Paying Commissions NOT Legal
Feb 05, 2025In the world of government contracting, understanding the rules is crucial to avoiding costly mistakes. In his latest video, The Legality of Paying and Receiving Commissions in Government Contracting, Richard C. Howard, a former government procurement officer and founder of DOD Contract Academy, tackles one of the most misunderstood topics: the legality of paying or receiving commissions.
Rick sheds light on the Federal Acquisition Regulation (FAR) and its stance on contingent fees—commonly known as commissions. These fees can lead to serious legal consequences if not handled with care. He explains key concepts, such as the definitions of bona fide employees and agencies, and warns of the strict regulations that govern these arrangements. Companies that fail to comply with these rules may face severe repercussions.
Instead of commission-based compensation, Rick advocates for a clear fee-for-service structure and offers best practices for compliance, such as maintaining transparency and seeking legal consultation when necessary. He also highlights his government contracting certification program, which provides valuable training for individuals looking to navigate the complexities of selling to the government.
If you're involved in government contracting, this video is a must-watch to ensure you stay on the right side of the law.
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