An Inaccurate SAM Registration Is Not Always a Fatal Flaw
August 3, 2018
By: Eric Whytsell
Most government contractors recognize the importance of scrupulously maintaining their registration in the System of Award Management (SAM). Given the numerous reasons to ensure that a company’s SAM registration is accurate, complete, and up-to-date, many contractors understandably obsess over making sure that the contents of their registration are absolutely correct. Such attention to detail absolutely represents the best practice with respect to SAM. As the recent Government Accountability Office (GAO) decision in Cyber Protection Technologies, LLC, B-416297.2; B-416297.3 (July 30, 2018) makes clear, however, not every inaccuracy will sound the “death knell” for the offending contractor. Such an adverse impact relies on another ingredient: prejudice.
The protest involved a challenge to an Air Force award of a contract for defensive cyber realization, integration, and operational support to Cyber Systems & Services Solutions, LLC (CS3). Upon learning of the award, another offeror, Cyber Protection Technologies, LLC (CPT) protested, arguing among other things that the agency unreasonably found CS3 eligible for award notwithstanding its alleged deficient SAM registration. More particularly, CPT alleged that CS3 failed to disclose its status as a joint venture or its corporate parents in SAM as required by FAR 52.204-17, Ownership or Control of Offeror (one of the required representations and certifications in SAM), which requires the offeror to identify whether it has an immediate owner. Here, CS3 represented in its SAM representations and certifications that it “does not have an immediate owner.”
According to CPT, CS3’s proposal should have been found technically unacceptable or otherwise ineligible for award because of this allegedly inaccurate information. In an attempt to establish competitive prejudice, CPT also argued that CS3’s failure to maintain a valid SAM registration disclosing its ownership structure precluded CPT from being able to investigate and contest the intervenor’s size status and, thus, its eligibility for award.
Unfortunately for CPT, the GAO never even considered whether CS3’s SAM registration was inaccurate or otherwise not in accordance with the FAR requirements. Instead, the GAO found that CPT had failed to demonstrate that it was competitively prejudiced by the agency’s waiver of the requirement for a valid SAM registration.
As the GAO has repeatedly noted, competitive prejudice is an essential element of any viable protest, and where none is shown or otherwise evident, a protest will not be sustained, even where a protester may have shown that an agency’s actions arguably were improper. In the context of allegations that an offeror’s SAM registration is inaccurate or incomplete, the GAO 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. Historically, the GAO has found no prejudicial error in such cases primarily 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.
Based on the facts of this case, the GAO adopted the same reasoning. Here, for example, CPT failed to demonstrate that CS3’s SAM registration provided CS3 with any competitive advantage, or explain how CPT would have amended its proposal had it known that the agency would not strictly enforce the SAM registration requirements. In addition, CPT undercut its claims of having been prejudiced in its ability to investigate and challenge CS3’s size status by stating that it had “filed a size protest which was submitted to the [Small Business Administration]--the appropriate fact finder.” On this record, the GAO found no basis on which to sustain the protest.
While this might seem to be an obvious and inevitable outcome, the decision underscores how easy it can be to forget the importance of prejudice--and how difficult it can be to establish. Disappointed offerors thinking about protesting based on an inaccuracy in the protester’s SAM registration should make sure they can show competitive prejudice before spending the time and money to pursue such a challenge. It may turn out to be harder than it looks.
Eric Whytsell is responsible for the contents of this article.
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