US GAO Decision Shows Danger of Allowing SAM Registration to Lapse During Solicitation Period
On April 1, 2024, the Government Accountability Office (GAO) sustained a bid protest by TLS Joint Venture, LLC because the awardee’s registration in the System for Award Management (SAM) lapsed before the government awarded the contract.1 Federal contractors should avoid the risk of being found ineligible for award by ensuring that their SAM registration remains current—and does not become a roadblock to receiving a potentially lucrative government contract.
The GAO Decision
The protest related to a Department of the Navy procurement for custodial services. The request for proposals incorporated Federal Acquisition Regulation (FAR) section 52.204-7, System for Award Management. And the request for proposals warned offerors that continuous compliance with all material aspects of the solicitation, including regulatory requirements, was necessary to be eligible for award.
After evaluating proposals, the Navy determined that the proposal by Silas Frazier Realty, LLC (SFR) was the lowest-priced technically acceptable offer and should receive award. Prior to making award to SFR, the Navy reviewed SFR’s SAM registration and confirmed that it was “active.”
One of the disappointed offerors, TLS, filed a GAO bid protest alleging that SFR was ineligible for award because it had not maintained a continuous SAM registration from the submission of its proposal through contract award. The Navy defended its award decision by arguing that FAR 52.204-7 does not require continuous registration but only requires a firm to be registered at the time of proposal submission and when any contract is awarded.
FAR 52.204-7(b)(1) requires that, to receive an award, an offeror must:
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, basic agreement, basic ordering agreement, or blanket purchasing agreement resulting from this solicitation.
On review of this provision, GAO ultimately agreed with TLS that FAR 52.204-7 “plainly and unambiguously requires offerors to maintain their SAM registrations during the evaluation period.”2 In making this finding, GAO rejected the Navy’s reliance on regulatory history suggesting that perhaps offerors only needed to be registered in SAM at the time of award. On this point, GAO explained that it will only consider regulatory history as an interpretive aid when the regulation is ambiguous.
After finding that FAR 52.204-7 requires continuous SAM registration, GAO turned to the question of whether SFR’s SAM registration actually lapsed. GAO explained that the regulation required both the offeror and the government to take actions for an offeror to be considered registered in SAM. Specifically, the offeror must enter all mandatory information, and the government must validate the information and mark the record as “active.”
Turning to the facts of the case, GAO found that SFR’s registration expired on December 11, 2023, and was not activated by the government until December 12. GAO explained that even though SFR submitted its SAM renewal request on December 8, the government did not take its required actions until after SFR’s existing SAM registration had expired.
Based on GAO’s conclusion that SFR did not maintain continuous registration in SAM between proposal submission and award of the contract as required by FAR provision 52.204-7, GAO recommended that the Navy terminate the award to SFR and make a new source selection decision.
Takeaways
- While federal contractors are surely aware of the requirement to be registered in SAM prior to contract award, the GAO’s TLS Joint Venture decision clarifies that the registration must be maintained from the time of proposal submission through the date of contract award.
- Importantly, the TLS Joint Venture decision shows that any lapses in SAM registration during the relevant period will render the offeror ineligible for award.
- The GAO’s decision is consistent with a recent US Court of Federal Claims (COFC) decision finding that the plain language of FAR 52.204-7 requires offerors to maintain their SAM registrations without lapses during the solicitation period. See Myriddian, LLC v. United States, 165 Fed. Cl. 650 (2023). Thus, GAO and COFC appear to be aligned on this issue (at least for now).
- This decision shows that even if an offeror submits a SAM registration renewal request before the expiration deadline, that offeror will suffer the consequences if the government does not validate the information and activate the offeror’s account in time. This application of a strict liability standard may strike offerors as a harsh and somewhat unfair result.
- In this case, the offeror submitted its renewal a mere three days before the expiration date, and no facts suggested that the government unduly delayed its processing of the request. It is unclear whether GAO would reach the same result in a situation where the government was to blame for failing to renew an offeror’s SAM registration within a reasonable time or otherwise was at fault for the registration lapse.
Federal contractors may reasonably complain that GAO’s TLS Joint Venture imposes an unduly harsh consequence when a contractor submitted its SAM information before its registration expired and the registration lapse only lasted one day. That said, GAO and the COFC appear to be aligned in their interpretation of FAR 52.204-7. Accordingly, contractors should take note of the TLS Joint Venture decision, which provides a stark warning that small administrative matters like SAM registration can make the difference between receiving a contract award and being disqualified.
1 TLS Joint Venture, LLC, B-422275, Apr. 1, 2024, 2024 WL 1460853.
