9.108-2 Prohibition
Source: FAR 9.108-2 on acquisition.gov
Federal agencies are prohibited from awarding contracts to inverted domestic corporations or their subsidiaries, with limited exceptions for pre-existing contracts and task orders.
Overview
FAR 9.108-2 establishes a governmentwide prohibition on awarding contracts using appropriated funds to inverted domestic corporations or their subsidiaries, as mandated by Section 745 of Division D of the Consolidated Appropriations Act, 2008, and its successors. This prohibition is designed to prevent federal contracting with companies that have restructured to avoid U.S. taxes by reincorporating abroad. The regulation includes an exception for contracts and task orders entered into before the enactment date of the relevant appropriations act. Contracting officers are advised to consult legal counsel if a contractor becomes an inverted domestic corporation or subsidiary during contract performance, ensuring proper application of the prohibition and any exceptions.
(a) Section 745 of Division D of the Consolidated Appropriations Act, 2008 (Pub. L. 110-161) and its successor provisions in subsequent appropriations acts (and as extended in continuing resolutions) prohibit, on a Governmentwide basis, the use of appropriated (or otherwise made available) funds for contracts with either an inverted domestic corporation, or a subsidiary of such a corporation, except as provided in paragraph (b) of this section and in 9.108-4 Waiver.
(b)
(1) Section 745 and its successor provisions include the following exception: This section shall not apply to any Federal Government contract entered into before the date of the enactment of this Act, or to any task order issued pursuant to such contract.
(2) To ensure appropriate application of the prohibition and this exception, contracting officers should consult with legal counsel if, during the performance of a contract, a contractor becomes an inverted domestic corporation or a subsidiary of one.