52.209-2 Prohibition on Contracting with Inverted Domestic Corporations-Representation
Source: FAR 52.209-2 on acquisition.gov
Offerors must certify whether they are, or are not, an inverted domestic corporation or subsidiary, as contracts with such entities are generally prohibited unless an exception or waiver applies.
Overview
FAR 52.209-2 requires offerors to represent whether they are an inverted domestic corporation or a subsidiary of one, as defined in FAR 52.209-10. This provision implements statutory prohibitions on awarding contracts using appropriated funds to such entities, unless a specific exception or waiver applies. The regulation is designed to prevent federal funds from being used to contract with companies that have moved their corporate location outside the U.S. for tax purposes but retain substantial business operations in the U.S.
Key Rules
- Definitions Reference
- The terms "inverted domestic corporation" and "subsidiary" are defined in FAR 52.209-10 and must be understood as such for compliance.
- Prohibition on Contracting
- Agencies cannot use appropriated funds to contract with inverted domestic corporations or their subsidiaries unless an exception (FAR 9.108-2(b)) or waiver (FAR 9.108-4) applies.
- Offeror Representation Requirement
- Offerors must affirmatively state whether they are, or are not, an inverted domestic corporation or a subsidiary thereof as part of their proposal submission.
Responsibilities
- Contracting Officers: Must include this provision in solicitations and ensure offerors complete the representation; verify compliance before award.
- Contractors/Offerors: Must accurately complete the representation regarding their corporate status.
- Agencies: Must not award contracts to prohibited entities unless an exception or waiver is properly documented.
Practical Implications
- This provision exists to enforce statutory restrictions on contracting with certain corporate structures seen as avoiding U.S. taxes.
- Contractors must be diligent in understanding and truthfully representing their corporate structure.
- Failure to comply or misrepresentation can result in ineligibility for award or contract termination.
As prescribed in 9.108-5(a), insert the following provision:
Prohibition on Contracting with Inverted Domestic Corporations-Representation (Nov 2015)
(a) Definitions. "Inverted domestic corporation" and "subsidiary" have the meaning given in the clause of this contract entitled Prohibition on Contracting with Inverted Domestic Corporations (52.209-10).
(b) Government agencies are not permitted to use appropriated (or otherwise made available) funds for contracts with either an inverted domestic corporation, or a subsidiary of an inverted domestic corporation, unless the exception at 9.108-2(b) applies or the requirement is waived in accordance with the procedures at 9.108-4.
(c) Representation. The Offeror represents that-
(1) It □ is, □ is not an inverted domestic corporation; and
(2) It □ is, □ is not a subsidiary of an inverted domestic corporation.
(End of provision)