Reminder: Joint Ventures Must Be Registered in SAM

Like any other offeror, a joint venture must be registered in the System for Award Management. And, as one joint venture recently learned the hard way, if a JV is not registered in SAM by the award date, the missing registration could prove costly.

The GAO’s bid protest decision in Continuity Global Solutions-Secure Me WLL Security, JV, B-419875 (Aug. 12, 2021), involved a State Department RFP for the provision of local guard services at the United States embassy in Bahrain. The RFP was issued under the procedures of FAR Part 15 (Contracting by Negotiation) and incorporated FAR 52.204-7 (System for Award Management). Award was to be made on a lowest-price, technically acceptable basis.

The version of FAR 52.204-7 included in the RFP stated that “[b]y submission of an offer, the Offeror acknowledges the requirement that a prospective awardee shall be registered in the SAM database prior to award, during performance, and through final payment” under any contract awarded from the RFP. (FAR 52.204-7 has since been updated to also require SAM registration at the time the offer is submitted).

Continuity Global Solutions-Secure Me WLL Security JV submitted the lowest-priced proposal and was evaluated as technically acceptable. CGS-SM was not registered in SAM, however, so the agency contacted the joint venture to inquire whether it would be registered in SAM before award. CGS-SM explained that it had “initiated the SAM registration process and expected the registration to become active within two weeks and prior to award.”

Over the next several weeks, the agency checked SAM on four occasions. Each time, CGS-SM remained unregistered. After six weeks had passed, the agency awarded the contract to another offeror.

CGS-SM filed a bid protest with GAO. It argued that the requirement to be registered in SAM was a “minor informality or irregularity” that the agency should have waived pursuant to FAR 14.405.

The agency responded that FAR 14.405 “only applies in the context of FAR part 14 sealed bidding procedures and therefore is not applicable to the [FAR Part 15] negotiated procurement procedures used here.” The agency further contended that even if FAR 14.405 applied, it only required the agency to give the offeror the opportunity to cure a minor informality; it did not mandate that the informality be waived.

The GAO agreed with the agency. It wrote that FAR 14.405 “is not applicable here” because the solicitation was issued under FAR Part 15. The GAO continued:

The facts as alleged by the protester show that the agency gave the protester an opportunity to cure its defect of not being registered in SAM when it notifed the protester, on April 14, of its unregistered status and requested verification. Therefore, the protester’s allegations fail to establish anything improper with the agency’s decision, in accordance with FAR provision 52.204-7(d), to proceed with award to the next otherwise successful registered offeror when it found that the protester was not registered in SAM on the date of contract award.

The GAO dismissed CGS-SM’s bid protest.

As the CGS-SM case demonstrates, a SAM profile doesn’t pop up instantaneously after the process is initiated. Instead, it can take a matter of weeks for the profile to become active. And FAR 52.204-7(a)(4) defines “registered in SAM” to mean an active profile, not just a new profile in process.

JVs are often established specifically to bid a particular opportunity. Sometimes the paperwork (or, these days, the pixel-work), such as SAM registration, isn’t appropriately prioritized, or sometimes, the procurement timeline itself is short. Either circumstance can leave JVs struggling to obtain active SAM profiles by the deadline to submit proposals, which–as I noted earlier–is required under the current version of FAR 52.204-7. Joint venture members should register in SAM as soon as possible to make sure there is enough time for the JV’s profile to go “active” before the proposal is due.

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