Contingent Fee Arrangements
Bona Fide Sales Agency Exception to the Ban on Contingent Fees
The purpose behind the federal limitations and additional requirements on contingent fee arrangements is described in the FAR as follows:
Contractors’ arrangements to pay contingent fees for soliciting or obtaining Government contracts have long been considered contrary to public policy because such arrangements may lead to attempted or actual exercise of improper influence. Therefore[1] every very federal contract contains a warranty by the contractor that no person or agency has been employed or retained to solicit or obtain this contract upon an agreement or understanding for a contingent fee, except a bona fide employee or agency.
Whether a relationship meets the bona fide sales agency exception will be based on a totality of the circumstances, rather than on a single factor. Three factors within the definition of "bona fide agency[2]" are:
(1) an established commercial or selling agency,
(2) maintained by a contractor for the purpose of securing business,
(3) that neither exerts nor proposes to exert improper influence to solicit or obtain Government contracts nor holds itself out as being able to obtain any Government contract or contracts through improper influence.