Overview
This section defines the core terminology used to regulate contingent fee arrangements in government contracting, specifically distinguishing between legitimate business representation and prohibited "improper influence."
Key Rules
- Bona Fide Agency: An established commercial entity maintained by a contractor to secure business that operates ethically and does not claim to have "special influence" over the procurement process.
- Bona Fide Employee: An individual directly supervised and controlled by the contractor (regarding time, place, and manner of work) who secures business based solely on the merits of the proposal.
- Contingent Fee: Any commission, percentage, or brokerage fee that is paid only if a person or agency is successful in securing a government contract.
- Improper Influence: Any attempt to induce a government official to award a contract based on factors other than the objective merits of the matter.
Practical Implications
- Contractors may legally pay commissions to their own employees or established commercial selling agencies, provided those parties do not rely on "insider" influence to win awards.
- These definitions provide the legal framework for the "Covenant Against Contingent Fees," allowing the government to annul contracts or deduct fees if a contractor uses an unauthorized "influence peddler" to obtain an award.