9.108-1
Definitions
Understanding the precise definitions of "inverted domestic corporation" and "subsidiary" is essential for compliance with the prohibition on contracting with certain foreign-incorporated entities.
Overview
FAR 9.108-1 provides definitions for key terms used in the prohibition on contracting with inverted domestic corporations. Specifically, it clarifies what constitutes an "inverted domestic corporation" and a "subsidiary" for the purposes of compliance with FAR 9.108. These definitions are critical for determining which entities are subject to the prohibition and ensuring that contractors and contracting officers correctly identify ineligible entities during the acquisition process.
Key Rules
- Inverted Domestic Corporation Definition
- An inverted domestic corporation is defined by reference to 6 U.S.C. 395(b) and (c), which outline the criteria for a foreign-incorporated entity to be considered inverted for federal contracting purposes.
- Subsidiary Definition
- A subsidiary is any entity more than 50% owned, either directly or indirectly, by a parent corporation, including ownership through another subsidiary.
Responsibilities
- Contracting Officers: Must apply these definitions when determining contractor eligibility under FAR 9.108.
- Contractors: Must understand and accurately represent their corporate structure and status regarding these definitions.
- Agencies: Ensure compliance with the prohibition by using these definitions in eligibility determinations.
Practical Implications
- These definitions are foundational for enforcing the prohibition on contracting with inverted domestic corporations.
- Misunderstanding or misapplying these terms can lead to improper contract awards or compliance violations.
- Contractors should review their corporate structure to ensure accurate representation and avoid inadvertent noncompliance.