FAR 52.209-2—Prohibition on Contracting with Inverted Domestic Corporations-Representation.
Plain-English Summary
FAR 52.209-2 is a solicitation provision that requires an offeror to represent whether it is an inverted domestic corporation or a subsidiary of one, and it ties that representation to the government’s statutory restriction on using appropriated or otherwise available funds for contracts with such entities. The provision works together with FAR 52.209-10, which supplies the definitions of “inverted domestic corporation” and “subsidiary,” and it references the limited exception at FAR 9.108-2(b) and the waiver procedures at FAR 9.108-4. In practice, this provision is used at the offer stage so the contracting officer can determine eligibility before award and document compliance with the prohibition. It matters because a false or incomplete representation can lead to award risk, post-award compliance issues, and potential remedies if the government contracts with a prohibited entity without an applicable exception or waiver. The section is short, but it is important because it connects a contractor’s status, the government’s funding restriction, and the acquisition file documentation needed to support a lawful award.
Key Rules
Offeror must make a status representation
The provision requires the offeror to state whether it is, or is not, an inverted domestic corporation and whether it is, or is not, a subsidiary of an inverted domestic corporation. This is a direct solicitation-level certification that the contracting officer may rely on for award evaluation and responsibility/eligibility review.
Definitions come from FAR 52.209-10
The terms “inverted domestic corporation” and “subsidiary” are not defined in this provision itself. Their meaning is taken from the companion contract clause at FAR 52.209-10, so offerors and contracting officers must read the two provisions together.
Government funding restriction applies
Government agencies may not use appropriated or otherwise available funds to contract with an inverted domestic corporation or its subsidiary unless an exception applies or a waiver has been granted. The provision is the representation mechanism that helps the government screen for this restriction before award.
Exception and waiver may permit award
The prohibition is not absolute; it may be avoided if the exception at FAR 9.108-2(b) applies or if the requirement has been waived under FAR 9.108-4. Contracting officers must confirm that any claimed exception or waiver is properly documented before proceeding.
Representation must be accurate and complete
Because the provision asks two separate questions, an offeror must answer both: its own status and its subsidiary status. A contractor that is not itself inverted may still be disqualified if it is a subsidiary of an inverted domestic corporation.
Responsibilities
Offeror
Review corporate structure and ownership carefully, determine whether it is an inverted domestic corporation or a subsidiary of one, and complete both representation checkboxes accurately in the offer. The offeror must ensure the representation is current and truthful at the time of submission.
Contracting Officer
Include the provision when prescribed, review the offeror’s representation, and verify whether any exception or waiver applies before award if the representation indicates a prohibited status. The contracting officer must also ensure the contract file supports the award decision.
Agency
Follow the statutory funding restriction and internal procedures for exceptions or waivers, and avoid obligating funds to prohibited entities unless a valid exception or waiver exists. The agency must maintain compliance controls and documentation supporting any approved waiver.
Legal/Policy Officials
Advise on whether the exception at FAR 9.108-2(b) applies, process or review waiver requests under FAR 9.108-4, and help ensure the agency’s interpretation of inverted domestic corporation status is legally supportable.
Practical Implications
Offerors should not treat this as a routine checkbox; the answer depends on corporate history, parent-subsidiary relationships, and the specific FAR definitions in 52.209-10.
A common pitfall is answering only the first question and overlooking subsidiary status, which can create an inaccurate representation even if the company itself is not inverted.
Contracting officers should not rely on the representation alone when the offeror indicates a prohibited status; they must confirm whether an exception or waiver exists before award.
Because the rule is tied to funding restrictions, improper award decisions can create procurement and compliance problems even if the contract is otherwise technically acceptable.
Companies involved in mergers, acquisitions, or corporate reorganizations should review their status early in the solicitation process, since inversion-related status can change and affect eligibility.
Official Regulatory Text
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)