22 April 2024 • 5 minute read
GAO joins COFC: A lapse in your SAM registration could render your company ineligible for award
Recent Government Accountability Office (GAO) decisions demonstrate an increased focus on potential risks associated with lapsed System for Award Management (SAM) registrations.
In June 2023, we published a client alert discussing the possible consequences of failing to maintain an active SAM registration from the time of proposal submission through the time of award, given the requirements outlined in Federal Acquisition Regulation (FAR) 52.204-7. That alert focused on a recent US Court of Federal Claims decision.
Since then, a number of GAO decisions have highlighted the growing relevance of the topic. First, in TLS Joint Venture, LLC, B-422275, 2024 WL 1460853 (Comp. Gen. Apr. 1, 2024), GAO joined the Court of Federal Claims (COFC) in finding that a lapse in an offeror’s SAM registration may render the offeror ineligible for award. In TLS, the offeror renewed its SAM registration – however, the renewal was not processed and finalized before the registration lapsed. The issue before GAO was whether this lapse in registration reasonably rendered the offeror ineligible for award.
To evaluate this issue, GAO requested that the General Services Administration (GSA), as the government entity responsible for processing SAM registrations, explain the process for obtaining a SAM registration. In response, GSA explained that, after a contractor submits its registration renewal, GSA and other agencies, including the Internal Revenue Service (IRS) and Defense Logistics Agency (DLA), must review and verify information about the contracting entity. Each day, GSA manually sends all contractor registrations received on that day to the IRS in a single transmission. Once the IRS validates the entity’s Tax Identification Number, the DLA must then verify the entity’s Commercial and Government Entity Code (CAGE) code.
In TLS, the offeror submitted its SAM registration renewal on Friday, December 8, 2023, at 3:01 pm. GSA did not send the renewal request to the IRS for validation until the following Monday, December 11, 2023 – the same day the entity’s registration was set to expire. The IRS provided its approval the following business day, December 12, 2023, and the entity’s registration was processed and finalized that day. By that point, it was too late; the entity’s registration had expired for one day. As a result, GAO determined that the offeror violated FAR 52.204-7, which provides that “[a]n Offeror is required to be registered in SAM when submitting an offer or quotation, and shall continue to be registered until time of award, during performance, and through final payment of any contract . . . resulting from this solicitation.” Accordingly, GAO concluded that the agency had properly determined that the offeror was ineligible for award.
Two additional GAO decisions found that a lapse did not render the awardee ineligible. In VivSoft Technologies, LLC, B-421561.15 et al., 2024 WL __ (Comp. Gen. Apr. 11, 2024), GAO held that an offeror’s lapse in SAM registration during the agency’s proposal evaluation was not a basis to find the entity ineligible for award where “the solicitation did not include or incorporate FAR provision 52.204-7.” The protester did not provide a basis for GAO to “read [the FAR provision] into the Solicitation” – thus, the agency acted reasonably in awarding the contract to a company that had a lapse in its registration during the procurement. Similarly, in Pernix, GAO held that an agency’s requirement for a contractual, or de facto, joint venture to be registered in SAM “unduly restricted competition because it prevented such an offeror from submitting a [] proposal.” B-422122.2, 2024 WL 1345063 (Comp. Gen. Mar. 22, 2024). As the offeror explained in that case, and which the agency did not dispute, it is “impossible for a de facto joint venture to register in SAM.” Although GAO’s determination was largely dependent on the unique facts and statutory requirements applicable to the procurement, this decision further highlights the complexities of the SAM registration process, particularly as it relates to non-traditional contractor entities such as joint ventures.
The cases highlight the importance of maintaining an active, accurate, and complete SAM registration at all times between the time of offer submission and the time of award. The decisions further demonstrate the complexities of the SAM registration process and remind contractors to remain proactive in renewing their SAM registration. Indeed, as we explained in our prior client alert, entities have experienced technical glitches in the SAM system, government delays in name change approvals, and inconsistencies in the contractor submission review and validation process conducted by SAM personnel – challenges that could delay the overall process.
In an effort to assist contractors as they navigate these challenges, the Department of Energy recently issued a class deviation to FAR 52.204-7, which effectively removes the requirement that offerors “shall continue to be registered until” the time of award, and makes any lapse in registration a noncompliance that may be waived at the discretion of the contracting officer. However, other procuring agencies do not have a basis to waive the requirement, and, as TLS establishes, there may be material consequences for contractors. Accordingly, entities that are required to be registered in SAM are encouraged to initiate the registration and/or renewal process as early as possible, as waiting until shortly before the expiration deadline could render the entity ineligible for award.
We will continue to closely monitor developments in this area. If you have any questions or are interested in learning more, please contact the authors.
In June 2023, we published a client alert discussing the possible consequences of failing to maintain an active SAM registration from the time of proposal submission through the time of award, given the requirements outlined in Federal Acquisition Regulation (FAR) 52.204-7. That alert focused on a recent US Court of Federal Claims decision.
Since then, a number of GAO decisions have highlighted the growing relevance of the topic. First, in TLS Joint Venture, LLC, B-422275, 2024 WL 1460853 (Comp. Gen. Apr. 1, 2024), GAO joined the Court of Federal Claims (COFC) in finding that a lapse in an offeror’s SAM registration may render the offeror ineligible for award. In TLS, the offeror renewed its SAM registration – however, the renewal was not processed and finalized before the registration lapsed. The issue before GAO was whether this lapse in registration reasonably rendered the offeror ineligible for award.
To evaluate this issue, GAO requested that the General Services Administration (GSA), as the government entity responsible for processing SAM registrations, explain the process for obtaining a SAM registration. In response, GSA explained that, after a contractor submits its registration renewal, GSA and other agencies, including the Internal Revenue Service (IRS) and Defense Logistics Agency (DLA), must review and verify information about the contracting entity. Each day, GSA manually sends all contractor registrations received on that day to the IRS in a single transmission. Once the IRS validates the entity’s Tax Identification Number, the DLA must then verify the entity’s Commercial and Government Entity Code (CAGE) code.
In TLS, the offeror submitted its SAM registration renewal on Friday, December 8, 2023, at 3:01 pm. GSA did not send the renewal request to the IRS for validation until the following Monday, December 11, 2023 – the same day the entity’s registration was set to expire. The IRS provided its approval the following business day, December 12, 2023, and the entity’s registration was processed and finalized that day. By that point, it was too late; the entity’s registration had expired for one day. As a result, GAO determined that the offeror violated FAR 52.204-7, which provides that “[a]n Offeror is required to be registered in SAM when submitting an offer or quotation, and shall continue to be registered until time of award, during performance, and through final payment of any contract . . . resulting from this solicitation.” Accordingly, GAO concluded that the agency had properly determined that the offeror was ineligible for award.
Two additional GAO decisions found that a lapse did not render the awardee ineligible. In VivSoft Technologies, LLC, B-421561.15 et al., 2024 WL __ (Comp. Gen. Apr. 11, 2024), GAO held that an offeror’s lapse in SAM registration during the agency’s proposal evaluation was not a basis to find the entity ineligible for award where “the solicitation did not include or incorporate FAR provision 52.204-7.” The protester did not provide a basis for GAO to “read [the FAR provision] into the Solicitation” – thus, the agency acted reasonably in awarding the contract to a company that had a lapse in its registration during the procurement. Similarly, in Pernix, GAO held that an agency’s requirement for a contractual, or de facto, joint venture to be registered in SAM “unduly restricted competition because it prevented such an offeror from submitting a [] proposal.” B-422122.2, 2024 WL 1345063 (Comp. Gen. Mar. 22, 2024). As the offeror explained in that case, and which the agency did not dispute, it is “impossible for a de facto joint venture to register in SAM.” Although GAO’s determination was largely dependent on the unique facts and statutory requirements applicable to the procurement, this decision further highlights the complexities of the SAM registration process, particularly as it relates to non-traditional contractor entities such as joint ventures.
The cases highlight the importance of maintaining an active, accurate, and complete SAM registration at all times between the time of offer submission and the time of award. The decisions further demonstrate the complexities of the SAM registration process and remind contractors to remain proactive in renewing their SAM registration. Indeed, as we explained in our prior client alert, entities have experienced technical glitches in the SAM system, government delays in name change approvals, and inconsistencies in the contractor submission review and validation process conducted by SAM personnel – challenges that could delay the overall process.
In an effort to assist contractors as they navigate these challenges, the Department of Energy recently issued a class deviation to FAR 52.204-7, which effectively removes the requirement that offerors “shall continue to be registered until” the time of award, and makes any lapse in registration a noncompliance that may be waived at the discretion of the contracting officer. However, other procuring agencies do not have a basis to waive the requirement, and, as TLS establishes, there may be material consequences for contractors. Accordingly, entities that are required to be registered in SAM are encouraged to initiate the registration and/or renewal process as early as possible, as waiting until shortly before the expiration deadline could render the entity ineligible for award.
We will continue to closely monitor developments in this area. If you have any questions or are interested in learning more, please contact the authors.
