This paper examines four critical areas where government contracting differs from commercial contracting: kickbacks, false statements, false claims, and antitrust regulations. While kickbacks are permissible in the commercial marketplace, they constitute a criminal offense in government contracting. Similarly, false statements and false claims carry far more severe criminal and civil penalties in the government context than in private dealings. The paper also discusses the Sherman Antitrust Act and its applicability to bid rigging and collusive pricing. Together, these distinctions highlight the heightened legal obligations businesses must understand before transitioning from commercial to government procurement.
This study guide is drawn from PaperDue's library of 130,000+ paper examples across 47 subjects.
When a business moves from the commercial contracting marketplace to the government procurement world, it must ensure a clear understanding of the specific rules and regulations to which it will be a party (Manos, 2004; Oyer, 2005). There are inherent risks in working with the government, but businesses that are careful can mitigate those risks and manage them effectively and efficiently (Barnett, 2003). There are four distinct areas where government and commercial contracting differ: kickbacks, false statements, false claims, and antitrust issues (Murphy, 2005; McKendrick, 2005). It is important to address all four of these areas in order to ensure that the differences between the two types of contracting are clearly understood.
In the commercial market, kickbacks are not illegal. For example, a subcontractor can offer to kick back a payment to another, higher-ranking subcontractor or the prime contractor in exchange for securing a contract (Barnett, 2003). While some people might find that practice unsavory, there is no law that prohibits it. However, the government is very strict about this type of behavior, and the use of kickbacks in government contracting is strictly forbidden (Manos, 2004).
Because kickbacks constitute a criminal offense, contractors and subcontractors generally avoid them. It may be tempting to attempt a kickback arrangement, but it is usually not worth the risk. Contractors who engage in this practice should reserve it for the commercial contracting arena, where it remains legally permissible.
Submitting false statements to the government is a criminal offense (Oyer, 2005). This kind of behavior can create problems in commercial contracts as well, but not as severely as when it occurs in dealings with the government. Any false information that a contractor provides can make that contractor subject to criminal penalties under federal law, so it is critically important that government contractors exercise extreme care regarding the information they submit. Double- and triple-checking all submitted information is a sound practice that can prevent significant legal and financial difficulty.
"Civil and criminal liability for false payment claims"
"Bid rigging and collusive pricing under antitrust law"
Doing business with the government can be extremely rewarding, but it is also important to remember that there are many risks, and compliance with rules and regulations is a significant part of the process. Patience, understanding, and care are all valuable assets for government contractors seeking to succeed in this environment.
You’re 51% through this paper. Sign up to read the remaining 2 sections.
Sign Up Now — Instant Access Already a member? Log inAlways verify citation format against your institution’s current style guide requirements.