Contingent Fee vs Kickback

Question

What’s the difference between a contingent fee and a kickback?

Answer

See FAR 3.4.┬áSometimes people get concerned about the commissions they pay bona fide employees or agencies – these are usually OK. Almost all companies pay their sales team or external sales reps on a commission basis and this is acceptable. The payment of contingent fees where the receiving person or entity utilizes “improper influence” to obtain a contract are bad.

See FAR 3.502-1. ┬áKickbacks are payments made “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.”

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