3.404
Contract clause
Include the 52.203-5 clause in all non-commercial contracts exceeding the simplified acquisition threshold to prevent improper contingent fee arrangements.
Overview
FAR 3.404 requires contracting officers to include the clause at 52.203-5, Covenant Against Contingent Fees, in all solicitations and contracts that exceed the simplified acquisition threshold, except for those involving commercial products or commercial services. This clause is designed to prevent improper payments to secure government contracts, reinforcing ethical standards in federal procurement.
Key Rules
- Clause Inclusion Requirement
- The 52.203-5 clause must be inserted in all applicable solicitations and contracts above the simplified acquisition threshold.
- Exemptions
- Contracts for commercial products or commercial services are exempt from this requirement.
Responsibilities
- Contracting Officers: Must ensure the 52.203-5 clause is included in all relevant solicitations and contracts.
- Contractors: Must comply with the requirements of the 52.203-5 clause, which prohibits the use of contingent fees to secure government contracts.
- Agencies: Should oversee compliance and ensure that the clause is properly implemented in all applicable contracts.
Practical Implications
- This section exists to prevent unethical practices, such as paying third parties to improperly influence contract awards.
- Contractors must be aware that contingent fee arrangements are generally prohibited and that violations can result in contract termination or other penalties.
- A common pitfall is failing to include the clause in eligible contracts, which can lead to compliance issues during audits or reviews.