As many government contractors know all too well, doing business with the government requires contractors to become familiar with and adhere to countless rules and regulations governing the procurement process. As shown in a recent Government Accountability Office ("GAO") protest decision, a contractor's failure to follow one such regulation can have a harsh outcome, as an awardee was deemed ineligible for failing to be continuously registered in the System for Award Management ("SAM").
The decision of TLS Joint Venture, LLC, B-422275, April 1, 2024, 2024 CPD involves a protester's argument that the awardee was ineligible because it was not continuously registered in SAM (i.e., between bid submission and award), as required by FAR 52.204-7. GAO agreed with the protester and recommended that the agency terminate the awardee's contract for convenience and make a new selection decision. So, what exactly happened?
Here, the facts are relatively straightforward. The decision shows that the awardee submitted its bid prior to the proposal deadline of September 15, 2023, and the agency made its award on December 26, 2023. In between that time, the awardee renewed its SAM registration. In that regard, the awardee's SAM registration was active through December 11, 2023 (expiring at 9:34 am) and marked active again as of December 12, 2023 (active at 9:48 am). Indeed, the awardee submitted its SAM renewal one business day early, on a Friday (12/8), but that process was not complete until the following Tuesday (12/12). Following the award, the protester lodged a protest arguing that the award decision was unreasonable because the awardee's SAM registration had lapsed.
Specifically, the protester argued that the awardee's SAM registration lapsed (which rendered the awardee ineligible) because, although the awardee submitted its renewal before its SAM registration expired, the government did not mark the record active until after the expiration. The agency, on the other hand, argued that GAO should dismiss the protest because it involves a contracting officer’s responsibility determination and that the awardee's SAM registration did not lapse because it submitted its renewal prior to the expiration. GAO was unpersuaded by both of the agency's arguments.
In agreeing with the protester, GAO made two important findings: (1) the FAR unambiguously requires contractors to "be registered in SAM when submitting an offer or quotation, and shall continue to be registered until time of award," and (2) the FAR states that "registered" in SAM occurs not when the contractor submits its renewal but when the government marks the SAM record “active.” FAR 52.204-7(b)(1) and 52.204-7(a). Thus, in light of the twin requirements of continuity and government activation, GAO was unpersuaded by the agency's argument that the pre-expiration renewal submission meant that the awardee's registration had not lapsed. GAO sustained the protest and found the protester suffered competitive prejudice because it would have had a substantial chance for award (it was next in line).
Interestingly, in sustaining the bid protest, it is also worth noting that GAO's decision is in harmony with a recent decision of the Court of Federal Claims ("COFC"), Myriddian, LLC v. United States, 165 Fed. Cl. 650 (2023) (cited by GAO and discussed here), in which the court likewise held that FAR 52.204-7 plainly requires offerors to maintain continuous SAM registrations during the solicitation period.
Takeaway
The GAO decision in TLS provides a cautionary reminder on SAM registrations and the severe consequences that contractors face where they fail to be continuously registered in SAM in between proposal submission and award. And, because the FAR requires the government to mark SAM records active to be deemed registered, contractors should not wait until the last minute to renew SAM registrations. Indeed, the decision also highlights the fact that the SAM renewal process is not instantaneous but rather involves multiple parties and can take days to complete.
