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.


Business Models in Today’s Economy

March 14, 2009 on 2:07 pm | In Getting Started | Comments Off

A business minded friend of mine and I had a discussion about a year or two ago concerning business plans. We both supported rationality in business planning, but we also admitted that sometimes the craziest of ideas works for a few. For example, we posited, if someone had come along a while back proposing to open a coffee shop on every conceivable corner of America, as well as every grocery store, Target store, book store, and about two dozen other store types, and…oh yeah….was going to charge $4.00 for a cup of coffee, we both would have kicked them out of our office and told them to get a brain before trying any business at all.

In that discussion we also talked about the dot com bubble that burst. What were these people thinking? How can you have a market cap in the billions when your own plan says that you will never make a dime? How can you continue selling vaporware to investors and not end up as Madoff’s cellmate? Who would pump millions into a black hole of zero assets? Ahh – the new market! Just wait and see.

And we have seen Starbucks, Amazon, EBay, and a very few others make many legitimate millionaires. But it seems to me that we are on the dawn of a new era. People aren’t paying $4.00 for that cup of coffee, or $6.00 for a few ounces of Cold Stone Creamery product. The businesses that cater to the elite are tanking fast. There are no more elite, it seems.

This suggests to me that my friend and I were right. You can ride a wave until it reaches shore, but they ALL reach shore eventually. There is really only one business model that works – one that uses assets to produce something of greater value. Whether it is a product or a service, you have no sustainability without some measurable value added. Fads must be capitalized on quickly. And you have to plan for the ultimate bust. They guy who developed the pet rock got rich. The guy who developed the hula hoop also got rich. And then it was over. When something seems too good to be true, it is said, it most certainly is. Sure, if you have “gotten in on the ground floor” you might have a 10% chance of hitting the wave at the right point in the curl. But you can’t bet the farm. And you have to plan for the next big wave. It seems to me that even among that 10% who make it by capitalizing on such a fad, eventually most (if not all) go bust for violating basic rules of business. And rule number one is, you can’t spend more than you make, which includes creating a massive infrastructure that cannot be sustained in down times. Ask the folks at Krispy Kremes. Or most anyone still left in Silicon Valley. Or read the so-called stimulus bill. Seems to me to be the same principle. Only a free market can reallocate assets sensibly. Central planners have failed every time they’ve tried. It’s not clear to me how this one is any different. I’m going to stick with the basics.

What do you think?

Who Needs A Business Plan?

March 23, 2007 on 2:41 pm | In Getting Started | Comments Off

So many folks ask us how to go about getting a government contract, but for many of them they have not even thought through what it takes to even run a business yet alone manage a government contract. As a result we spend a lot of time mentoring entrepreneurs on how to get their business started before we even start talking about government contracts.

Anyone who wants to be their own boss should have a business plan. And not jst “anyone” but EVERYONE! There are no exceptions. What kind of business you plan to have will determine how detailed of a plan you might need, but regardless, everyone needs a business plan.

How do you go about doing that. You could go to the bookstore and get any of about 100 books on the subject. You can also go online and find a great number of resources and templates that will help you. Any of those might work, but before you begin you should do two things. First, you should sit down with your computer (or pen and paper, or whatever you use to record your thoughts) and just start writing. Write whatever things you think are important about your business. What do you plan to sell? Is is a good or a service? Where will you find suppliers? Will you do any manufacturing yourself? Will you be importing? How big will your company be? What amount of money do you need to get started? How much will you need to maintain your operations? There are countless other questions you might think about, but just get started! You can organize these thoughts into categories later. For now – just start writing.

 The second question you need to answer is – why am I writing this plan? Am I looking for a bank loan? Do I need an angel investor or a VC firm? Is my plan just to help me organize my thoughts? Plans take a different shape depending on what there purpose might be.

 So these are the first two question sto answer for your self and a couple steps to get started. Watch for more on getting your business started and then seeking government contracts.

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