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Highest-Level Who? What Contractors Need to Know About the New FAR Provisions Requiring the Disclosure of Immediate and Highest-Level Ownership

By Lorraine M. Campos, Leslie A. Monahan & Nkechi Kanu on October 31, 2014
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Back in May, a final rule issued by the Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA) imposed new disclosure requirements on federal contractors. Contractors will now be required to disclose whether they are owned or controlled by another business entity during their System for Award Management (SAM) registration.

Starting tomorrow, November 1, 2014, SAM registrants will face a new set of questions on ownership. The first question asks:

  • Does your entity have an immediate owner?

If the registrant selects “yes,” they will be required to answer the second question:

  • Does your entity have a higher-level owner?

The final rule adds a new FAR subpart 4.18, which defines “immediate owner” and “highest-level owner.”

  • Immediate owner means an entity, other than the offeror, that has direct control of the offeror. Indicators of control include, but are not limited to, one or more of the following: Ownership or interlocking management, identity of interests among family members, shared facilities and equipment, and the common use of employees.
  • Highest-level owner means the entity that owns or controls an immediate owner of the offeror, or that owns or controls one or more entities that control an immediate owner of the offeror. No entity owns or exercises control of the highest level owner.

In addition, offerors are now required to provide their Commercial and Government Entity (CAGE) codes for awards valued at greater than $3,000 (the micro-purchase threshold). The CAGE code is a five-character alpha-numeric identifier used within the Federal Government. Further, offerors must also list the name and CAGE codes for all entities reported as immediate and highest-level owners.

While CAGE codes have traditionally been reserved for contractors, the final rule now requires legal entities that may not have their own government contracts to obtain this identifier. As a result, the federal government will have more insight into who is actually benefiting from federal contracts.

Photo of Lorraine M. Campos Lorraine M. Campos

Lorraine M. Campos is a partner and member of the Steering Committee of Crowell & Moring’s Government Contracts Group and focuses her practice on assisting clients with a variety of issues related to government contracts, government ethics, campaign finance, and lobbying laws. Lorraine…

Lorraine M. Campos is a partner and member of the Steering Committee of Crowell & Moring’s Government Contracts Group and focuses her practice on assisting clients with a variety of issues related to government contracts, government ethics, campaign finance, and lobbying laws. Lorraine regularly counsels clients on all aspects of the General Services Administration (GSA) and the U.S. Department of Veterans Affairs (VA) Federal Supply Schedule (FSS) programs. She also routinely advises clients on the terms and conditions of these agreements, including the Price Reduction Clause, small business subcontracting requirements, and country of origin restrictions mandated under U.S. trade agreements, such as the Trade Agreements Act and the Buy American Act. Additionally, Lorraine advises life sciences companies, in particular, pharmaceutical and medical device companies, on federal procurement and federal pricing statutes, including the Veterans Health Care Act of 1992.

Lorraine has been ranked by Chambers USA since 2013, and she was recognized by Profiles in Diversity Journal as one of their “Women Worth Watching” for 2015. Additionally, Lorraine is active in the American Bar Association’s Section of Public Contract Law and serves as co-chair of the Health Care Contracting Committee.

Lorraine joined the firm from Reed Smith, where she chaired their Government Contracts & Grants Team since 2010. Prior to that, she worked as a consultant for Grant Thornton, where she advised the Intelligence Community, analyzed the Department of Defense utility privatization program, and performed numerous Circular A-76 studies for the Office of Management and Budget.

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Photo of Leslie A. Monahan Leslie A. Monahan
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Photo of Nkechi Kanu Nkechi Kanu
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  • Posted in:
    Government Contracts
  • Blog:
    Global Regulatory Enforcement Law Blog
  • Organization:
    Reed Smith LLP

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