The Use of a Contingent Fee Arrangement

B-208212: Jul 19, 1982

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The Building Development Counsel International, Inc. (BDCI) requested GAO's opinion on whether BDCI qualifies as a "bonafide selling agency" which is excepted from the Federal prohibition against payment of contingent fees to firms which aid contractors in obtaining contracts. The prohibition had been implemented in the Federal Procurement Regulations, which governed use by civilian executive agencies of the covenant against contingent fees and the Defense Acquisition Regulations. BDCI provided management consultant services to architectural-engineering firms/clients for which BDCI is paid as a nominal monthly retainer, plus a management fee contingent on award of a contract to the client.

Under the circumstances, GAO could not provide a definitive response to the inquiry. However, they determined that BDCI needed to establish that it meets the criteria set forth in the regulations to be considered a bonafide selling agency.