What if – a Company has a Defective SAM Registration?

August 22, 2018 on 12:58 pm | In Bids and Proposals, Getting Started, Marketing to the Government | Comments Off

One requirement under the Federal Acquisition Regulation (FAR) is that in almost every case, any entity receiving a contract award must be registered in the System for Award Management (SAM) a government-run portal to identify every entity with which it does business. The registration can be done online by anyone, and is not that complicated, but does take some time and some familiarity with the various clauses found in FAR that find their way into many contracts.

What if the person doing the registration messes up? What if some aspect of the registration is omitted or just false? Is the entity ineligible for award? Not necessarily. In a recent case the protestor contended that a defective SAM registration made the awardee “technically unacceptable or otherwise ineligible for award.” Specifically, the awardee’s SAM registration indicated that it did not have an immediate owner or owners when in fact it did. An immediate owner (per GAO):

is defined as “an entity, other than the offeror, that has direct control of the offeror.” FAR clause 52.204-17 at (a). The clause specifically requires that “[i]f the Offeror has more than one immediate owner (such as a joint venture),” then the offeror must disclose the identities and Defense Logistics Agency (or North Atlantic Treaty Organization, if applicable) Commercial and Government Entity codes for the offeror’s immediate owners.

There is no question that this entity had provided a false certification within the SAM system. The protestor attempted to claim that this created prejudice against the other offerors.

GAO disagreed:

 Competitive prejudice is an essential element of any viable protest, and where none is shown or otherwise evident, we will not sustain a protest, even where a protester may have shown that an agency’s actions arguably were improper. [Citation omitted] With 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. [Citations omitted]  We have found no prejudicial error in these cases largely because an awardee’s registration status does not implicate the terms of its proposal, and there is nothing to suggest that another offeror would have altered its proposal to its competitive advantage in response to a relaxed SAM registration requirement. [Citations omitted] Even accepting CPT’s allegations that CS3’s SAM registration was not in compliance with applicable FAR provisions or otherwise was inaccurate, the protester has not established that it was prejudiced by the agency’s waiver of the SAM registration requirement. It has not, for example, demonstrated that CS3’s SAM registration provided the intervenor with any competitive advantage, or explained how CPT would have amended its proposal had it known that the agency would not strictly enforce the SAM registration requirements.[1]

What lessons can we take from this?

Rule #1: NEVER rely on a defective SAM registration. Whether to waive any error in the registration and in fact often the determination of what is a error will be almost entirely within the discretion of the contracting officer. No two are going to view the same facts in an identical manner. If the CO in this case HAD determined that the SAM registration was not a minor informality, the awardee here may have become the protestor and may very well have not won the protest. GAO tends to give great deference to an agency’s use of its discretion in such matters. After all, it is the agency that has to live with the decision, not the GAO. Thus – complete your SAM registration completely and accurately. In fact complete every aspect of your proposal completely and accurately. Win the competition fairly and squarely; do not rely on dumb luck or the uncontrollable discretion of a party that may or may not be sufficiently knowledgeable and experienced to make a decision of this type.

Rule #2: Never forget that GAO is looking for competitive disadvantage. If the procurement is conducted in a fair manner, even if it does deviate somewhat from the proscribed procedure, GAO will often not find the procurement defective. Given the cost of pursuing a protest (and the new filing fee), carefully consider whether you can clearly demonstrate competitive disadvantage to yourself based on the alleged defect.

Rule #3: The integrity of the procurement process is paramount. Even so, the range of discretion afforded a contracting officer can be amazingly broad, whether or not their training and experience has prepared them to properly exercise that discretion. The risk is in guessing how an agency might view any irregularity in the process. When GAO reviews the facts in any protest, they look solely at whether the action was “reasonable” and whether the basis for the reasonable action is properly documented.  If the method, conclusion, and documentation are clear and reasonable, the agency determination will stand. This returns us to Rule #1.

 

[1] Cyber Protection Technologies, LLC, B-416297.2; B-416297.3. July 30, 2018.

 

Do You Compete With Federal Prison Industries?

October 7, 2009 on 3:44 pm | In Bids and Proposals, Marketing to the Government | Comments Off

Under applicable federal procurement rules certain products are required to be purchased from Federal Prison Industries (FPI). These purchases are intended to give prisoners productive work and a method to pay, at least in part, for their upkeep and maintenance. The problem is that there are companies in the commercial marketplace that are effectively frozen out of the federal market since they produced the same things as FPI.

In a recent decision, GAO had occasion to review the statutory and regulatory underpinnings of the current role of FPI in federal procurements.  Ashland Sales & Service Company. B-401481,September 15, 2009.

 FPI is a self-supporting, wholly-owned government corporation that was established to provide employment and training to federal penal inmates involving the production of commodities for consumption in prisons or for sale to government agencies. 18 U.S.C. §§ 4121, 4122 (2006); Federal Acquisition Regulation §§ 8.601(a), (b). For DOD, the requirements for the procurement of products from FPI are defined by the National Defense Authorization Act (NDAA) for Fiscal Year 2002, (citations omitted).

In 2008 Congress changed the process for determining when FPI is a preferred provider. This law created a new procedure for obtaining products from FPI for situations where FPI has been determined to have a “significant market share” of the product category in question as follows:

The Secretary of Defense may purchase a product listed in the latest edition of the Federal Prison Industries catalog for which Federal Prison Industries has a significant market share only if the Secretary uses competitive procedures for the procurement of the product or makes an individual purchase under a multiple award contract in accordance with the competition requirements applicable to such contract. In conducting such a competition, the Secretary shall consider a timely offer from Federal Prison Industries.
* * * *
For purposes of this subsection [2410n(b)], Federal Prison Industries shall be treated as having a significant share of the market for a product if the Secretary, in consultation with the Administrator of Federal Procurement Policy, determines that the Federal Prison Industries share of the Department of Defense market for the category of products including such product is greater than 5 percent.

So if FPI has captured 5% or more of a market segment, then DOD publishes that list from time to time as the DOD determines necessary. In the particular procurement before the GAO here, the product was “8405, Outerwear, Men’s” and it had been added to the list on June 3, 2009, with an effective date thirty days hence. Based on a solicitation issued within this window, and after conducting market research on these items as required by the statute, the agency decided to obtain them from FPI non-competitively. The protestor argued that since FPI now had a greater then 5% market share, the use of the set-aside was improper. The issues before GAO included the discretion of DOD in publishing the list with a later effective date, and the proper role of FPI in the federal marketplace.
The GAO analysis began with the interpretation of the relevant statute. For GAO and other decision makers when conducting statutory interpretation, they start with an analysis of the language in the law – does it provide an unambiguous expression of the intent of Congress? If so, the analysis ends there because the unambiguous intent of Congress must be given effect. (citations omitted) If, however, the statute is silent or ambiguous with respect to the specific issue, the decision maker will turn to the interpretation given to the statute by an agency responsible for administering the law; in this case DOD (citations omitted). Generally if the agency has interpreted ambiguous provision of the statute through a process of rulemaking or adjudication, the decision maker will provide great deference to that interpretation unless the resulting regulation or ruling is procedurally defective, arbitrary, or capricious in substance, or manifestly contrary to the statute. (citations omitted) On the other hand, where the agency’s position reflects an informal interpretation, deference is not warranted; in these cases, the agency’s interpretation is “entitled to respect” only to the extent it has the “power to persuade.” (citations omitted) The weight given to an interpretation under this lesser standard depends “upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade.”

So in a nutshell, and these rules apply whenever statutory or regulatory interpretation is required to resolve a dispute, if agencies follow a formal process of rulemaking/interpretation under authority granted to them by Congress then the courts and boards will generally follow that interpretation. If the interpretation is merely advisory, or informal in its creation, it is provided much less deference, but is given weight to the degree it makes sense and is persuasive. These are good rules to remember when reading laws or regulations.

Another rule of statutory interpretation cited by GAO is the rule that “[a] statute is passed as a whole and not in parts or sections and is animated by one general purpose and intent. Consequently, each part or section should be construed in connection with every other part or section as to produce a harmonious whole.” (citations omitted).

In this case, GAO determined that the timing of the update was proper, and even though a determination had been made that FPI had a greater than 5% market share for these products, the formal publication provided for 30 days to become effective. Thus the procurement from FPI under a non-competitive acquisition was proper.

So there are two lessons to consider here. If you compete with FPI, you will not have an opportunity to sell to the government unless and until FPI reaches a 5% market share. You might make your product commercially unique in a way that meets a government need, but is not copied by FPI. Intellectual property protection might be one way to do this. Second, this GAO opinion provides some excellent guidance on how adjudicative bodies interpret statutes and regulations. As confusing as they may be sometimes, these are standard rules of interpretation. Given the number of regulations and statutes that are involved in government procurement, these rules are worth remembering and applying.

Where do you Find Opportunities?

April 27, 2007 on 4:04 pm | In Marketing to the Government | Comments Off

One of the most common questions I am asked has to do with how to market to the government. It is important to understand that the government has some very stringent rules that make many normal commercial marketing activities illegal. For example you cannot buy government employees anything – even meals. You can give them advertising “trinkets” with the company name or logo of minimal value, but do not offer them sporting event tickets. People go to jail for that!

Marketing to the government is also different in the arena of “decision makers.” In traditional marketing classes you are always told to speak ONLY to the decision maker. If you are not talking to the person who can make the buying decision, you are told, you are just wasting everyone’s time. While that is good advice in the commercial arena, the decision maker in the government is a bit more complicated. In fact the checks and balances that surround our governmental systems create three separate decision makers that must be convinced that the sale should go forward. I describe this more fully in an article that appeared in Contract Managementmagazine in December 2006 entitled “Exactly who IS the Government Customer?” that you can read here. 

What I really wanted to talk about today was what you should do to locate opportunities. The key is to identify what you are selling and who in the government is buying what you are selling. There are three steps to the process, and a fourth if you want to stay on top of things!

First, you need to review the vast listing of NAICS codes. Those can be accessed at http://www.census.gov/epcd/naics02/. From this listing you can identify the codes that apply to the goods or services that you sell. Take these numbersto the Federal Business Opportunities website (often called FedBizOpps) at http://vsearch2.fbo.gov/servlet/SearchServlet where you can now enter those NAICS codes and conduct a search for all currently open solicitations for those goods or services. Once you have identified the opportunities you need to make a bid/no-bid decision based on whether your company could make a credible bid or proposal for what is being sought by the government. If so, then put your bid or proposal together and submit!

Oh, and that optional fourth step? Go to this site http://www2.fbo.gov/servlet/VendorReg and select the product codes that match your NAICS codes. This signs you up to receive email notices on a daily basis of EVERY opportunity that has been posted for those product codes.

Yes, this all sounds simple, and in some respects it is. That doesn’t mean that it is easy! We’ll talk more about what comes before and after these steps, as well explain these steps in more detail in later posts, but for now I hope this helps get you started in finding opportunities to sell what you have to the government!

Government Contracting for the Small Business

March 19, 2007 on 3:14 pm | In Marketing to the Government, Uncategorized | Comments Off

So what does a small business do that wants a government contract? Well we think that there are seven steps to the starting process – BEFORE you start submitting offers. Ask us how.

Entries and comments feeds. Valid XHTML and CSS. ^Top^
This Blog Is Offered By Certified Contracting Solutions
22 queries. 0.280 seconds.