We have actively monitored the drum beat of bid protest decisions addressing lapses in an offeror’s System for Award Management (SAM.gov or SAM) registration and their impact on an offeror’s eligibility for award. More recent decisions out of the Government Accountability Office (GAO) and the Court of Federal Claims (COFC) have muddied the waters even more, but there may be clarity on the horizon if the Federal Circuit takes up this issue. Below, we discuss some of the recent bid protest decisions, provide practical tips for getting registered in SAM.gov and keeping your registration active, and offer our thoughts on how to right the “lapsing SAM registration” ship.
Wading into the Case Law
Before wading into the caselaw, it is useful to understand how we got to the current turbulence. Historically, a lapse in an offeror’s SAM registration did not have the severe consequence of upending a contract award, with the impacts generally limited to payment delays during performance. In 2016, however, the Federal Acquisition Regulation (FAR) Council proposed “clarifications” to the FAR, including FAR 52.204-7, to resolve inconsistencies within the FAR as to whether SAM registration was required at offer or proposal submission or prior to award, a seemingly straightforward proposition. 81 Fed. Reg. 31985 (May 20, 2016). In the preambles to both the proposed and final rules, the FAR Council repeated its belief that it was clarifying existing requirements, only, and not imposing any new obligations. Id.; see 83 Fed. Reg. 48691 (Sept. 26, 2018) (“The Council[] emphasize[s] that this rulemaking effort does not create a new requirement for offerors, large or small. The purpose of this rule is to clarify for offerors the required timing of SAM registration, i.e., when should offerors register in SAM.”). But, the revised version of FAR 52.207-4 went further than identifying when registration is required and added that offerors “shall continue to be registered” until award. The FAR Council offered no explanation for this additional text, which has become the source of recent bid protest litigation.
In 2020, GAO denied a protest in Master Pavement Line, B-419111, holding that an offeror’s lack of an active SAM registration was a minor informality or irregularity that does not impact an offeror’s eligibility under a FAR Part 14 sealed bidding procurement. Likewise, in Phoenix Envt’l Design, Inc., B-418473, GAO held that “[w]ith respect to allegations that an offeror’s SAM registration is inaccurate or incomplete, our Office has generally recognized that minor informalities related to SAM (or its predecessor systems) registration generally do not undermine the validity of the award and are waivable by the agency without prejudice to other offerors.” In 2021, GAO in Continuity Global Solutions, B-419875, similarly affirmed that an offeror’s failure to be registered in SAM was an issue of responsibility not responsiveness, but distinguished FAR Part 14 procurements from those under FAR part 15, holding that in that case the agency was not obligated to waive the requirement or allow an opportunity to cure.
But then the Court of Federal Claims weighed in. In Myriddian, LLC v. United States, 165 Fed. Cl. 650 (2023), the court held that that the plain language of FAR 52.204-7 required the agency to disqualify an awardee whose SAM registration lapsed for 17 days after the awardee’s proposal submission, even though it had been renewed before the time of award. The COFC held that the FAR mandated that an offeror’s SAM registration be continuously active at the time of proposal submission, evaluation, and the time of award, and that any lapse in an offeror’s SAM registration during any of these periods necessitated disqualification.
GAO then followed suit in TLS Joint Venture, LLC, which we covered in a previous client alert, where it sustained a protest because the awardee’s SAM registration had lapsed for less than 24 hours during the pendency of award. In that case, the contractor had submitted its update in SAM in the final days before its annual registration update deadline, but because the system does not automatically refresh, the awardee’s registration temporarily switched to inactive status.
Recent cases have extended these harsh rulings. In Zolon PSC II, LLC v. United States, published September 10, 2024, the COFC found for a protester challenging an agency’s corrective action that amended the Solicitation to incorporate a deviation from FAR 52.204-7. The deviation removed the clause’s continuous registration requirement. The agency’s corrective action was in response to the protester’s initial protest at GAO that challenged awards to three offerors whose SAM registration had lapsed prior to award. The court found that the agency’s corrective action was arbitrary and capricious because it had the “effect of conforming the solicitation precisely to a particular offeror’s proposal” by removing a solicitation requirement for continuous SAM registration that would have ordinarily disqualified the three offerors whose SAM registration lapsed before award.
But just when the caselaw appeared to be coalescing around an objective—if draconian—rule, GAO threw another curve ball. On September 27, 2024, GAO released its decision in Maxim Healthcare Staffing Services, B-422389.2, sustaining a protest by a disappointed offeror who was disqualified after another contractor protested that its SAM registration had lapsed. What gives? Turns out, the agency neglected to include FAR 52.204-7 in this task order solicitation, or any other language expressly stating that a continuous SAM registration was necessary (or that a SAM lapse would be disqualifying). GAO thus held that the agency’s corrective action in disqualifying the original awardee was unreasonable, notwithstanding that FAR 52.204-7 is a mandatory provision. Not to be left out, the COFC has also added more nuance to this requirement. In a decision released on October 7, 2024 in Hanford Tank Disposition Alliance, LLC, Judge Horn held that where an offeror submits a revised proposal, any lapse in its SAM registration from the date of the initial proposal to the time of the revised proposal is forgiven, notwithstanding the continuous registration requirement in FAR 52.204-7 from the time of the “offer.”
In yet another twist, the September 16, 2024, Federal Circuit decision in Oak Grove Techs., LLC v. United States, which is covered in a companion article, suggests that the Federal Circuit would be unwilling to adopt the harsh consequences of these COFC and GAO approaches. In Oak Grove, Section L of the solicitation required offerors to provide copies of any teaming agreements in their proposals. A disappointed offeror was disqualified because it did not include its teaming agreements in its proposal, despite proposing team members. The Federal Circuit held that failure to comply with a nonmaterial solicitation provision was not grounds for disqualification and that “a defect or variation is immaterial when the effect on price, quantity, quality, or delivery is negligible when contrasted with the total cost or scope of the supplies or services being acquired.” This aligns with GAO’s previous acknowledgement in Phoenix Envt’l Design, Inc., B-418473, that “an awardee’s registration status does not implicate the terms of its proposal.” Applying the Federal Circuit’s logic in Oak Grove, a temporary lapse in SAM registration likely would not rise to a non-conformance with a material requirement that warrants disqualification, because it does not impact the price, quantity, quality, or delivery of the supplies or services offered.
Overview of Steps for SAM Registration
So where do things stand now? Although there is a possibility of relief at the Federal Circuit, contractors cannot bank on that relief or treat the requirement to be registered in SAM as an unimportant “check the box” issue. They must take care to ensure there is no interruption in their SAM registration and, for first time contractors, they must start the process early. Contractors who wait too long and update their SAM registration towards the end of the required annual deadline are likely to run into an issue, may lose their active status, and could put their awards in jeopardy. Setting aside the risks of losing an award, SAM registration lapses can also put a contractor’s contract payments in jeopardy, because if a SAM registration goes inactive so does the contractor’s Commercial and Government Entity (CAGE) code, and then the contractor cannot get paid. Although SAM requires contractors to update their SAM registration once a year, given the potential for delays, outages, and unforeseen hangups in the system, we recommend that contractors refresh their SAM registration at least on a quarterly basis to minimize the risk of a lapse.
For new entrants or existing companies, it’s important to know just what SAM registration entails even if you are not the company’s entity administrator. To obtain federal money through a contract, grant, or certain federal loans, an entity must register in SAM. If you are performing only subcontracts, FAR 52.204-7 does not apply—it is not a mandatory flow-down. That said, many prime contractors will make it a requirement to be registered or will, at the very least, require subcontractors to obtain a Unique Entity Identifier (UEI) number for tracking, just like they used to do with Data Universal Numbering System (DUNS) numbers.
Below is an overview of the process, where the bumps in the road might be, and how long a registration might take.
- The first step is to obtain a UEI Number.
- The UEI process affirms your entities’ name and address, and the U.S. General Services Administration (GSA) provides a list of acceptable supporting documentation. The documents must exactly match the name and address you are trying to register.
- This process is automated and, if all goes well, typically takes 48 hours. But if you try to provide alternative documentation or have some other oddity in the request that draws attention, then a live person might have to review your submission, which can take weeks to resolve.
- Once you have the UEI, then you can register in SAM. To register, entities must gather and populate a lot of data into SAM. This requires advance planning and is not something to do in a single afternoon.
- There are higher levels of information required from contractors because of the FAR representations and certifications portion of the registration.
- For grantees or those seeking other non-contract awards, you typically need only populate the basic data, and the remaining registration process is optional. To complicate matters, however, certain grant applications or government databases for grant announcements and submissions require a CAGE code. The Defense Logistics Agency (DLA), which manages the CAGE codes, will not assign CAGE codes to those SAM registrations that are not registered for contracts.
- For the full registration, the entity must answer over 60 questions that then populate certain FAR representations and certifications. Many can be answered by saying the entity will provide the information with any specific proposals, but some require substantive responses.
- Once the registration request is completed and submitted, GSA commits to processing the registration within ten days. In our experience, its normally takes 24-48 hours if there are no unanticipated hurdles.
- The registration then kicks over to DLA for the assignment of a CAGE code. This is usually a smooth and systematic process. But, DLA will generally send out a validation email to the entity administrator, especially if you register an entity that shares the address with another SAM registrant with a different suite or office number, have a similar entity name, or other complicating factor. The important thing is that the entity administrator must be on the lookout for emails from DLA, including checking their SPAM folder. If you do not respond to an email from DLA, the entire registration will be closed and you must resubmit.
- At the end of the process, your registration will show as “Active” in SAM, and you can submit your proposal.
This process can be daunting and frustrating. But being mindful of the process and ensuring that you first gather all required documents and data, before even logging in to SAM, should make this process as smooth as it can be.
A Path Forward
Returning to the root cause of this SAM caselaw turbulence is the text of FAR 52.204-7. There are legitimate reasons to identify precisely when an offeror must have a SAM registration and even to require SAM registration to be active at the time of award. Because SAM includes representations and certifications, a Contracting Officer (CO) needs to validate them as part of the responsibility determination prior to award, as required by FAR Subpart 9.1. But consider the length of many procurements and the fact that a protest can extend an already lengthy process for years, the vagaries of computer systems with intervening human processes, and the impact on a procurement when an award is overturned for what is arguably a ministerial error. Is it really essential to the procurement system to cancel an award simply because, at some point during a potentially multi-year source selection, an offeror’s registration lapsed for a day?
The FAR Council can and should take this issue up. The provision can be amended to clarify that a SAM registration lapse that does not affect the ability of a CO to conduct a responsibility determination will not be disqualifying. Alternatively, the clause could state that an offeror can request a waiver of a lapsed registration (and a CO will reasonably consider such request) as part of a responsibility inquiry without triggering the discussions process. Other fixes are no doubt also possible, but until the FAR Council remedies the unintended consequences of its rule, contractors need to be extra vigilant to their SAM registrations.
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