XL EagleAnti-Kickback Act
Anti-Kickback Act. The Anti-Kickback Act makes it illegal to offer, pay, request, or accept a kickback in connection with a federal prime contract or subcontract. A kickback is money, gifts, or anything of value given to get or reward favorable treatment, such as being picked as a subcontractor.
Prime contractors must have procedures to prevent and detect kickbacks and must promptly report possible violations when they have reasonable grounds. The rule is in FAR 52.203-7, and violations can bring criminal and civil penalties.
Why it matters to a small contractor
Never pay a prime's employee to get on a job, and never accept a gift from a supplier who wants your subcontract. Even small favors can be a problem. If someone asks for a payment to steer work to you, say no and report it.
Example
A prime's project manager hints that a small sub could win a painting subcontract if it pays him a 'finder's fee.' The sub refuses and reports the request to the prime's compliance office.
Anti-Kickback Act: common questions
Does the Anti-Kickback Act apply to subcontractors?
Yes. It covers kickbacks at any tier, between primes, subcontractors, and their employees.
Is a referral fee a kickback?
It can be if it is paid to improperly get or reward favorable treatment on a federal contract. Get advice before paying any fee tied to winning federal work.
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