Clauses · FAR · Banned sources and products
FAR 52.209-10 Prohibition on Contracting with Inverted Domestic Corporations
Does the regulation require it to flow down?
No
There is NO flow-down mandate anywhere in this chain, and the batch instruction to check for one closes negative on the primary source. The clause text has no insertion paragraph (it runs (a) definitions, (b) restriction, (c) exceptions by cross-reference to 9.108-2, (d) five-business-day notice, and stops). FAR 9.108-5 speaks only to the contracting officer, and 9.108-2's prohibition is on the Government's use of appropriated funds, not on the prime's choice of supplier. The clause is on neither commercial flow-down list. Primes flow it down anyway for two reasons: it is one of the five clauses in the always-applicable block at 52.212-5(a), so it rides along whenever a prime copies its own commercial clause list wholesale; and the inversion risk they actually care about is reputational and payment-side, so pushing a notice obligation into the supply chain costs them nothing. GDMS puts it even in its FFP COMMERCIAL template (gdms-scm-tmp-095), which is the tell — that is a list copied, not a mandate applied.
A clause can reach your subcontract without a mandate. Once it is in your document, it is a contract term all the same. The missing mandate is a fact about the regulation. It is not a ruling on your order.
Checked against acquisition.gov on 2026-08-05 · edition Nov 2015 · base v0.9.3 Read the text ↗
What it makes you produce
One item for your checklist.
Something you write
Days to weeks, and nobody outside your company has to agree to it.
- FAR 52.209-10(d)
Written notice to the buyer within five business days — in a flowed-down copy that means your buyer, since there is no contracting officer in your chain
Owed when you become an inverted domestic corporation, or a subsidiary of one, during performance
When it is used
FAR 9.108-5(b): the contracting officer includes the clause 'in each solicitation and contract for the acquisition of products or services (including construction).' No dollar threshold, no contract-type restriction, no commercial or COTS carve-out — it sits at 52.212-5(a)(4) (Nov 2015), the always-applicable block of the commercial clause vehicle. The underlying prohibition is at FAR 9.108-2(a): appropriated funds may not be used for a contract with an inverted domestic corporation or a subsidiary of one, except as provided in 9.108-2(b) and 9.108-4. The exceptions are narrow: 9.108-2(b)(1) exempts contracts entered into before enactment and task orders under them, and 9.108-4 lets an agency head waive the prohibition for a specific contract on a written national-security determination that is documented and reported to Congress. 'Inverted domestic corporation' means a foreign incorporated entity meeting the definition at 6 U.S.C. 395(b) applied under the rules of 6 U.S.C. 395(c); 'subsidiary' means an entity more than 50 percent owned by a parent directly or through another subsidiary. The companion at the solicitation stage is the provision 52.209-2.
Read closely
The definition catches a United States company that reorganized into a foreign incorporated entity, or one more than 50 percent owned by such an entity directly or through another subsidiary — a fact about your own place of incorporation under 6 U.S.C. 395, which no profile question asks. Paragraph (b) is the restriction and paragraph (c) points at the exceptions in FAR 9.108-2 and the agency-head waiver in 9.108-4. The representation is a separate instrument at FAR 52.209-2, and that is where the exposure sits.
The 4 templates that name it, with the line
Source: acquisition.gov, FAR 52.209-10, FAR 9.108-5, FAR 9.108-2, FAR 9.108-4, FAR 52.212-5 (Mar 2026) and FAR 52.244-6 (Oct 2025) (verified 2026-08-05)
This is research, not legal advice. It states what the regulation says about this clause and cites the paragraph behind it. It does not rule on your order, and it does not rule on whether a prime's markings are correct.