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FAR 3.4: Contingent Fees |
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Comptroller General - Key Excerpts |
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Section 2306(b) of title 10, United States Code, places certain
limitations on obtaining contracts under “contingent fee”
arrangements. However, the purpose of this limitation, as
implemented by Federal Acquisition Regulation (FAR) subpart 3.4,
is to prevent the attempted or actual exercise of improper
influence by third parties over the federal procurement system.
Puma Industrial Consulting v. Daal Assocs., Inc., 808 F.2d 89
(2d Cir. 1987); Quinn v. Gulf & Western Corp., 644 F.2d 89 (2d
Cir. 1981); E&R, Inc.--Claim for Costs, B‑255868.2, May 30,
1996, 96-1 CPD para. 264 at 3-4; Howard Johnson Lodge--Recon.,
B‑244302.2, Mar. 24, 1992, 92-1 CPD para. 305. We have held that
the prohibition applies only to situations where an agent agrees
“to solicit or obtain” a contract from a procuring agency.
Bertsch Constr., B‑253526, Aug. 25, 1993, 93-2 CPD para. 122.
The fact that an agent’s fee is contingent upon the contractor’s
successful performance of the contract, or even upon receiving
the contract award, is not sufficient, by itself, to bring a fee
agreement under the contingent fee prohibition; rather, the
regulation contemplates a specific demonstration that an agent
is retained for the express purpose of contacting government
officials, where such contact poses a threat of the exertion of
improper influence to obtain government contracts. Convention
Mktg. Servs., B‑245660.3, B‑246175, Feb. 4, 1992, 92-1 CPD para.
144. Here, Kola Nut acknowledges that the consultant’s fee
agreement is calculated as a portion of the profit resulting
from the awardees’ performance of the contract--not in exchange
for the awardees’ receipt of contract awards. Kola Nut Protest
Submission (Mar. 28, 2005) at 3. Further, the record is devoid
of any evidence that the challenged awards reflect any improper
influence on government officials. To the contrary, as shown
above, the agency selected proposals that offered significantly
lower prices and were evaluated equal to, or higher than, Kola
Nut’s proposal with regard to the non-price evaluation factors.
On this record, Kola Nut’s assertion that the contracts
incorporate a prohibited contingent fee agreement is without
merit. (Kola Nut Travel, Inc.,
B-296090.4, August 25, 2005) (pdf) |
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Comptroller
General - Listing of Decisions |
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For
the Government |
For
the Protester |
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Kola Nut Travel, Inc.,
B-296090.4, August 25, 2005 (pdf) |
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U.
S. Court of Federal Claims - Key Excerpts |
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U.
S. Court of Federal Claims - Listing of Decisions
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For
the Government |
For
the Protester |
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