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.

(b) 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.

(c) 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 Contractoragent relationships where a continuing relationship is contemplated by the parties.

(d) 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.

(e) 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 non-Government 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.

However, any 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.

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Except as provided in § 1.507-2, each Department 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 fulltime 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

to be included in the invitation or bid form:

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 to 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. (For interpretation of the representation, including the term "bona fide employee," see Code of Federal Regulations, Title 44, Part 150.)

§ 1.506-1 Interpretation of the representation.

For the purpose of the representation and agreement required from the prospective Contractor, as described in § 1.506, the definition of "bona fide employee" is as specified in § 1.505-3.

(a) 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 Contractor-agent 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, or retainer.

(b) 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 answering in the negative.

§ 1.507 Use of Standard Form 119.

Except as provided in § 1.507-2, Standard Form 119 (December 1952 ed.) shall be used without deviation whenever either part of the inquiry provided for by 1.506 is answered in the affirmative. The form shall also be used without deviation in any other case where a department 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.

§ 1.507-1 Statement in lieu of form.

Any bidder or proposed Contractor who has previously furnished a Standard Form 119 (December 1952 ed.) 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.

§ 1.507-2 Exceptions.

The inquiry and agreement specified in § 1.506 need not be made and submission of Standard Form 119 (December 1952 ed.) 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 $5,000;

(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, designated by the Secretary. Reports of any such exceptions shall be filed promptly with the Administrator of General Services.

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successful bidder or proposed Contractor has furnished a representation (negative or affirmative) and agreement as described in § 1.506.

(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 procedures of the Department concerned.

(b) If the indicated successful bidder or proposed Contractor makes such representation in the affirmative, a completed Standard Form 119 (December 1952 ed.) 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 of the Department concerned 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 (December 1952 ed.) prior to acceptance of the offer or execution of the contract unless the Secretary, 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 (December 1952 ed.).

(c) If the indicated successful bidder or proposed Contractor fails to furnish the representation and agreement as set forth in § 1.506, 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.

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(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 of the Department concerned.

§ 1.508-2 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 Department 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 of the Department concerned.

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(d) Determine whether the should be referred to the Department of Justice in accordance with § 1.111. § 1.509 Preservation of records.

Departments shall preserve, for enforcement or report purposes, at least one executed copy of any representation and completed Standard Form 119 (December 1952 ed.) (or statement in lieu of form) together with a record of any other pertinent data, including data as to action taken.

Subpart F-Debarred, Ineligible, and Suspended Bidders

SOURCE: The provisions of this Subpart F appear at 25 F.R. 14088, Dec. 31, 1960, except as otherwise noted.

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§ 1.601-2

Information contained in departmental lists.

Each Departmental list shall show as a minimum the following information: (a) The names of those firms or individuals debarred, ineligible, or suspended (names will be set forth in alphabetical order with appropriate cross-reference where more than one name is involved in a single action);

(b) The basis of authority for each action;

(c) The extent of restrictions imposed; and

(d) The termination date for each debarred listing.

§ 1.601-3 Joint consolidated list.

By agreement among the Military Departments, the Department of the Army is responsible for the issuance of a joint consolidated list of firms and individuals to whom contracts will not be awarded and from whom bids or proposals will not be solicited. The Joint Consolidated List shall be kept current by notices of additions or deletions and periodic reprinting. Each military department shall furnish, not later than the 5th of each month, to the Office of the Assistant Secretary of the Army (Installations and Logistics) (Assistant Judge Advocate General for Civil Law), an alphabetical list of the additions, deletions, or modifications to the Joint Consolidated List, containing the information set forth in § 1.601-2. Each military department shall be responsible for determining the number of copies of the joint consolidated list required and for distributing the list within the Department. The Department of the Army will furnish copies to the Assistant Secretary of Defense (Installations and Logistics). [29 F.R. 2811, Feb. 29, 1964]

§ 1.601-4 Protection of lists.

The Joint Consolidated and Departmental Lists, and all correspondence relating thereto, shall be protected to pre

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No firm or individual wi" be listed on a consolidated list for causes or under conditions other than those set forth in this subpart F.

§ 1.603 Grounds for listing and treatment to be accorded listed concerns.

(a) A firm or individual may be listed for any of several reasons. The particular reason for listing determines the consequences thereof. The various types of listing and the treatment to be accorded each type are set forth below:

Type A includes debarments in any of the following categories:

(1) Those listed by the Comptroller pursuant to section 3 of the Walsh-Healey Public Contracts Act (41 U.S.C. 37) for violating the requirements of that Act;

(2) Those listed by the Comptroller General pursuant to section 3 of the Davis-Bacon Act (40 U.S.C. 276a-2(a)) for violating the requirements of that Act; and

(3) Those which the Secretary concerned or his representatives has determined to debar for any of the causes and under all of the conditions set forth in § 1.604.

Contracts shall not be awarded to, nor bids or proposals solicited from, nor invitations for bids nor requests for proposals furnished to, concerns which are listed as Туре A and which are debarred because of Walsh-Healey or Davis-Bacon violations (categories (1) and (2) above). The same rules apply with respect to Type A listings within category (3) above, unless the Secretary concerned or his representative determines it to be in the interest of the Government to make an exception for a particular procurement action, or unless the listing indicates that the debarment is not to apply to sales contracts or to procurement contracts (see § 1.606).

Type B includes concerns which the Secretary of Labor has determined to be ineligible because they do not qualify as "manufacturers" or "regular dealers" within the meaning of section 1(a) of the Walsh-Healey Public Contracts Act (41 U.S.C. 35(a)). Under that Act, procurement contracts in excess of $10,000 shall not be awarded to concerns under Type B listings for those materials, articles, or equipment with respect to which the concern has been found to be ineligible. However, contracts in any amount may be awarded, and bids or proposals may be solicited, for commodities with respect to which the concern has not been declared

ineligible. In connection with ineligibility under the Walsh-Healey Act (Type B listing only), the name of an individual may be listed as affiliated with an ineligible firm. This listing is intended only to prevent such individuals from evading ineligibility merely by changing their business names and addresses. It does not prohibit other firms in which such individuals have an interest, and which are qualified manufacturers or regular dealers from receiving contracts subject to the Walsh-Healey Public Contracts Act.

Type C includes concerns which the appropriate Secretary, pursuant to section 3(b) of the Buy American Act (41 U.S.C. 10b(b)), has found to have failed to comply with the "Buy American Act" clause required for construction contracts (see § 6.205 of this Chapter). Contracts for the construction, alteration, or repair of public buildings or public works in the United States or elsewhere shall not be awarded to concerns under Type C listings; nor shall bids or proposals for such work be solicited from such concerns. However, concerns under Type C listings may be awarded contracts and may be solicited for bids or proposals for other than the construction, alteration, or repair of public buildings or public works.

Type D includes concerns which the appropriate Secretary or his representative has determined to suspend under the conditions set forth in § 1.605. Concerns under Type D listings shall not be awarded contracts, nor solicited for bids or proposals, except where the Secretary concerned or his representative determines it to be in the best interest of the Government to make an exception for a particular procurement, or where the listing indicates that the suspension does not apply to sales contracts or procurement contracts (see § 1.606). Authority to permit exceptions in keeping with the foregoing has been given to the Assistant Judge Advocate General for Civil Law for the Army; the Chief of Naval Material for the Navy; the Deputy Chief of Staff, Systems and Logistics, for the Air Force; and the Counsel, for the Defense Supply Agency.

Type E includes concerns which have been reported by the Secretary of Labor to have violated labor standards provisions of any of the following statutes: Anti-Kickback Act (48 Stat. 948) as amended (40 U.S.C. 276c), Eight Hour Law (27 Stat. 340) as amended (40 U.S.C. 321-326), National Housing Act (53 Stat. 804) as amended (12 U.S.C. 1703), Hospital Survey and Construction Act (60 Stat. 1040), Federal Airport Act (60 Stat. 170) as amended (49 U.S.C. 1101), Housing Act of 1949 (63 Stat. 413) (42 U.S.C. 1441), School Survey and Construction Act of 1950 (64 Stat. 967) (20 U.S.C. 251), Federal Civil Defense Act of 1950 (64 Stat. 1245) as amended, Defense Housing and Community Facilities and Services Act of 1951 (65 Stat. 293) as amended (42 U.S.C. 1591), and Area Redevelopment Act of 1961 (75 Stat. 47). Concerns under Type E listings shall not be

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