74558 Federal Register / Vol. 79, No. 240 / Monday December 15, 2014 / Proposed Rules 

DEPARTMENT OF DEFENSE 

GENERAL SERVICES 

ADMINISTRATION 

NATIONAL AERONAUTICS AND 

SPACE ADMINISTRATION 

48 CFR Part 52 

[FAR Case 2015–006; Docket No. 2014– 

0051; Sequence No. 1] 

RIN 9000–AM85 

Federal Acquisition Regulation; 

Prohibition on Contracting With 

Inverted Domestic Corporations— 

Representation and Notification 

AGENCY: Department of Defense (DoD), 

General Services Administration (GSA), 

and National Aeronautics and Space 

Administration (NASA). 

ACTION: Proposed rule. 

SUMMARY: DoD, GSA, and NASA are 

proposing to amend the Federal 

Acquisition Regulation (FAR) to require 

additional actions by contractors to 

assist contracting officers in ensuring 

compliance with the Governmentwide 

statutory prohibition on the use of 

appropriated (or otherwise made 

available) funds for contracts with any 

foreign incorporated entity that is an 

inverted domestic corporation or to any 

subsidiary of such entity. 

DATES: Interested parties should submit 

written comments to the Regulatory 

Secretariat Division at one of the 

addresses shown below on or before 

February 13, 2015 to be considered in 

the formation of the final rule. 

ADDRESSES: Submit comments in 

response to FAR Case 2015–006 by any 

of the following methods: 

• Regulations.gov: http:// 

www.regulations.gov. Submit comments 

via the Federal eRulemaking portal by 

searching for ‘‘FAR Case 2015–006’’. 

Select the link ‘‘Comment Now’’ that 

corresponds with ‘‘FAR Case 2015– 

006’’. Follow the instructions provided 

at the ‘‘Comment Now’’ screen. Please 

include your name, company name (if 

any), and ‘‘FAR Case 2015–006’’ on your 

attached document. 

• Fax: 202–501–4067. 

• Mail: General Services 

Administration, Regulatory Secretariat 

Division (MVCB), ATTN: Ms. Hada 

Flowers, 1800 F Street NW., 2nd Floor, 

Washington, DC 20405. 

Instructions: Please submit comments 

only and cite FAR Case 2015–006, in all 

correspondence related to this case. All 

comments received will be posted 

without change to http:// 

www.regulations.gov, including any 

personal and/or business confidential 

information provided. 

FOR FURTHER INFORMATION CONTACT: Mr. 

Michael O. Jackson, Procurement 

Analyst, at 202–208–4949, for 

clarification of content. For information 

pertaining to status or publication 

schedules, contact the Regulatory 

Secretariat at 202–501–4755. Please cite 

FAR Case 2015–006. 

SUPPLEMENTARY INFORMATION: 

I. Background 

DoD, GSA, and NASA are proposing 

to revise the provisions of the FAR that 

address the continuing 

Governmentwide statutory prohibition 

(in effect since fiscal year 2008) on the 

use of appropriated (or otherwise made 

available) funds for contracts with any 

foreign incorporated entity that is an 

inverted domestic corporation (under 

section 835 of the Homeland Security 

Act of 2002, codified at 6 U.S.C. 395) or 

any subsidiary of such entity. By 

separate notice, DOD, GSA, and NASA 

have issued an interim rule (FAR Case 

2014–017) that more clearly reflects the 

ongoing and continuing nature of this 

statutory prohibition. 

An inverted domestic corporation is a 

corporation that meets the criteria 

specified in 6 U.S.C. 395(b) and (c). To 

date, an offeror has been required to 

include a statement in its offer (found at 

FAR 52.209–2(c) and 52.212–3(n)(2)) 

representing that by signing the offer, 

the offeror is representing that it is not 

an inverted domestic corporation or a 

subsidiary of an inverted domestic 

corporation. To increase the 

Government’s ability to identify an 

offeror’s status as an inverted domestic 

corporation, this rule proposes to 

change the representation to require an 

affirmative act by the offeror to 

complete two yes/no check-off boxes on 

whether it is an inverted domestic 

corporation, or a subsidiary of one, so 

that the Government will know which 

corporations are subject to the 

contracting prohibition. (Contracting 

officers would be allowed to continue 

relying on the offeror’s representation 

unless there is an independent reason to 

question it.) 

In accordance with FAR 4.1201(b)(1), 

52.204–8, and 52.212–3, offerors would 

continue to be required to represent 

their current status at the earlier of an 

offer submission or the annual 

anniversary of their registration in the 

System for Award Management (SAM). 

This existing requirement, coupled with 

the proposed new more specific 

representation, will better ensure clear, 

current, accurate, and complete 

disclosure by offerors of whether or not 

they are an inverted domestic 

corporation, for consideration by a 

contracting officer before making a new 

contract award. 

In addition, the rule proposes to add 

a new paragraph to FAR clause 52.209– 

10 that would require the contractor, 

when the contractor becomes an 

inverted domestic corporation during 

contract performance, to give written 

notification of its change in status as an 

inverted domestic corporation to the 

contracting officer within five business 

days from the date of the inversion 

event. 

II. Executive Orders 12866 and 13563 

Executive Orders (E.O.s) 12866 and 

13563 direct agencies to assess all costs 

and benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). E.O. 13563 emphasizes the 

importance of quantifying both costs 

and benefits, of reducing costs, of 

harmonizing rules, and of promoting 

flexibility. This is a significant 

regulatory action and, therefore, was 

subject to review under section 6(b) of 

E.O. 12866, Regulatory Planning and 

Review, dated September 30, 1993. This 

rule is not a major rule under 5 U.S.C. 

804. 

III. Regulatory Flexibility Act 

DoD, GSA, and NASA do not expect 

this rule to have a significant economic 

impact on a substantial number of small 

entities within the meaning of the 

Regulatory Flexibility Act, 5 U.S.C. 601, 

et seq., because this rule will only 

impact an offeror that is an inverted 

domestic corporation and wants to do 

business with the Government. It is 

expected that the number of small 

entities impacted by this rule will be 

minimal. Small business concerns are 

unlikely to have been incorporated in 

the United States (or, if a partnership, 

established in the United States) and 

then subsequently incorporated in a 

foreign country; the major participants 

in these transactions are reportedly large 

multinational corporations. No domestic 

entities will be impacted by this rule. 

For the definition of ‘‘small business,’’ 

the Regulatory Flexibility Act refers to 

the Small Business Act, which in turn 

allows the U.S. Small Business 

Administration (SBA) Administrator to 

specify detailed definitions or standards 

(5 U.S.C. 601(3) and 15 U.S.C. 632(a)). 

The SBA regulations at 13 CFR 121.105 

discuss who is a small business: ‘‘(a)(1) 

Except for small agricultural 


emcdonald on DSK67QTVN1PROD with PROPOSALS3
Federal Register / Vol. 79, No. 240 / Monday December 15, 2014 / Proposed Rules 74559 

cooperatives, a business concern eligible 

for assistance from SBA as a small 

business is a business entity organized 

for profit, with a place of business 

located in the United States, and which 

operates primarily within the United 

States or which makes a significant 

contribution to the U.S. economy 

through payment of taxes or use of 

American products, materials or labor.’’ 

Therefore, an Initial Regulatory 

Flexibility Analysis has not been 

performed. DoD, GSA, and NASA invite 

comments from small business concerns 

and other interested parties on the 

expected impact of this rule on small 

entities. 

DoD, GSA, and NASA will also 

consider comments from small entities 

concerning the existing regulations in 

subparts affected by the rule in 

accordance with 5 U.S.C. 610. Interested 

parties must submit such comments 

separately and should cite 5 U.S.C 610 

(FAR Case 2015–006), in 

correspondence. 

IV. Paperwork Reduction Act 

The Paperwork Reduction Act (44 

U.S.C. Chapter 35) applies because the 

proposed rule contains information 

collection requirements. Accordingly, 

the Regulatory Secretariat Division will 

submit a request for approval of a new 

information collection requirement 

concerning Prohibition on Contracting 

with Inverted Domestic Corporations to 

the Office of Management and Budget. 

A. Public Reporting Burden 

The public reporting burden for this 

collection of information is estimated to 

average .2 hours per response, including 

the time for reviewing instructions, 

searching existing data sources, 

gathering and maintaining the data 

needed, and completing and reviewing 

the collection of information. 

The annual reporting burden 

estimated as follows: 

Respondents: 352,000. 

Responses per respondent: 

Approximately 1. 

Total annual responses: 352,002. 

Preparation hours per response: 

Approximately .2. 

Total response Burden Hours: 70,410. 

B. Request for Comments Regarding 

Paperwork Burden. 

Submit comments, including 

suggestions for reducing this burden, 

not later than February 13, 2015 to: FAR 

Desk Officer, OMB, Room 10102, NEOB, 

Washington, DC 20503, and a copy to 

the General Services Administration, 

Regulatory Secretariat Division (MVCB), 

ATTN: Ms. Hada Flowers, 1800 F Street 

NW., 2nd Floor, Washington, DC 20405. 

Public comments are particularly 

invited on: Whether this collection of 

information is necessary for the proper 

performance of functions of the FAR, 

and will have practical utility; whether 

our estimate of the public burden of this 

collection of information is accurate, 

and based on valid assumptions and 

methodology; ways to enhance the 

quality, utility, and clarity of the 

information to be collected; and ways in 

which we can minimize the burden of 

the collection of information on those 

who are to respond, through the use of 

appropriate technological collection 

techniques or other forms of information 

technology. 

Requesters may obtain a copy of the 

supporting statement from the General 

Services Administration, Regulatory 

Secretariat Division (MVCB), ATTN: Ms. 

Hada Flowers, 1800 F Street NW., 2nd 

Floor, Washington, DC 20405. 

Please cite OMB Control Number 

9000–00XX, Prohibition on Contracting 

with Inverted Domestic Corporations, in 

all correspondence. 

List of Subject in 48 CFR Part 52 

Government procurement. 

Dated: December 5, 2014. 

William Clark, 

Acting Director, Office of Government-wide 

Acquisition Policy, Office of Acquisition 

Policy, Office of Government-wide Policy. 

Therefore, DoD, GSA, and NASA are 

proposing to amend 48 CFR part 52 as 

set forth below: 

PART 52—SOLICITATION PROVISIONS 

AND CONTRACT CLAUSES 

■ 1. The authority citation for 48 CFR 

part 52 continues to read as follows: 

Authority: 40 U.S.C. 121(c); 10 U.S.C. 

chapter 137; and 51 U.S.C. 20113. 

■ 2. Amend section 52.209–2 by 

revising the date of the provision and 

paragraph (c) to read as follows: 

52.209–2 Prohibition on Contracting with 

Inverted Domestic Corporations— 

Representation. 

* * * * * 

Prohibition on Contracting With 

Inverted Domestic Corporations— 

Representation (Date) 

* * * * * 

(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) 

■ 3. Amend section 52.209–10 by 

revising the date of the clause; and 

adding paragraph (d) to read as follows: 

52.209–10 Prohibition on Contracting with 

Inverted Domestic Corporations. 

* * * * * 

Prohibition on Contracting With 

Inverted Domestic Corporations (DATE) 

* * * * * 

(d) In the event the Contractor becomes 

either an inverted domestic corporation, or a 

subsidiary of an inverted domestic 

corporation during contract performance, the 

Contractor shall give written notice to the 

Contracting Officer within five business days 

from the date of the inversion event. 

* * * * * 

■ 4. Amend section 52.212–3 by 

revising the date of the provision; and 

paragraph (n)(2) to read as follows: 

52.212–3 Offeror Representations and 

Certifications—Commercial Items. 

* * * * * 

Offeror Representations and 

Certifications—Commercial Items 

(DATE) 

* * * * * 

(n) * * * 

(2) Representation. The offeror represents 

that— 

(i) It ❏ is, ❏ is not an inverted domestic 

corporation; and 

(ii) It ❏ is, ❏ is not a subsidiary of an 

inverted domestic corporation. 

* * * * * 

■ 5. Amend section 52.212–5 by 

revising the date of the clause and 

paragraph (a)(1) to read as follows: 

52.212–5 Contract Terms and Conditions 

Required To Implement Statutes or 

Executive Orders—Commercial Items. 

* * * * * 

Contract Terms and Conditions 

Required To Implement Statutes or 

Executive Orders—Commercial Items 

(DATE) 

(a) * * * 

(1) 52.209–10, Prohibition on Contracting 

with Inverted Domestic Corporations 

(DATE)(section 745 of Division D of Pub. L. 

110–161 and its successor provisions in 

subsequent appropriations acts and 

continuing resolutions). 

* * * * * 

[FR Doc. 2014–29151 Filed 12–12–14; 8:45 am] 

BILLING CODE 6820–EP–P 


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