Who Are You?

August 25, 2018 on 4:37 pm | In Bids and Proposals | Comments Off

(With apologies to Pete Townsend and his buddies)

Sometimes the government has a pre-approved source list. If you are not on the list, you are not eligible to receive the award. In a recent case there was considerable confusion over who was actually making the offer to the government – the entity on the approved list or some other party. The government maintains the System for Award Management (SAM) and entities that register there must provide a Dunn and Bradstreet (D&B) ID, and are assigned a Commercial and Government Entity Code (CAGE Code) by the government. The CAGE Code, among other things, can further distinguish among different locations of an entity.

The identity of the entity proposing to the government is extremely important. Who can be held legally responsible for performance? Who should receive payment? Is someone trying to broker government contracts in violation of the Anti-assignment Act?

In a recent protest to GAO the protester asserted that an award was made to an entity NOT on the approved list. In a review of the file documentation, including the SAM registrations, D&B numbers, and CAGE Codes, the GAO provided an explanation of the systems used for the identification of entities.

Uncertainty as to the identity of an offering entity renders an offer technically unacceptable, since ambiguity as to an offeror’s identity could result in there being no party bound to perform the obligations of the contract. [Citations omitted] Generally, the entity awarded the contract should be the entity that submitted the initial proposal. [Citations omitted] The information readily available, such as CAGE codes and DUNS numbers, must reasonably establish that differently-identified entities are in fact the same concern. [Citations omitted]  CAGE codes are assigned to discrete business entities for a variety of purposes (e.g., facility clearances, preaward surveys, and tracking the ownership of technical data) to dispositively establish the identity of a legal entity for contractual purposes. [Citations omitted] Similarly, the DUNS numbering system is established by Dun & Bradstreet Information Services, and discrete 9-digit numbers are assigned for purposes of establishing the precise identification of an offeror or contractor. [Citation omitted] On an SF 33, the CAGE code and DUNS number are used to identify the entity that is the offeror for a given procurement.[1]

In this case the facts are rather interesting.

The record shows that LSL’s proposal identified the correct part number, but did not reference CAGE code 55064, the approved source CAGE code. Instead, throughout its proposal, including its SAM registration and the SF 33, LSL identified its CAGE code as 1HFE7.17 Additionally, while the SAM registration shows that the entities associated with CAGE codes 55064 and 1HFE7 are both named Logistical Support, LLC and have the same address, each entity possesses a different CAGE code, DUNS number, DBA name, and activation date. The record also shows that the SAM registration and D&B report offered by the agency identify the existence of multiple entities associated with the Prairie Street address and parent/affiliate relationship between LSL and the approved source.[2]

Got that? Without parsing the details, the bottom line is that the vendor had several confusing sets of data registered in SAM. What it was trying to achieve from a business perspective is not addressed. Additionally, the offeror was unclear in its proposal and the manner in which it identified itself as to its eligibility to provide items on the approved vendor/parts list. Thus the offer initially introduced the confusion in its proposal. And we all know whose responsibility it is to submit a clear proposal. When challenged, the agency attempted to clarify the offering entity and determine whether the offeror was eligible for award. According to GAO the agency botched the documentation of their efforts to resolve the confusion – leaving the confusion in place. The key questions become, who are you or who do you represent yourself to be? How do you identify yourself and validate your eligibility for the award? Both the D&B number and its associated system and the DLA CAGE code and its associated system are designed to ensure the government is crystal clear on the entity with which it is contracting. Here the contractor was less than clear and when the contracting agency attempted to clarify that identity, it failed to properly document its process that would permit the GAO to determine that it made a reasonable decision.

We have often talked about the importance of having a current and accurate SAM (previously CCR) registration. Here the awardee was given another chance via the agency’s re-evaluation of the situation. It is extremely unwise to base the success of your proposal on either luck or reliance that the government will perform their job accurately and effectively. The only thing GAO reviews is whether the agency action was reasonable based on the record it was given. When the vendor introduces the confusion into the system over their own identity, perhaps the answer is that they are too stupid to hold a government contract at all. That might sound harsh, but a lot of time, money and effort was wasted sorting it all out after the fact. Did I mention that the protestor was awarded its protest coasts as well?[3]

Moral: Don’t be stupid, and don’t rely on your government counterpart being any smarter.

[1] United Valve Company, B-416277; B-416277.2. July 27, 2018.

[2] Ibid.

[3] For an interesting case see GC Works, Inc., B-416379; B-416379.2, August 14, 2018, where the protestor alleged that the awardee was ineligible for award because it had no SAM registration at all. GAO reviewed the agency’s verification documentation and found that the entity WAS fully and properly registered in SAM. The decision is unclear on why the protestor couldn’t seem to find the registration in the system.

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.


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