American Business for American Companies Act of 2026

This bill aims to prevent "inverted domestic corporations" from receiving Federal Government contracts. It prohibits executive agencies from awarding contracts for property or services to any foreign incorporated entity determined to be an inverted domestic corporation, its subsidiaries, or joint ventures where such an entity holds more than 10 percent. This measure applies to both civilian and defense contracts, integrating new sections into titles 41 and 10 of the U.S. Code.

An entity is considered an inverted domestic corporation if, after May 8, 2014, it acquires a domestic corporation or partnership and either more than 50 percent of its stock is held by former domestic shareholders or partners, or its management and control are primarily within the United States with significant domestic business activities. However, an entity is not deemed inverted if its expanded affiliated group has substantial business activities in the foreign country of organization, as determined by Treasury regulations. These regulations align with existing IRS rules for substantial business activities.

For the purpose of determining significant domestic business activities, at least 25 percent of the group's employees, employee compensation, assets, or income must be based or derived in the United States. The Secretary of the Treasury is directed to issue regulations to define when management and control are primarily within the United States, specifically stating this occurs if substantially all executive officers and senior management making day-to-day strategic, financial, and operational decisions are based in the U.S.

The bill also addresses subcontracting, requiring federal contracts exceeding $10,000,000 (excluding commercial items) to include a clause prohibiting prime contractors from awarding first-tier subcontracts over 10 percent of the prime contract value to inverted domestic corporations. This clause also prevents structuring subcontract tiers to circumvent this limitation. Violations can lead to contract termination for default or debarment of the prime contractor.

Executive agency heads may waive these prohibitions if necessary for national security or for the efficient administration of Federal or federally funded health benefit or public health programs. Any such waiver must be reported to the relevant congressional committees within 14 days. The provisions apply to new contracts and to task or delivery orders issued after the bill's enactment, covering contracts regulated under the Federal Acquisition Regulation and its Defense Supplement.