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.