I.  Background

This rule implements section 738 of Division C of the Consolidated Appropriations Act, 2012 (Pub. L. 112-74), which was signed on December 23, 2011. The same Governmentwide restrictions are already incorporated in the FAR for funds appropriated in Fiscal Years 2008 through 2010, under FAR Case 2008-009, which published as an interim rule in the Federal Register at 74 FR 31561 on July 1, 2009, and as a final rule which published in the Federal Register at 76 FR 31410 on May 31, 2011.

Section 738 of Division C extends to the use of Federal appropriated funds for Fiscal Year 2012, the prohibition against contracting with any inverted domestic corporation, as defined at section 835(b) of the Homeland Security Act of 2002 (Pub. L. 107-296, 6 U.S.C. 395(b)) or any subsidiary of such an entity.

An inverted domestic corporation is one that used to be incorporated in the United States, or used to be a partnership in the United States, but now is incorporated in a foreign country, or is a subsidiary whose parent corporation is incorporated in a foreign country. See the definition of inverted domestic corporation at FAR 9.108-1.

As in past consolidated appropriations acts that prohibited contracting with inverted domestic corporations, the prohibition does not apply when using Fiscal Year 2012 funds for a contract entered into before the date the funds were appropriated (December 23, 2011), or for any order issued pursuant to such contract. A paragraph has been added to FAR 52.209-10, Prohibition on Contracting with Inverted Domestic Corporations, to refer to the FAR 9.108-2 exceptions to the prohibition.