Overview
FAR Subpart 4.18 establishes the policies and procedures for using Commercial and Government Entity (CAGE) codes to uniquely identify business entities and their corporate hierarchies. It facilitates the accurate exchange of data between government contracting, payment, and administration systems while providing transparency into the ownership and control of federal offerors.
Key Rules
- Mandatory Disclosure: Offerors must provide their CAGE code prior to any contract award exceeding the micro-purchase threshold if the solicitation requires a Unique Entity Identifier (UEI) or SAM registration.
- Ownership Transparency: Offerors are required to identify their "Immediate Owner" and "Highest-Level Owner," providing the legal names and CAGE codes for both to ensure the government understands the corporate structure.
- Verification Requirement: Contracting Officers cannot rely on an offeror's word alone; they must verify the CAGE code through the System for Award Management (SAM) or the Defense Logistics Agency (DLA) CAGE search tool.
- Distinct Identifiers: The regulation clarifies that a CAGE code is a separate and distinct identifier from the Unique Entity Identifier (UEI), though both are often required for the same transaction.
- Continuous Maintenance: Per FAR 52.204-18, contractors are obligated to maintain their CAGE code data for the duration of the contract, ensuring that any changes in entity status are reported.
Responsibilities
- Contracting Officers (COs):
- Verify the validity of CAGE codes via SAM or the DLA website prior to award.
- Ensure the CAGE code is included in the final contract document and all electronic data transmissions to other systems (e.g., FPDS, payment systems).
- Incorporate the necessary solicitation provisions (52.204-16, 52.204-17, 52.204-20) and contract clauses (52.204-18) based on the specific requirements of the procurement.
- Offerors/Contractors:
- Obtain and provide a CAGE code for their specific location.
- Disclose "Immediate" and "Highest-Level" ownership information.
- Report any "Predecessor" entities that held a federal contract within the last three years.
- Maintain accurate CAGE records throughout the life of the contract.
Practical Implications
- Prevents "Shell Game" Tactics: By requiring the disclosure of immediate and highest-level owners, this subpart makes it difficult for suspended or debarred entities to hide behind new or subsidiary corporate structures.
- Streamlines Payment and Logistics: Because CAGE codes are used by the Defense Logistics Agency (DLA) and the Defense Finance and Accounting Service (DFAS), accurate codes are critical for ensuring that shipments reach the correct location and payments are routed to the correct bank accounts.
- Compliance Hurdle for New Entrants: Small businesses or foreign entities new to the federal market must realize that obtaining a UEI is not enough; they must also navigate the DLA-managed CAGE validation process, which can sometimes involve "facility clearance" checks or additional documentation regarding their physical location.
- Corporate Hierarchy Mapping: This subpart allows the government to perform "spend analysis" across a whole corporate family, identifying when multiple subsidiaries of the same parent company are competing for or winning government work.