Sponsors (5)
The bill aims to strengthen U.S. procurement and boost domestic contracting by restricting inverted firms and capping subcontracting, at the trade-off of narrower supplier choices, higher compliance and transition costs, and legal uncertainty that could raise prices and delay projects.
Federal procurement will exclude or limit awards to companies that moved headquarters or control overseas via inversions, reducing the chance that U.S. government contracts are performed by foreign-controlled firms and strengthening procurement integrity.
Capping subcontracting at 10% for certain work shifts more contract value to primes and U.S.-based subcontractors, increasing opportunities for domestic small businesses and keeping more taxpayer-funded work in the U.S.
Treasury-directed rulemaking to define 'management/control' and 'substantial activities' creates a uniform standard for determining inverted status across federal procurements, reducing ad hoc or inconsistent agency decisions.
Companies that reorganized abroad could lose eligibility for federal contracts, disrupting existing supplier relationships and forcing agencies and primes to transition to new vendors—raising short-term procurement transition costs.
Prime contractors and subs will face higher compliance burdens and the risk of contract suspension or termination if subcontracting exceeds the 10% cap, increasing administrative, legal, and monitoring costs for industry and government.
Restricting participation by inverted firms could narrow the pool of eligible suppliers for specialized goods and services, potentially raising prices and causing delays on government projects that rely on niche providers.
Based on analysis of 2 sections of legislative text.
Bars federal contracts and large subcontracts to inverted domestic corporations and their subsidiaries, limits first‑tier subcontracting to 10%, and directs Treasury regs with waiver/reporting rules.
Official title: Prohibit the award of Federal Government contracts to inverted domestic corporations, and for other purposes.
Introduced February 9, 2026 by Richard Joseph Durbin · Last progress February 9, 2026
Prohibits federal civilian and defense agencies from awarding prime contracts, large subcontracts, or controlling joint-venture shares to ‘‘inverted domestic corporations’’ (foreign-incorporated firms that effectively operate as U.S. companies) and to their subsidiaries. Requires prime-contract clauses capping first‑tier subcontracting to such entities at 10% for large non‑commercial contracts, allows agency waiver for national security or health-program efficiency with prompt congressional notice, and directs Treasury to issue rules to identify when a group is effectively U.S.-managed.