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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