be by the Contractor's check only; unless and until the Contracting Officer determines, and notifies the bank in writing, that such check shall be countersigned on behalf of the Government by the Contracting Officer.

(g) The Contractor may at any time repay all or any part of the funds or credit obtained under the Letter of Credit. When so requested in writing by the Contracting Officer, the Contractor shall repay to the Government such part of the unliquidated balance of advance payments as shall, in the opinion of the Contracting Officer, be in excess of the Contractor's current needs or in excess of the contract price or estimated cost as revised from time to time. In the event the Contractor fails to make repayment in accordance with such written request by the Contracting Officer, the amount of unliquidated advance payments requested may be withdrawn from the special bank account by checks payable to the Treasurer of the United States signed solely by the Contracting Officer.

(h) If upon completion or termination of this contract all amounts obtained by the Contractor under the Letter of Credit have not been fully liquidated by authorized charges under the contract, the balance thereof shall be deducted from any sums otherwise due or which may be due to the Contractor from the Government, and any excess funds shall be repaid by the Contractor to the Government upon demand.

(1) Before a withdrawal against the Letter of Credit is made hereunder, an "Agreement for Special Bank Account," in the form prescribed by the Contracting Officer, must be executed by and between the Contracting Officer, the Contractor and the bank in which the special account is to be established. Such bank shall be a member of the Federal Reserve System, or an "insured" bank within the meaning of the Act creating the Federal Deposit Insurance Corporation (Act of Aug. 23, 1935, 49 Stat. 694, as amended; 12 U.S.C. 264).

(j) Notwithstanding any other provisions of this contract, the Contractor shall not transfer, pledge, or otherwise assign this contract or any interest therein, or any claim arising thereunder, to any party or parties, bank, trust company, or other financing institution.

(k) The Government shall have a lien upon any balance in the special bank account paramount to all other liens, which lien shall secure the repayment of any funds obtained under the Letter of Credit.

(1) Any and all advance payments made under this contract shall be secured by a lien in favor of the Government, paramount to all other liens, upon the supplies or other things covered by this contract and on all material and other property acquired for or allocated to the performance of this contract, except to the extent that the Government by virue of any other provision of this contract, or otherwise, shall have valid title to such supplies, materials, or other property as against

other creditors of the Contractor. The Contractor shall identify by marking or segregation all property which is subject to a lien in favor of the Government by virtue of any provision of this contract in such a way as to indicate that it is subject to such lien and that it has been acquired for or allocated to the performance of this contract. If for any reason such supplies, materials, or other property are not identified by marking or segregation, the Government shall be deemed to have a lien to the extent of the Government's interest under this contract on any mass of property with which such supplies, materials, or other property are commingled. The Contractor shall maintain adequate accounting control over such property on his books and records. If at any time during the progress of the work on the contract it becomes necessary to deliver any item or items and materials upon which the Government has a lien as aforesaid to a third person, the Contractor shall notify such third person of the lien herein provided and shall obtain from such third person a receipt, in duplicate, acknowledging, inter alia, the existence of such lien. A copy of each receipt shall be delivered by the Contractor to the Contracting Officer. If this contract is terminated in whole or in part and the Contractor is authorized to sell or retain termination inventory acquired for or allocated to this contract, such sale or retention shall be made only if approved by the Contracting Officer, which approval shall constitute a release of the Government's lien hereunder to the extent that such termination inventory is sold or retained, and to the extent that the proceeds of the sale, or the credit allowed for such retention on the Contractor's termination claim, is applied in reduction of advance payments then outstanding hereunder. § 18-1.358-2 Form of agreement for special bank account.

The following form shall be used to establish the special bank account or accounts for funds provided to a contractor by the Letter of Credit method. AGREEMENT FOR SPECIAL BANK ACCOUNT

Agreement entered into this

day of

of such advance payment provisions has been furnished to the Bank.

of

(b) Said Contract or Supplemental Agreement requires that amounts advanced to the Contractor thereunder be deposited in a Special Bank Account or accounts at a member bank or banks of the Federal Reserve System or any "insured" bank within the meaning of the Act creating the Federal Deposit Insurance Corporation (Act Aug. 23, 1935; 49 Stat. 684, as amended; 12 U.S.C. 264), separate from the Contractor's general or other funds; and, the Bank being such a bank, the parties are agreeable to so depositing said amounts with the Bank. (c) This Special Bank Account shall be designated

count."

(Name of Contractor) Special Bank Ac

(Department)

COVENANTS

In consideration of the foregoing, and for other good and valuable considerations, it is agreed that

(1) The Government shall have a lien upon the credit balance in said account to secure the repayment of all advance payments made to the Contractor, which lien shall be superior to any lien or claim of the Bank with respect to such account.

(2) The Bank will be bound by the provisions of said contract or contracts relating to the deposit and withdrawal of funds in the above Special Bank Account, but shall not be responsible for the application of funds withdrawn from said account. After receipt by the Bank of written directions from the Contracting Officer, or from the Administering Office designated in the advance payment contract mentioned above, or from the duly authorized representative of the Contracting Officer or the Administering Office, the Bank shall act thereon and shall be under no liability to any party hereto for any action taken in accordance with the said written directions. Any written directions received by the Bank through the Contracting Officer upon National Aeronautics and Space Administration stationery and purporting to be signed by, or by the direction of

or

his duly authorized representative, shall, in so far as the rights, duties and liabilities of the Bank are concerned, be conclusively deemed to have been properly issued and filed with the Bank by the National Aeronautics and Space Administration.

(3) The Government, or its authorized representatives, shall have access to the books and records maintained by the Bank with respect to such Special Bank Account at all reasonable times and for all reasonable purposes, including (but without limiting the generality thereof) the inspection or copying of such books and records and any and all memoranda, checks, correspondence, or documents appertaining thereto. Such books and records shall be preserved by the Bank for a

The Contractor warrants that no person or selling agency has been employed or retained to solicit or secure this contract upon an agreement or understanding for a commission, percentage, brokerage, or contingent fee, excepting bona fide employees or bona fide established commercial or selling agencies maintained by the Contractor for the purpose of securing business. 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 such commission, percentage, brokerage, or contingent fee.

§ 18-1.504 Improper influence.

The term "improper influence" means influence, direct or indirect, which induces or tends to induce consideration or action by any employee or officer of the United States with respect to any Government contract on any basis other than the merits of the matter.

§ 18-1.505 General principles and standards applicable to the covenant. The principles and standards set forth in this subpart are intended to be used

as a guide in the negotiation, award, administration, and enforcement of all contracts.

§ 18-1.505-1 Contingent character of the fee.

Any fee, whether called commission, percentage, brokerage, or contingent fee, or otherwise denominated, is within the purview of the covenant if, in fact, any portion thereof is dependent upon success in obtaining or securing the Government contract or contracts involved. The fact, however, that a fee of a contingent nature is involved does not preclude a relationship which qualifies under the exceptions to the prohibition of the covenant.

Excepted from the prohibition of the covenant are "bona fide employees" and "bona fide established or selling agencies maintained by the contractor for the purpose of securing business."

§ 18-1.505-3 Bona fide employee.

The term "bona fide employee," for the purpose of the exception to the prohibition of the covenant, means an individual (including a corporate office) employed in good faith by a concern to devote his full time to such concern and no other concern and over whom the concern has the right to exercise supervision and control as to time, place, and manner of performance of work. It is recognized that a concern, especially a small business concern, may employ an individual who represents other concerns. The factors set forth in § 181.505-4, except paragraph (d) thereof, shall be applied to determine whether such an individual comes within the exception to the prohibition of the covenant. (However, in applying such factors, the word "employee" shall be substituted for the word or words "agent" and "selling agency" as they appear throughout § 18-1.505-4, except paragraph (d) thereof.)

(a) A person may be a bona fide employee whether his compensation is on a fixed salary basis or, when customary in the trade, on a percentage, commission, or other contingent basis or a combination of the foregoing.

(b) The hiring must contemplate some continuity and it may not be related only to the obtaining of one or more specific Government contracts.

(c) An employee is not "bona fide" who seeks to obtain any Government contract or contracts for his employer through the use of improper influence or who holds himself out as being able to obtain any Government contract or contracts through improper influence. § 18-1.505-4 Bona fide established commercial or selling agency maintained by the contractor for the purpose of securing business.

In determining whether an agency is a "bona fide established commercial or selling agency maintained by the contractor for the purpose of securing business," the factors set forth in paragraphs (a) through (e) of this section shall be considered. They are necessarily incapable of exact measurement or precise definition, and it is neither possible nor desirable to prescribe the relative weight to be given any single factor as against any other factor or as against all other factors. The conclusions to be reached in a given case will necessarily depend upon a careful evaluation of the agreement and other attendant facts and circumstances.

(a) The fees charged should not be inequitable and exorbitant in relation to the services actually rendered. That is, the compensation should be commensurate with the nature and extent of the services and should not be excessive as compared with the fees customarily allowed in the trade concerned for similar services related to commercial (non-Government) business. In evaluating reasonableness of the fee, the services of the agent other than actual solicitation should be considered; for example, technical, consultant, or managerial services, and assistance in the procurement of essential personnel, facilities, equipment, materials, or subcontractors for performance of the contract.

(b) The selling agency should have adequate knowledge of the products and the business of the concern represented, as well as other qualifications necessary to sell the products or services on their merits.

(c) There should ordinarily be a continuity of relationship between the contractor and the agency. The fact that the agency has represented the contractor over a considerable period of time is a factor for favorable consideration. It is not intended, however, to disqualify a newly established contractoragent relationship where a continuing

relationship is contemplated by the parties.

(d) It should appear that the agency is an established concern. The agency may be either one which has been in business for a considerable period of time or a new agency which is a presently going concern and which is likely to continue in business as a commercial or selling agency in the future. The business of the agency should be conducted in the agency name and characterized by the customary indications of the conduct of a regular business.

(e) The fact that a selling agency confines its selling activities to the field of Government contracts does not, in and of itself, disqualify it under the covenant. The fact, however, that the selling agency is employed to secure business generally, that is, to represent the concern in connection with sales to the Government as well as regular commercial sales to non-Government activities, is a factor entitled to favorable consideration in evaluating the case as one coming within the authorized exception. Arrangements confined, however, to obtaining Government contracts, particularly those involving a selling agency organized immediately prior to or during periods of expanded procurement resulting from conditions of national emergency, must be closely scrutinized. However, any agency or agent is not "bona fide" which seeks to obtain any Government contract or contracts for its principals through the use of improper influence or which holds itself out as being able to obtain any Government contract or contracts through improper influence.

§ 18-1.505-5 Fees for information.

Contingent fees paid for information leading to obtaining a Government contract or contracts are included in the prohibition and, accordingly, are in breach of the covenant unless the agent qualifies under the exception as a bona fide employee or a bona fide established commercial or selling agency maintained by the contractor for the purpose of securing business.

18-1.506 Representation and agreement required from prospective contractors.

(a) Except as provided in § 18-1.507-2, contracting officers shall inquire of and ecure a written representation from >rospective contractors as to whether hey have employed or retained any com

41

pany or person (other than a full-time employee working solely for the prospective contractor) to solicit or secure the contract, and shall secure a written agreement to furnish information relating thereto as required by the contracting officer.

(b) When an invitation for bids is issued, the requirements of paragraph (a) of this section shall be accomplished by requiring the bidder to check the appropriate boxes in the following statement to be included in the invitation or bid form (also, see § 18-1.507-50):

Bidder or offeror represents: (a) That he [ ] has, [ ] has not, employed or retained any company or person (other than a fulltime bona fide employee working solely for the bidder or offeror) to solicit or secure this contract, and (b) that he [ ] has, [ ] has not, paid or agreed to pay to any company or person (other than a full-time bona fide employee working solely for the bidder or offeror) any fee, commission, percentage, or brokerage fee, contingent upon or resulting from the award of this contract, and agrees to furnish information relating to (a) and (b) above as requested by the Contracting Officer. (For interpretation of the representation, including the term "bona fide employee," see Code of Federal Regulations, Title 44, Part 150.) (January 1964)

(c) When a procurement is to be effected by negotiation, the requirements of paragraph (a) of this section will be accomplished by requiring the offeror either to (1) check the appropriate boxes in the above statement, or (2) execute a written representation which substantially conforms with the above statement. This may be accomplished by including the above statement in the request for proposals or quotations or by obtaining an appropriate statement during the course of negotiations (also see § 181.507-50).

§ 18-1.506-1 Interpretation of the representation.

(a) For the purpose of the representation and agreement required from the prospective contractor, as described in § 18-1.506, the definition of "bona fide employee" is as specified in § 18-1.505-3.

(b) The fact that the prospective contractor retains a person who does not devote his full time solely to the prospective contractor does not necessarily mean that the relationship involved is in violation of the covenant against contingent fees or that there is any stigma attached to the contractor-agent relationship. It does mean, however, that the prospective contractor must fill out the representa

tion in the affirmative and, as required, furnish information with respect to such employment or retainer.

(c) If the representation would otherwise be answered in the affirmative, the fact that the person employed or retained by the bidder or contractor is an attorney, or a public relations consultant, or has any other special or professional title, does not permit answering in the negative.

§ 18-1.507

Use of Standard Form 119.

Except as provided in § 18-1.507-2, Standard Form 119 shall be used without deviation when either part of the inquiry provided for by § 18-1.506 is answered in the affirmative. The form shall also be used without deviation in any other case when the contracting officer desires to obtain such information. When, after use of the form, further information is required, it may be obtained in any appropriate manner. Normally, submission of the form will be required only of successful bidders and contractors.

§ 18-1.507-1 Statement in lieu of form.

Any bidder or proposed contractor who has previously furnished a Standard Form 119 to the office issuing the invitation or negotiating the contract may be permitted to accompany his bid with, or submit in connection with the proposed contract, a signed statement:

(a) Indicating when such completed form was previously furnished;

(b) Identifying by number the previous invitation or contract in connection with which such form was submitted; and

(c) Representing that the statements in such previously furnished form are applicable to such subsequent bid or contract.

In such case, submission of an additional completed Standard Form 119 need not be required. See § 18-1.507-50. § 18-1.507-2 Exceptions.

The inquiry and agreement specified in § 18-1.506 need not be made and submission of Standard Form 119 need not be requested in connection with the following:

(a) Any advertised contract in which the aggregate amount involved does not exceed $25,000;

(b) Any negotiated contract in which the aggregate amount involved does not exceed $5,000;

(c) Any negotiated contract for perishable subsistence supplies in which the aggregate amount involved does not exceed $25,000;

(d) Any contract for services which are required to be performed by an individual contractor in person under Government supervision and paid for on a time basis;

(e) Any contract for public utility services furnished by a public utility company where the utility company's rates for the services furnished are subject to regulation by Federal, State, or other regulatory body and the public utility company is the sole source of supply; and

(f) Contracts to be made in foreign countries.

§ 18-1.507-50 Additional provision.

(a) In addition to the statement to be included in the invitation or bid form required by § 18-1.506, contracting officers may add the following provision to the invitation or bid form:

If the bidder, by checking the appropriate box provided therefor in his bid, has represented that he has employed or retained a company or person (other than a full-time bona fide employee) to solicit or secure this contract, he may be requested by the Contracting Officer to furnish with his bid a completed Standard Form No. 119 (Contractor's Statement of Contingent or Other Fees for Soliciting or Securing Contract). If the bidder has previously furnished & complete Standard Form No. 119 to the office issuing this invitation for bids, he may accompany his bid with a signed statement, in lieu of Standard Form 119, (a) indicating when such completed Form was previously furnished; (b) identifying by number the previous invitation or contract in connection with which such Form was submitted; and (c) representing that the statements in such previously furnished Form are applicable to this bid. (February 1962.)

(b) The statement, in paragraph (a) of this section, suitably modified, may be included in the request for proposals or quotations, in addition to the statement provided for in § 18-1.506(c).

§ 18-1.508 Enforcement.

The contracting officer shall take the necessary steps to ensure that the indi