On September 10, the Court of Federal Claims (COFC) issued an opinion in Zolon PCS II, LLC v. United States, holding that the National Geospatial-Intelligence Agency (NGA or Agency) unreasonably issued a deviation from FAR 52.204-7, which requires offerors to be continuously registered in SAM.gov from the time of proposal submission through award.
The COFC found the deviation to be arbitrary and capricious because the NGA lacked the discretion to waive a mandatory regulatory requirement, verifying that compliance was administratively practicable, and the Agency failed to properly substantiate how issuing the deviation would bolster competition.
The decision is the latest of several recent decisions that demonstrate the importance of maintaining an active SAM registration from the time of proposal submission through award.
The Solicitation
The solicitation sought to award multiple-award, indefinite delivery, indefinite-quantity contracts for acquisition, financial, and business management services. The contract had a potential total value of $950 million. Twenty-three offerors originally submitted proposals, and NGA awarded contracts to the top five offerors.
Protest at the Government Accountability Office (GAO)
Upon receiving notice of its unsuccessful bid, Zolon PCS II, LLC (Zolon) filed a protest with the GAO, asserting, among other arguments, that at least one awardee was ineligible for award due to a lapse in its SAM.gov registration. A week later, Zolon filed a supplemental protest alleging two additional awardees (three in total) were ineligible for award on the same basis. Undisputed evidence demonstrated that the SAM.gov registrations of these awardees had, in fact, lapsed between the deadline to submit proposals and the date of contract award. The crux of Zolon’s argument centered on another recent COFC decision, Myriddian LLC v. United States, which held that FAR 52.204-7 requires offerors to be continuously registered from the time of proposal submission through contract award.
NGA took corrective action in response to Zolon’s GAO protests. As part of its corrective action, on September 11, 2023, NGA approved an individual deviation from FAR 52.204-7 whereby offerors were “required to be registered in SAM when (i) submitting an offer or quotation, (ii) at the time of award, and (iii) during performance, and through final payment . . . .”
Effectively, the deviation eliminated the continuous SAM registration requirement between proposal submission and award. The Agency also drafted a memorandum discussing the bases for the deviation, which, among other things, stated that the deviation was necessary to do the following:
- Clarify the agency’s original intent for the solicitation.
- Enable award to offerors that had lapses in their SAM registrations between proposal submission and contract award.
- Ensure that award can be made to the best value proposals.
A few weeks before NGA approved the deviation, Zolon filed this case at COFC challenging the corrective action by arguing it was arbitrary, capricious, and not in accordance with the law.
COFC Opinion
In its opinion, COFC reviewed the Agency’s rationale for issuing the deviation, which was: “(1) the NGA wished to clarify its intent that the SAM registration requirement not be continuous; (2) the continuous registration requirement is not administratively practical for the NGA; and (3) the NGA wished to award contracts to the best value offerors and not eliminate offerors based solely on a lapse in SAM registration.” COFC disagreed with each of these reasons for issuing the deviation and addressed each in length.
First, COFC held that the SAM.gov registration requirements are mandatory in nature. Therefore, NGA lacked the discretionary authority to waive the requirement. COFC summarized its holding for this argument by stating: “[i]ssuing a post-award deviation to ‘clarify’ that the Agency never intended to follow the plain language of a mandatory FAR requirement is not rational.”
COFC disagreed with the Agency’s argument that continual verification is not administratively practical, holding that the Agency misread Myriddian to require that agencies continually check the SAM registrations of offerors. Rather, the COFC held that the Agency set forth a method of verifying an offeror’s SAM registration that comports with the requirements of Myriddian—verifying the registration at the time of proposal submission and prior to award. The COFC concluded that apart from verifying the registration at the time of proposal submission and prior to award, no additional monitoring is required.
COFC held that while the government may amend a solicitation to change or clarify requirements in an attempt to obtain the best value, it must be justified on the basis of increased competition. But here, COFC concluded that the deviation was unable to be justified on that basis because, in part, “there [was] no evidence in the record that the pool of offerors competing for CLOVER awards would be significantly narrowed absent the deviation.” In addition, COFC found it notable that NGA issued a deviation from a mandatory regulatory requirement rather than clarifying a provision in the solicitation related to its own requirements.
Going Forward
The Zolon decision marks the most recent opinion in a slew of rulings that demonstrates the importance of maintaining an active SAM registration throughout the entire lifecycle of a contract competition. In April, GAO’s decision in TLS Joint Venture, LLC, sustained a disappointed offeror’s protest alleging that a solicitation’s inclusion of FAR 52.204-7 required the awardee to be found ineligible because its SAM registration lapsed for roughly 24 hours after its proposal submission but before award. The TLS decision was significant because it marked GAO’s agreement with the COFC’s previous understanding that awardees are ineligible for a contract award if they fail to maintain an active SAM registration from proposal submission through award.
In light of these recent opinions, contractors should ensure their SAM registration is continually active throughout a contract competition or risk being excluded from the procurement. Further, contractors should regularly review their SAM registration status and apply for renewal well before their registrations expire, as the process can take longer than anticipated with required responses to follow-up questions from SAM.
