Providing services to a company that wants to provide a full package

[Fischstabchen]

I have a guy that wants to be able to have engineering services available so that he can offer a complete package to his customers. It is looking like I want to setup a retainer type agreement so that he stays high priority in being able to get engineering services quickly for his clients. His business is not an engineering company but compliance company. We sort of want to have a business to business relationship where I do the engineering support and he can do his compliance work. I have read that some states have hooks about finder fees but what kinds of issues are there in providing services in this way? My engineering fees at least as he described are going to be pass through since he just doesn't want to lose clients to business that offer turnkey services. Finders fees seem a little merky but it seem like being under a sub-contract is kind of doing the same thing in an indirect way. Every state has their own guidelines but what are some things I should be worried or aware of ?

 

[gte447f]

phamENG, of course these entities don't openly call themselves brokers, and in fact they usually try to present themselves as the actual service provider, but if it walks like a duck and quacks like a duck, then it is a broker.

Also, I can appreciate a business seeing a need and trying to indenture themselves to their customer by introducing the customer to other service providers, but that should be an arms length referral and the referring business should not get in the middle of any contract that follows between the other two parties. In other words, make the referral and then step aside and do not collect a referral fee or a markup. I sometimes make referrals, and sometimes I am offered a referral fee or kickback, but I always say, "no thanks, I'm not interested, it's not necessary." I used to be tempted by the possibility of a small referral fee for doing none of the work, but I gradually came to see the practice as a form of conflict of interest. I know others don't see any harm in it, but for small potatoes, I can leave it alone.

Likewise, I have been approached numerous times about business opportunities where someone would funnel work to me in exchange for skimming a small portion of the fee off the top. This has usually been small time (unlicensed) "contractors" that wanted to offer turnkey services to customers. To me this sounds similar to the scenario that the OP is describing. This scenario seems easy to identify as somewhat shady when it is being proffered by small time operators that are obviously in over their head and don't bring much to the table, but it is my contention that the same standard should apply to large sophisticated companies.

I think a joint venture could be a good and legitimate structure for this type of thing. I looked into years ago and drafted up a couple of joint venture agreements to try to pursue project opportunities with general contractors in a more equitable way, but I found the structure to be complicated and intimidating to the uninitiated.

 

[SWComposites]

Companies have to be licensed as engineering companies, an engineer. > in general, no. In the civil structures industry, probably yes. In other industries, such as aerospace, no.

 

[gte447f]

SWComposites, the engineering licensing laws apply to all engineers. Most likely, companies in your aerospace industry are covered by an industrial or product development type exemption. The OP didn't explicitly say that a PE license was required in this case, but that has been the general assumption of the discussion up to this point. Maybe the OP will clarify whether this is an exempted industry or situation.