It’s a tale as old as time, and I’m not talking about “Beauty and the Beast.” I’m talking about an offeror who failed to comply with the registration requirements in FAR 52.204-7. What’s FAR 52.204-7? It’s the FAR provision that requires, among other things, all offerors to be registered in the System for Award Management, or SAM as it is better known. And, as we have seen many times before, there is no way around this rule. Often, failure to be registered in SAM limits an offeror’s eligibility before award is made, making the offeror ineligible for award. However, this time, it affected the award that had already been made, resulting in the court entering a preliminary injunction against the government continuing with its original award.
As the Court of Federal Claims (COFC) stated, COFC has repeatedly upheld an agency’s determination that an offeror is ineligible for award because the offeror did not comply with aspects of the FAR. The type of failure to comply may vary, but a common form of non-compliance, and the one subject to this protest, is the failure to register in SAM. Myriddian, LLC v. United States, No. 23-443 (Fed. Cl. May 23, 2023). Additionally, in a somewhat unique situation, the court in Myriddian not only had to inform the awardee, Cloud Harbor, that it was noncompliant and, therefore, ineligible, but also had to inform the contracting agency, the Department of Health and Human Services (DHHS).
The relevant solicitation incorporated FAR 52.204-7 by reference. That rule requires that an offeror be registered in SAM at the time of offer submission, “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” per FAR 52.204-7(b). And “registered in SAM” is more than just having a record in the system. Specifically, “registered in SAM” means:
- The offeror has entered all mandatory information, including its unique entity identifier, the Electronic Funds Transfer (EFT) indicator, its Commercial and Government Entity (CAGE) code, and data required by the Federal Funding Accountability and Transparency Act of 2006;
- The offeror has completed the Core, Assertions, and Representations and Certifications, and Points of Contact sections in SAM;
- The government has validated all mandatory data fields, including validating the offeror’s Taxpayer Identification Number (TIN); and
- The government has marked the record “Active.”
Cloud Harbor was registered in SAM when it submitted its offer (making this protest different from protests where the offeror is not registered in SAM at time of offer submission, but gets registered by the time an award is made). And, as DHHS pointed out, Cloud Harbor was also registered at the time of award. Yet, for a 17-day period of time sometime between when Cloud Harbor submitted its proposal and when DHHS made the award, DHHS’s registration in SAM lapsed, making Cloud Harbor ineligible for an award under the solicitation.
While DHHS tried to frame the SAM registration requirement as one that it had the authority to waive, the plain language of FAR 52.204-7 led COFC to disagree. The judge, citing many prior decisions, held that FAR 52.204-7 was unambiguous, and the registration requirement was mandatory. Not only that, but COFC pointed out a myriad of prior decisions in which the Government itself argued that the registration requirement was mandatory and non-waivable. (I see you, COFC, using the Government’s own words against itself.)
Since DHHS didn’t get to waive the requirement, it then attempted to argue that FAR 14.405 allows agencies to correct minor irregularities in an offeror’s proposal when the irregularity is immaterial to an invitation for bids. Unfortunately, for both DHHS and Cloud Harbor, the ability to make corrections to minor irregularities only applies to procurements that are performed according to FAR Part 14, pertaining to sealed bidding with non-negotiated procurements. Here, we had a negotiated procurement that was subject to FAR Part 15, meaning DHHS had no authority to allow correction of a minor irregularity, like the lapse in SAM registration by Cloud Harbor.
Following DHHS’s failure to prove that Cloud Harbor was eligible for award, the rest of the decision focused on whether an injunction was warranted. COFC went through the factors that merit an injunction—(1) likelihood of success on the merits; (2) irreparable harm absent immediate relief; (3) the balance of interests weighing in favor of relief; and (4) that the injunction serves the public interest—and determined that all the requirements for a preliminary injunction were met. Accordingly, COFC issued the preliminary injunction, and ordered the parties to continue with the protest to achieve a final resolution, demonstrating the vital importance of accurate and continual SAM registration to the federal government contracting process.
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