52.203-7
Anti-Kickback Procedures
FAR 52.203-7 requires contractors to actively prevent, detect, and report kickbacks, and to flow down anti-kickback requirements to qualifying subcontracts, ensuring integrity throughout the federal contracting process.
Overview
FAR 52.203-7, Anti-Kickback Procedures, establishes strict prohibitions and requirements to prevent and address kickbacks in federal contracting. It defines key terms related to kickbacks, outlines prohibited conduct under 41 U.S.C. chapter 87, and mandates that contractors implement procedures to detect and prevent kickbacks. Contractors must report suspected violations, cooperate with investigations, and may face financial offsets or withholdings if kickbacks are discovered. The clause also requires flow-down of its substance to subcontracts exceeding the threshold in FAR 3.502-2(i), ensuring anti-kickback protections throughout the supply chain.
Key Rules
- Prohibition of Kickbacks
- No person may provide, solicit, accept, or attempt to include kickbacks in contract pricing.
- Contractor Procedures
- Contractors must have reasonable procedures to prevent and detect kickbacks in their operations and direct business relationships.
- Mandatory Reporting
- Contractors must promptly report suspected kickback violations in writing to the agency inspector general, agency head, or Attorney General.
- Cooperation with Investigations
- Full cooperation with federal investigations into possible kickback violations is required.
- Financial Remedies
- The Contracting Officer may offset or direct withholding of kickback amounts from contract payments.
- Flow-Down Requirement
- The clause (except for the procedures requirement) must be included in all subcontracts exceeding the specified threshold.
Responsibilities
- Contracting Officers: Enforce compliance, order offsets/withholdings, and ensure clause flow-down.
- Contractors: Implement anti-kickback procedures, report violations, cooperate with investigations, and flow down the clause to qualifying subcontracts.
- Agencies: Investigate reported violations and oversee compliance.
Practical Implications
- This clause exists to deter and address corruption in federal contracting, protecting the integrity of the procurement process.
- Contractors must be proactive in compliance, as failure to prevent, detect, or report kickbacks can result in financial penalties and reputational harm.
- Common pitfalls include inadequate internal controls, failure to report, or not properly flowing down the clause to subcontracts.