Overview
This section provides precise definitions for "Highest-level owner" and "Immediate owner" to establish a framework for identifying corporate ownership and control structures of entities bidding on government contracts.
Key Rules
- Immediate Owner: Defined as any entity (other than the offeror) having direct control over the offeror.
- Indicators of Control: Control is not limited to equity ownership; it includes interlocking management, identity of interests among family members, shared facilities/equipment, and the common use of employees.
- Highest-level Owner: The ultimate parent entity in a corporate hierarchy that owns or controls the immediate owner and is not itself controlled by any other entity.
- Hierarchical Identification: The regulation creates a two-tier reporting requirement to trace an offeror’s accountability up to the top of its corporate chain.
Practical Implications
- Contractors must conduct a thorough internal audit of their management and resource-sharing agreements—not just their cap table—to accurately report control relationships.
- This data allows the government to track performance, responsibility, and potential conflicts of interest across a single corporate umbrella, even if work is distributed among different subsidiaries.