American Business for American Companies Act of 2026
Sponsored By: Representative DeLauro
Introduced
Summary
Blocks inverted domestic corporations from winning federal contracts. This bill would bar foreign‑incorporated firms that qualify as inverted domestic corporations from receiving most civilian and defense contracts and would add subcontract limits, penalties, and narrow waivers for security and health needs.
Show full summary
- Federal agencies would be prohibited from awarding contracts to foreign entities deemed inverted or to joint ventures that are more than 10% owned by such entities. For prime contracts over $10 million the agency must include a clause limiting first‑tier subcontracts to 10% of the contract value and banning tiering to evade that limit.
- Contractors and subcontractors would face tougher rules and penalties. Violations can lead to termination for default and referral for suspension or debarment.
- Treasury would write rules to decide when an expanded affiliated group is primarily U.S. controlled, use a 25% test for significant domestic activity, and allow agency waivers for national security or health programs with a 14‑day notice to Congress.
Bill Overview
Analyzed Economic Effects
3 provisions identified: 0 benefits, 0 costs, 3 mixed.
Limits on subcontracts for big contracts
This bill would stop agencies from awarding FAR-covered contracts to foreign entities the agency determines are "inverted domestic corporations" or their subsidiaries. Joint ventures would be barred when more than 10% of the venture (by vote or value) is owned by such an inverted entity or its subsidiary. Prime contracts over $10,000,000 (not only commercial-item contracts) would need a clause forbidding any first-tier subcontract worth more than 10% of the prime to those inverted entities and forbidding tier structuring to evade the 10% limit. Violating the clause could lead to termination for default and referral for suspension or debarment. The rule would take effect on enactment and would not apply to contracts entered into before enactment, but task or delivery orders issued after enactment would be covered.
Waivers for national security and health
This bill would let an agency head grant a waiver to the ban only when required for national security or when necessary to run federal or federally funded health-benefit or public-health programs. Any waiver must be reported in writing within 14 days. Defense waivers would be reported to congressional defense committees. Other agency waivers would be reported to relevant authorizing committees and both Appropriations committees.
Which companies count as inverted
This bill would say a foreign company is an "inverted domestic corporation" if, after a plan or related deal completed on or after May 8, 2014, it bought substantially all of a U.S. firm's assets and then either (A) the old U.S. owners hold more than 50% of its stock, or (B) management and control are mainly in the United States and the group has significant U.S. business. "Significant domestic business activities" would mean at least 25% of employees, U.S. employee pay, assets, or income relate to the United States, though Treasury could lower that percent by rule. The bill would let Treasury write rules to say when management and control count as U.S.-based, and those rules would apply to periods after May 8, 2014. It would also allow an exception if the group has substantial business activity in the company's foreign home country, but Treasury may not widen that exception beyond the January 18, 2017 rules.
Sponsors & CoSponsors
Sponsor
DeLauro
CT • D
Cosponsors
There are no cosponsors for this bill.
Roll Call Votes
No roll call votes available for this bill.
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