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Fara Fasat

percent of work

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Scenario: Large is negotiating teaming agreement with small. A provision in the agreement says that the large will guarantee the small at least 20% of the work (small is not the prime, so the statutory percents do not apply). Contract manager says that the provision would violate the prohibition against contingent fees and the anti-kickback act.

Sounds like a stretch to me, but is there any basis for this?

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There may be more to this than first meets the eye. Please explain further:

Is this an agreement to team as part of a prime contract proposal or bid process or has the prime contract already been awarded?

Please advise me if I am correct in assuming that 1) the subcontractor is asking for a guarantee of "at least 20% of the [contract] work" and 2) the "contract manager" works for the prime?

If the prime contract isnt awarded, is the percentage of subcontracting to small business a factor in the selection process?

Finally, why does the contract manager say "that the provision would violate the prohibition against contingent fees and the anti-kickback act"?

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Unless there is something that you haven't told us, it's more than a "stretch," it's ridiculous. A teaming agreement that provides for a teaming partner to get 20 percent of the contract work does not violate either the prohibition against contingent fees or the anti-kickback act. See FAR Subpart 3.4 and 3.502. The contract manager does not know what he or she is talking about. Again, I'm assuming that there is not more to this than you have told us.

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Then it appears to be a negotiated agreement between a first and second tier sub as to share of their work between them and nothing more.

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In general I agree with Vern and Joel. I do advise just a little caution as FAR 9.6 does acknowledge the potential for antitrust violations with regard to teaming agreements. The FAR guidance is almost nil but some agencies have expanded guidance on the matter. Antitrust matters come up with regard to exclusivity arrangements. As Vern and Joel appropriately point out the specific details of the teaming agreement could change the answer. As the concern has been raised by a “contract manager” I recommend further discussion on the specific agreement with legal counsel.

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