B-226543, APR 10, 1987, OFFICE OF GENERAL COUNSEL
Highlights
WHICH WILL BE CODIFIED AT 41 U.S.C. THIS IS FAR CASE NO. 87-08. WHICH WILL BE CODIFIED AT 41 U.S.C. A KICKBACK IS DEFINED AS COMPENSATION OF ANY KIND PROVIDED TO A PRIME CONTRACTOR. THE ACT STATES THAT GOVERNMENT PRIME CONTRACTS MUST REQUIRE THE CONTRACTOR TO HAVE IN PLACE AND FOLLOW REASONABLE PROCEDURES DESIGNED TO PREVENT KICKBACKS AND TO COOPERATE FULLY WITH GOVERNMENT INVESTIGATIONS OF KICKBACK ACTIVITY. PRIME CONTRACTORS AND SUBCONTRACTORS MUST REPORT INSTANCES OF SUSPECTED VIOLATIONS OF THE ACT WHEN THERE ARE REASONABLE GROUNDS TO BELIEVE THAT SUCH VIOLATIONS MAY HAVE OCCURRED. WE HAVE NO OBJECTION TO THE INTERIM REGULATION.
B-226543, APR 10, 1987, OFFICE OF GENERAL COUNSEL
PROCUREMENT - SPECIAL PROCUREMENT METHODS/CATEGORIES - SUBCONTRACTS - CONTRACT AWARDS - PRIME CONTRACTORS - BRIBES DIGEST: GENERAL ACCOUNTING OFFICE HAS NO OBJECTION TO FEDERAL ACQUISITION REGULATION (FAR) CASE NO. 87-08, AN INTERIM REGULATION AMENDING FAR 3.502 AND ADDING A CONTRACT CLAUSE AT FAR SEC. 52.203-7 TO IMPLEMENT THE ANTI- KICKBACK ACT OF 1986, WHICH WILL BE CODIFIED AT 41 U.S.C. SECS. 51 THROUGH 58.
MS. MARGARET A. WILLIS:
THIS RESPONDS TO YOUR LETTER OF MARCH 11, 1987, REQUESTING OUR COMMENTS ON AN INTERIM REGULATION AMENDING THE FEDERAL ACQUISITION REGULATION (FAR) TO IMPLEMENT THE ANTI-KICKBACK ACT OF 1986. THIS IS FAR CASE NO. 87-08.
THE ANTI-KICKBACK ACT, WHICH WILL BE CODIFIED AT 41 U.S.C. SECS. 51 THROUGH 58, PROHIBITS "KICKBACKS" BETWEEN GOVERNMENT PRIME CONTRACTORS AND SUBCONTRACTORS. BASICALLY, A KICKBACK IS DEFINED AS COMPENSATION OF ANY KIND PROVIDED TO A PRIME CONTRACTOR, SUBCONTRACTOR, OR THEIR EMPLOYEES FOR THE PURPOSE OF IMPROPERLY OBTAINING OR REWARDING FAVORABLE TREATMENT IN CONNECTION WITH A GOVERNMENT PRIME CONTRACT OR A SUBCONTRACT RELATING TO A PRIME CONTRACT. THE ACT PROVIDES FOR CRIMINAL PENALTIES AND PERMITS THE GOVERNMENT TO RECOVER CIVIL PENALTIES FOR VIOLATIONS OF THE ACT. THE GOVERNMENT ALSO MAY RECOVER THE AMOUNT OF ANY KICKBACK, EITHER FROM A PRIME CONTRACTOR BY ADMINISTRATIVE OFFSET OR BY REQUIRING AN OFFSET BY THE PRIME CONTRACTOR AGAINST AMOUNTS DUE A SUBCONTRACTOR. THE ACT STATES THAT GOVERNMENT PRIME CONTRACTS MUST REQUIRE THE CONTRACTOR TO HAVE IN PLACE AND FOLLOW REASONABLE PROCEDURES DESIGNED TO PREVENT KICKBACKS AND TO COOPERATE FULLY WITH GOVERNMENT INVESTIGATIONS OF KICKBACK ACTIVITY. PRIME CONTRACTORS AND SUBCONTRACTORS MUST REPORT INSTANCES OF SUSPECTED VIOLATIONS OF THE ACT WHEN THERE ARE REASONABLE GROUNDS TO BELIEVE THAT SUCH VIOLATIONS MAY HAVE OCCURRED.
THE INTERIM REGULATION REVISES FAR SEC. 3.502 AND ADDS A NEW CONTRACT CLAUSE AT FAR SEC. 52.203-7, BOTH OF WHICH NOW TRACK THE PROVISIONS OF THE ANTI-KICKBACK ACT. IN ADDITION, THE NEW CLAUSE CONTAINS A FLOWDOWN PROVISION, WHICH REQUIRES THE CONTRACTOR TO INCORPORATE THE SUBSTANCE OF THE CLAUSE IN ALL SUBCONTRACTS AND TO REQUIRE THAT ITS SUBCONTRACTORS DO LIKEWISE.
WE HAVE NO OBJECTION TO THE INTERIM REGULATION.