Far 52.203-7

FAC 2005-13 SEPTEMBER 28, 2006
52.203-5

FEDERAL ACQUISITION REGULATION

(c) If this contract is terminated under paragraph (a) of this
clause, the Government is entitled—
(1) To pursue the same remedies as in a breach of the
contract; and
(2) In addition to any other damages provided by law,
to exemplary damages of not less than 3 nor more than 10
times the cost incurred by the Contractor in giving gratuities
to the person concerned, as determined by the agency head or
a designee. (This paragraph (c)(2) is applicable only if this
contract uses money appropriated to the Department of
Defense.)
(d) The rights and remedies of the Government provided in
this clause shall not be exclusive and are in addition to any
other rights and remedies provided by law or under this
contract.
(End of clause)
52.203-4 [Reserved]
52.203-5 Covenant Against Contingent Fees.
As prescribed in 3.404, insert the following clause:
COVENANT AGAINST CONTINGENT FEES (APR 1984)
(a) The Contractor warrants 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. For breach or violation of this warranty, the Government shall have the right to
annul this contract without liability or, in its discretion, to
deduct from the contract price or consideration, or otherwise
recover, the full amount of the contingent fee.
(b) “Bona fide agency,” as used in this clause, means an
established commercial or selling agency, maintained by a
contractor for the purpose of securing business, 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.
“Bona fide employee,” as used in this clause, means a person, employed by a contractor and subject to the contractor’s
supervision and control as to time, place, and manner of performance, who neither exerts nor proposes to exert improper
influence to solicit or obtain Government contracts nor holds
out as being able to obtain any Government contract or contracts through improper influence.
“Contingent fee,” as used in this clause, means any commission, percentage, brokerage, or other fee that is contingent
upon the success that a person or concern has in securing a
Government contract.
“Improper influence,” as used in this clause, means any
influence that induces or tends to induce a Government
employee or officer to give consideration or to act regarding
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a Government contract on any basis other than the merits of
the matter.
(End of clause)
52.203-6 Restrictions on Subcontractor Sales to the
Government.
As prescribed in 3.503-2, insert the following clause:
RESTRICTIONS ON SUBCONTRACTOR SALES TO THE
GOVERNMENT (SEPT 2006)
(a) Except as provided in (b) of this clause, the Contractor
shall not enter into any agreement with an actual or prospective subcontractor, nor otherwise act in any manner, which has
or may have the effect of restricting sales by such subcontractors directly to the Government of any item or process (including computer software) made or furnished by the
subcontractor under this contract or under any follow-on production contract.
(b) The prohibition in (a) of this clause does not preclude
the Contractor from asserting rights that are otherwise authorized by law or regulation.
(c) The Contractor agrees to incorporate the substance of
this clause, including this paragraph (c), in all subcontracts
under this contract which exceed the simplified acquisition
threshold.
(End of clause)
Alternate I (Oct 1995). As prescribed in 3.503-2, substitute the following paragraph in place of paragraph (b) of the
basic clause:
(b) The prohibition in paragraph (a) of this clause does not
preclude the Contractor from asserting rights that are otherwise
authorized by law or regulation. For acquisitions of commercial
items, the prohibition in paragraph (a) applies only to the extent
that any agreement restricting sales by subcontractors results in
the Federal Government being treated differently from any
other prospective purchaser for the sale of the commercial
item(s).

52.203-7 Anti-Kickback Procedures.
As prescribed in 3.502-3, insert the following clause:
ANTI-KICKBACK PROCEDURES (JUL 1995)
(a) Definitions.
“Kickback,” as used in this clause, means any money, fee,
commission, credit, gift, gratuity, thing of value, or compensation of any kind which is provided, directly or indirectly, to
any prime Contractor, prime Contractor employee, subcontractor, or subcontractor employee for the purpose of improperly obtaining or rewarding favorable treatment in connection
with a prime contract or in connection with a subcontract
relating to a prime contract.

SUBPART 52.2—TEXT OF PROVISIONS AND CLAUSES
“Person,” as used in this clause, means a corporation, partnership, business association of any kind, trust, joint-stock
company, or individual.
“Prime contract,” as used in this clause, means a contract
or contractual action entered into by the United States for the
purpose of obtaining supplies, materials, equipment, or services of any kind.
“Prime Contractor” as used in this clause, means a person
who has entered into a prime contract with the United States.
“Prime Contractor employee,” as used in this clause,
means any officer, partner, employee, or agent of a prime Contractor.
“Subcontract,” as used in this clause, means a contract or
contractual action entered into by a prime Contractor or subcontractor for the purpose of obtaining supplies, materials,
equipment, or services of any kind under a prime contract.
“Subcontractor,” as used in this clause, (1) means any person, other than the prime Contractor, who offers to furnish or
furnishes any supplies, materials, equipment, or services of
any kind under a prime contract or a subcontract entered into
in connection with such prime contract, and (2) includes any
person who offers to furnish or furnishes general supplies to
the prime Contractor or a higher tier subcontractor.
“Subcontractor employee,” as used in this clause, means
any officer, partner, employee, or agent of a subcontractor.
(b) The Anti-Kickback Act of 1986 (41 U.S.C. 51-58) (the
Act), prohibits any person from—
(1) Providing or attempting to provide or offering to
provide any kickback;
(2) Soliciting, accepting, or attempting to accept any
kickback; or
(3) Including, directly or indirectly, the amount of any
kickback in the contract price charged by a prime Contractor
to the United States or in the contract price charged by a subcontractor to a prime Contractor or higher tier subcontractor.
(c)(1) The Contractor shall have in place and follow reasonable procedures designed to prevent and detect possible
violations described in paragraph (b) of this clause in its own
operations and direct business relationships.
(2) When the Contractor has reasonable grounds to
believe that a violation described in paragraph (b) of this
clause may have occurred, the Contractor shall promptly
report in writing the possible violation. Such reports shall be
made to the inspector general of the contracting agency, the
head of the contracting agency if the agency does not have an
inspector general, or the Department of Justice.
(3) The Contractor shall cooperate fully with any Federal agency investigating a possible violation described in
paragraph (b) of this clause.
(4) The Contracting Officer may (i) offset the amount of
the kickback against any monies owed by the United States
under the prime contract and/or (ii) direct that the Prime Contractor withhold from sums owed a subcontractor under the

52.203-8
prime contract the amount of the kickback. The Contracting
Officer may order that monies withheld under
subdivision (c)(4)(ii) of this clause be paid over to the Government unless the Government has already offset those monies under subdivision (c)(4)(i) of this clause. In either case, the
Prime Contractor shall notify the Contracting Officer when
the monies are withheld.
(5) The Contractor agrees to incorporate the substance
of this clause, including paragraph (c)(5) but excepting
paragraph (c)(1), in all subcontracts under this contract which
exceed $100,000.
(End of clause)
52.203-8 Cancellation, Rescission, and Recovery of Funds
for Illegal or Improper Activity.
As prescribed in 3.104-9(a), insert the following clause:
CANCELLATION, RESCISSION, AND RECOVERY OF FUNDS
FOR ILLEGAL OR IMPROPER ACTIVITY (JAN 1997)
(a) If the Government receives information that a contractor or a person has engaged in conduct constituting a violation
of subsection (a), (b), (c), or (d) of section 27 of the Office of
Federal Procurement Policy Act (41 U.S.C. 423) (the Act), as
amended by section 4304 of the National Defense Authorization Act for Fiscal Year 1996 (Pub. L. 104-106), the Government may—
(1) Cancel the solicitation, if the contract has not yet
been awarded or issued; or
(2) Rescind the contract with respect to which—
(i) The Contractor or someone acting for the Contractor has been convicted for an offense where the conduct
constitutes a violation of subsection 27(a) or (b) of the Act for
the purpose of either—
(A) Exchanging the information covered by such
subsections for anything of value; or
(B) Obtaining or giving anyone a competitive
advantage in the award of a Federal agency procurement contract; or
(ii) The head of the contracting activity has determined, based upon a preponderance of the evidence, that the
Contractor or someone acting for the Contractor has engaged
in conduct constituting an offense punishable under
subsection 27(e)(1) of the Act.
(b) If the Government rescinds the contract under
paragraph (a) of this clause, the Government is entitled to
recover, in addition to any penalty prescribed by law, the
amount expended under the contract.
(c) The rights and remedies of the Government specified
herein are not exclusive, and are in addition to any other rights
and remedies provided by law, regulation, or under this contract.
(End of clause)
(FAC 2005–06)

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