User:Brendabalves/Anti-Kickback Enforcement Act

Not to be confused with the Copeland "Anti-kickback" Act.

(this paragraph was already written) The Anti-Kickback Enforcement Act ( Pub. L. Tooltip Public Law (United States) 99–634, 100 Stat. 3523, enacted November 7, 1986, originally codified at 41 U.S.C. § 51 et seq., recodified at 41 U.S.C. ch. 87) modernized and closed the loopholes of previous statutes applying to government contractors. The law attempts to make the anti-kickback statute a more useful prosecutorial tool by expanding the definition of prohibited conduct and by making the statute applicable to a broader range of persons involved in government subcontracting.

Background
The Anti-Kickback Act was a U.S. Act of Congress under President Harry S. Truman first enacted in 1946. While auditing World War II cost-plus-a-fixed-fee contracts, the General Accounting Office of the United States found that, for purposes of obtaining subcontracts from prime contractors who held cost-plus contracts, certain firms were paying kickbacks to those employed in the purchasing departments of such prime contractors. The kickbacks were found to have been paid by the government because the terms of the contract required the contractor to be reimbursed for the costs bore by all subcontracts. At the time, there were no statutory remedies for recovery of these costs by the government which prompted Congress to enact the Anti-Kickback Act. The Anti-Kickback Act was initially only for cost-plus-a-fixed-fee government contracts until the Comptroller General of the United States recommended for it to include all negotiated government contracts and thus the Act was amended as such on September 2, 1960.

In 1986, the Anti-Kickback Act of 1946 was amended by the Anti-Kickback Enforcement Act. The 1986 amendment included expanding the Act's coverage, increasing criminal and civil sanctions, as well as clarifying previously ambiguous provisions and adding a six-year statute of limitation provision regarding civil suits. The Anti-Kickback Enforcement Act prohibits both the acceptance and payment of a kickback, which was lacking in the original Anti-Kickback Act that only prohibited the granting or payment of a kickback. The Anti-Kickback Enforcement Act expanded its coverage by prohibiting completed as well as attempted kickbacks, including all Federal contracts that induce any favorable treatment in contracting and not just kickbacks in order to induce subcontracts. The Act also requires government contractors to state in the contract that they will use internal procedures to locate and prohibit kickbacks in their operations and business relations. These procedures include cooperating with government investigations on potential kickbacks and reporting suspected violations. The amendment also attempted to expand criminal and civil penalties. Criminal penalties were proposed to increase to a maximum 10-year prison term and either a $1,000,000 fine for business entities or a $250,000 fine for others. Today, criminal penalties include a maximum 10-year prison term, fines to be deduced under title 18 of the U.S. Code, or both. For civil actions, it was proposed and enacted that the government can recover twice the amount of the kickback plus $10,000 or less if it finds that violator acted knowingly. Additionally, the Act finds civil penalities totalling the amount of the kickback for employers whose employee engage in the prohibited conduct outlined in §8701 of the Act.

Definitions
The key definitions the Act offers are those for "kickback" and "subcontractor".

A kickback is defined as,"any money, free, commission, credit, gift, gratuity, thing of value, or compensation of any kind that is provided to a prime contractor, prime contractor employee, subcontractor, or subcontractor employee to improperly obtain or reward favorable treatment in connection with a prime contract or a subcontract relating to a prime contract."A subcontractor is defined as,"(A) a person, other than the prime contractor, that offers to furnish or furnishes supplies, materials, equipment, or services of any kind under a prime contract or a subcontract entered into in connection with the prime contract; and (B) includes a person that offers to furnish or furnishes general supplies to the prime contractor or a higher tier subcontractor."

Prohibited Conduct
The Act precludes individuals or business entities from doing the following:


 * 1) provide, attempt to provide, or offer to provide a kickback;
 * 2) solicit, accept, or attempt to accept a kickback; or
 * 3) include the amount of a kickback prohibited by paragraph (1) or (2) in the contract price-
 * 4) A subcontractor charges a prime contractor or a higher tier subcontractor; or
 * 5) A prime contractor charges the Federal Government.

The recipient does not need to induce the kickback or know that the contract was within the coverage of the Act in order to be in violation. As long as the recipient knew that the payment was being in made in order to induce the award of a subcontractor is enough.

Contractor Responsibilities
Each prime contract* must:


 * include reasonable procedures that prevent and detect kickbacks in a contractors own operations and direct relationships; and
 * cooperate with a Federal Government investigation of violations of the Act

* This does not apply to prime contracts that are $100,000 or less or prime contracts for the commercial acquisition of commercial products or commercial services as defined in 41 U.S.C.A. §103 and 41 U.S.A.C. §103(a).

If there are reasonable grounds in doing so, a prime contractor or a subcontractor must report possible violations of the Act in writing to the contracting agency's inspector general or if there is no inspector general, the head of the agency or the Attorney General.

Inspection Authority
The Act allows the Comptroller General and the inspector general of the contracting agency, or a representative of the contracting agency designated by the head of the agency if the agency does not have an inspector general, to access and audit the books and records of a prime contractor or subcontractor and inspect the facilities of said prime contractor or subcontractor under a contract awarded by the agency.

Civil Actions
The Act lists two ways the Federal Government can recover from a person who violated the Act.


 * If a person knowingly engages in the prohibited conduct, they will be subject to a civil penalty of twice the amount of each kickback involved and a maximum $10,000 per violation occurrence.
 * If a persons employee, subcontractor, or subcontractor employee provides, accepts or charges a kickback they will be subject to a civil penalty equal to the amount of that kickback.

However, the Act also states that there is a 6 year statute of limitation after the later date when the prohibited conduct establishing the cause of action occurred or when the Federal Government knew or should have know that the conduct occurred.

Criminal Penalties
The Act states that a person who knowingly and willfully violates the act, they will be fined under title 18 of the U.S. Code, imprisoned for a maximum of 10 years, or both.

U.S. ex rel. Vavra v. Kellogg Brown & Root, Incorporated
In this 2017 case, the Court of Appeals for the Fifth Circuit held that corporations can be held vicariously liable if an employee knowingly violates the Act. Viarious liability was initally only applicable to employers who themselves have violated the Act, but this case expanded that.

Kellogg Brown & Root (KBR) entered into a services contract with the U.S. Army in 2001 and perform the work through subcontractors. It was then discovered that employees from the subcontractors were paying kickbacks to KBR in the form of meals, drinks, golf outings, rodeo tickets, baseball and football games to receive favorable treatment.

The court stated that the employee must have been acting within the scope of their employed or acted with apparent authority. Additionally, the employees knowledge of violating the Act can be imputed to the corporation because of the role the employee holds within the company. This will ultimately be dependant on the employees particular circumstances and position in the corporate hierarchy such that their responsibility or authority can impute their knowledge to the corporation.