Sponsors
The bill aims to keep large federal contract work with firms having strong U.S. ties to protect national security and the domestic industrial base, but it raises compliance risks, legal uncertainty, administrative costs, and the potential for higher procurement prices from reduced competition.
Taxpayers and government agencies: federal contracts will be steered away from firms that have effectively shifted corporate residence abroad, reducing reliance on contractors with weakened domestic ties and protecting mission-critical procurement.
Small businesses and domestic contractors: the bill requires at least 90% of prime contract work (by value) on large federal contracts to be performed by non-inverted entities, helping preserve U.S. industrial base and domestic supply‑chain participation.
Government and contractors: the statute creates a targeted mechanism (Treasury regulations and statutory tests) to identify true inversions and allow exceptions, reducing the risk of overly broad bans that would exclude legitimately foreign‑operating firms.
Government contractors and small subcontractors: prime contracts risk termination and firms face suspension or debarment if first‑tier or structured lower‑tier work causes more than 10% of performance to be by covered (inverted) entities, increasing compliance risk and exposure.
Taxpayers: excluding or limiting participation by foreign‑incorporated firms may reduce competition on some procurements and lead to higher prices on large contracts.
Government contractors: the bill's retroactive regulatory reach (applying tests back to May 8, 2014) combined with forthcoming Treasury rulemaking could create legal uncertainty, complicate bid decisions, and invite disputes.
Based on analysis of 2 sections of legislative text.
Bars federal awards and limits subcontracts to foreign‑incorporated "inverted domestic corporations," sets tests and Treasury regs, and allows narrow waivers for national security or certain health efficiencies.
Introduced February 9, 2026 by Rosa L. Delauro · Last progress February 9, 2026
Prohibits federal executive agencies and defense agencies from awarding new contracts, certain subcontracts, or joint-venture stakes to foreign-incorporated entities that are determined to be "inverted domestic corporations" (or their subsidiaries). It requires prime-contract clauses for large non‑commercial procurements to limit first‑tier subcontracts to such entities to no more than 10% of the prime contract, sets definitions and tests for identifying inverted domestic corporations and significant domestic business activities, directs Treasury to issue implementing regulations, and allows agency‑head waivers for national security or certain health‑program efficiency reasons with short congressional notice. The rule generally applies prospectively to contracts and to task/delivery orders issued after enactment and is limited to procurements subject to the FAR (and DFARS for defense).