Engineer Pay a Finders Fee for Referral or Lead

[fjvillegasjr]

Good day fellow Engineers.

I have a question regarding finders fees or referral fees being paid to a contractor.
Can an engineer legally pay a contractor a finders fee for being recommended and getting a job.

If a contractor refers a client to an engineer or architect, and the client is the one who is working directly with the engineer/architect, is it legal and ethical to pay the contractor a finders fee or referral fee. Obviously the client has the opportunity to find someone else, the contractor's work is not affected by the engineer/architect. It is only a recommendation of an engineer/architect.

At first I considered it harmless but then lets consider that the engineer/architect increases his fee based on the idea of quoting the client. Would this be unethical?
The client has the opportunity to seek other quotes, so it seems okay but maybe I am wrong.
It is business at the end of the day.

The client is open to choose any other engineer/architect as they are not coordinating with/for the construction documents.

Thanks for your responses in advance.

 

[xnuke]

Please see the NSPE Ethics cases on their website. I believe it would violate the following:

NSPE Code of Ethics II.5.b.
Engineers shall not offer, give, solicit, or receive, either directly or indirectly, any contribution to influence the award of a contract by public authority, or which may be reasonably construed by the public as having the effect or intent of influencing the awarding of a contract. [highlight #FCE94F]They shall not offer any gift or other valuable consideration in order to secure work. They shall not pay a commission, percentage, or brokerage fee in order to secure work, except to a bona fide employee or bona fide established commercial or marketing agencies retained by them.[/highlight]

Consider the case reviewed here for more information.

xnuke
"Live and act within the limit of your knowledge and keep expanding it to the limit of your life." Ayn Rand, Atlas Shrugged.
Please see FAQ731-376 for tips on how to make the best use of Eng-Tips.

 

[fjvillegasjr]

According to the text above, the code denotes that a person shall not offer consideration to secure work.

In no way, in this particular case, would the work be 'secured' as the consideration depends on if the job is acquired.

Basically a referral fee would be only be provided to contractor in the event that a job is acquired and accepted by a client, but the referral fee does not affect the outcome as to whether or not the job is acquired. If paid a fee to contractor, it would not 'secure' the work.

Now, it could also be interpreted as the engineer/architect has secured work from a contractor by offering consideration - but it again goes back to what is said above.

 

[Ron]

@fjv....you're splitting semantics. "Secure" in this context simply means "to get". Is it legal?...perhaps. Is it ethical?....hell no.

 

[phamENG]

I don't think I'd advertise "Send me work and I'll give you a $100!" But, if that contractor sends you several referrals, I don't see anything wrong with taking them out to a nice meal or 18 holes.

There's a fine line between a quid pro quo and a thank you.

 

[EnergyProfessional]

If you have to ask - it probably is not ethical.

It also is not ethical from the contractor's point. the client expects an honest recommendation, not one based on who pays the contractor.

Ask yourself, doe sit pass the smell test?

 

[JAE]

A lot of that NSPE language posted by xnuke above is also found in many US State Engineering Laws.

Tread carefully and if in doubt - definitely contact your applicable state board of engineers and ask them.

 

[fjvillegasjr]

Thanks for all your responses. I get the gist here.

 

[CWB1]

Your situation is both ethical and common practice among engineering and contracting firms alike. Many contractors keep engineering firms on retainer or choose to only work with specific firms they have experience with - the old bi-directional "approved supplier" list. Ultimately as your OP points out, the public retains the right to choose their engineering provider unless the contractor subcontracts to their favored firm directly. Many contractors also publicly advertise that they pay a referral fee and I would not be surprised to hear that an engineering firm did as well, particularly after seeing an ad for one that involved a coupon. The common ethical issue to be aware of is granting/soliciting referral fees to the employee of a firm rather than the firm itself, the employee only being entitled to what their employer grants and NOT what the customer does - quid pro quo.

The irony of the above example is that the "case" and "board" discussed above are entirely within NSPE rather than an actual government agency as the verbiage would have you assume. Misleading and thereby unethical? Some would say so.

 

[Ron]

CWB1....I think you need to re-read NSPE and other ethics guidelines for Professional Engineers. What is proposed is not ethical.

 

[CWB1]

Ron, I read the linked "case" as well as several other related NSPE pages prior to my previous post due to the fact that they do not appear to follow any sort of ethical-problem-solving process nor even mention the basic tenets of ethics. I have no shortage of professional education on the subject, a requirement of holding an international role was several weeks annually of ethics and legal training in-person with a corporate attorney in addition to heavy oversight and regular review otherwise. Per the common, basic tenets of ethical decision-making I see no ethical issues but would welcome input otherwise.

If I understand the OP correctly, the customer retains the right to choose both their contractor and engineer through separate quotes, equal consideration is being given by all to all others involved, and the common good is consequently maintained throughout. The money offered is merely a gesture of thanks for a tip leading to potential work, not payment toward someone with purchasing power.

 

[Compositepro]

There is a big difference between a reward and a bribe, besides spelling.