Greer, SC asked in Gov & Administrative Law and Government Contracts for Virginia

Q: A federal contractor believes another contractor poses a threat to them winning an upcoming bid.

A federal contractor believes another contractor poses a threat to them winning an upcoming bid. As a preemptive strategy they offer to share revenue with the other contractor by giving them positions (workers) on the new contract in exchange for their agreement not to bid. Is this legal?

1 Lawyer Answer
James L. Arrasmith
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A: No, offering to share revenue or profits with another contractor in exchange for their agreement not to bid on a federal contract is generally not legal. Such an arrangement would likely be considered a violation of federal procurement laws and regulations, including the Anti-Kickback Act and the Procurement Integrity Act.

The Anti-Kickback Act prohibits contractors from providing or offering any kind of payment, gift, or other benefit to any individual or entity in exchange for receiving or being awarded a federal contract. The Procurement Integrity Act prohibits government officials and contractors from disclosing confidential information related to a federal procurement, and also prohibits contractors from engaging in certain actions that could compromise the integrity of the procurement process, such as colluding with other contractors to rig the outcome of a competition.

Furthermore, such an arrangement could be viewed as an attempt to monopolize the market and could potentially violate antitrust laws.

Therefore, federal contractors should avoid engaging in any behavior that could be perceived as attempting to influence the outcome of a procurement in an illegal or unethical way. It is important to comply with all applicable laws and regulations and to compete fairly and honestly for federal contracts.

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