FAR 4.901—Definition.
Plain-English Summary
FAR 4.901 provides a single, specialized definition used in this subpart: "common parent." It explains which corporate entity counts as the parent for purposes of the rule set by tying the term to an affiliated group of corporations that files Federal income tax returns on a consolidated basis, and by requiring that the offeror be a member of that group. In practice, this definition matters because it identifies the correct corporate parent when the subpart requires reporting, representation, or other actions based on corporate affiliation rather than on a standalone legal entity. The definition is tax-structure-specific, so it focuses on consolidated Federal income tax filing status rather than broader concepts like ownership in the abstract or general corporate family relationships. For contractors, the key significance is determining whether the offeror belongs to a consolidated group and, if so, which entity is the controlling parent for compliance purposes. For contracting personnel, the definition helps ensure that any requirements in the subpart are applied to the right corporate entity and not to an unrelated affiliate or subsidiary.
Key Rules
Common parent is a corporate entity
The term refers to a corporate entity, not an individual, partnership, or other non-corporate organization. The definition is limited to the entity that sits at the top of the relevant corporate structure.
Must own or control the affiliated group
The parent must own or control the affiliated group of corporations. This means the entity has the relationship necessary to direct or hold the group together for purposes of the subpart.
Group files consolidated tax returns
The affiliated group must file Federal income tax returns on a consolidated basis. If the group does not file consolidated returns, this definition does not apply.
Offeror must be a member
The offeror must be part of the affiliated group for the common parent concept to apply. The definition is not triggered by a parent company that is unrelated to the offeror's filing group.
Responsibilities
Offeror
Determine whether it is a member of an affiliated group that files consolidated Federal income tax returns and identify the correct common parent when responding to solicitation or contract requirements that use this term.
Contracting Officer
Apply the definition consistently when the subpart requires identification of the common parent, and verify that the offeror’s corporate structure supports the claimed parent relationship.
Corporate Parent / Tax Filing Group
Maintain accurate corporate and tax-filing records showing which entity owns or controls the affiliated group and whether the group files consolidated Federal income tax returns.
Practical Implications
This definition is narrow and tax-driven, so contractors should not assume that any holding company or ultimate owner automatically qualifies as the common parent.
A common mistake is confusing corporate control for tax purposes with broader business affiliation; the rule depends on consolidated Federal income tax filing status.
Offerors in complex corporate families should confirm the exact entity that files the consolidated return, especially after mergers, reorganizations, or ownership changes.
Contracting personnel should use this definition only within the subpart that adopts it and avoid applying it as a general FAR-wide definition.
Accurate identification of the common parent can affect compliance, reporting, and responsibility determinations tied to the corporate group rather than the individual offeror.
Official Regulatory Text
Common parent , as used in this subpart, means that corporate entity that owns or controls an affiliated group of corporations that files its Federal income tax returns on a consolidated basis, and of which the offeror is a member.