One could easily sprain their neck tracking the flurry of decisions regarding System for Award Management (SAM) registration lapses and how they impact an offeror's eligibility for award - the latest decisions out of the Court of Federal Claims (COFC) and the Government Accountability Office (GAO) are no exception. The lesson learned is facts are king and words matter.

COFC Applies Ground Rules Literally

The COFC recently affirmed that if an offeror is not registered continuously in the SAM from the initial proposal through the date the agency makes the award, it "may" not be eligible for award under the terms of the solicitation.

In Zolon PSC II, LLC v. United States, Zolon PSC II, LLC (Zolon) protested corrective action taken by the National Geospatial-Intelligence Agency (NGA) in response to a prior protest at the GAO whereby NGA allowed three awardees to remain in the competition whose SAM registration lapsed in violation of FAR 52.204-7(b)(1). In May 2023, Zolon was notified that it was an unsuccessful offeror in a procurement to support NGA with acquisition, financial, and business management services, called the CLOVER procurement. Initially, Zolon filed a protest at GAO asserting that three awardees were ineligible for award based on its failure to comply with the SAM registration requirement. The record showed that the SAM registration of three awardees lapsed between the deadline to submit proposals and the date awards were issued for periods ranging between one day and nearly two months. Relying on COFC precedent, Zolon argued at GAO that pursuant to FAR 52.204-7(b)(1), offerors are required to be continuously registered in SAM from the time of offer through the time of award, meaning that these three awardees were ineligible for award. In response, NGA informed GAO it intended to take corrective action, including ensuring that all awardees complied with FAR 52.204-7(b)(1), conducting a factual investigation into the SAM registration status of the remaining offerors, and reasonably interpreting and applying the FAR provision based on the specific language of the solicitation.

In taking corrective action, NGA attempted to circumvent the continuous registration requirement through the issuance of an individual deviation from FAR 52.204-7 for the CLOVER procurement. This deviation required that offerors only be registered (i) when submitting an offer or quotation, (ii) at the time of award, and (iii) during performance and through final payment, specifically eliminating the continuous registration obligation. NGA provided three rationales for the deviation. First, the NGA wished the clarify that the registration requirement is not continuous. Second, the continuous registration requirement is not practical for NGA. Third, NGA wished to award contracts to the best value offerors and not eliminate offerors based solely on a lapse in SAM registration.

Ultimately, the court adopted prior COFC case law to find that during corrective action from a GAO protest, NGA erroneously allowed the three awardees to remain in the competition and held that the decision to issue a deviation was arbitrary and capricious. First, the court found that issuing a post-award deviation to clarify that the agency never intended to follow the plain language of a mandatory FAR requirement was not rational and was contrary to NGA's representations to GAO that it would "reasonably interpret and apply FAR 52.204-7(b)(1)." The court also held that NGA's second rationale was similarly irrational. Finally, it found that with regard to the third rationale, while the government may ordinarily amend the solicitation to change or clarify requirements with the stated purpose of securing the best value of a contract, the deviation could not be justified on that basis here because there is no evidence that the pool of offerors competing for the CLOVER award would be significantly narrowed absent the deviation. Furthermore, unlike other solicitations where the agency had issued a deviation in the interests of securing the best value, this deviation was of a mandatory FAR provision, not a technical or other requirement the agency chose to impose in the solicitation. Though, the court did note that while the NGA's deviation of FAR 52.204-7 was not rational here, deviations of FAR 52.204-7 are permissible and other agencies have issued class deviations of this provision. 

Next, the court turned to whether the plaintiff was prejudiced by NGA's action and found that it was impossible at this stage of the procurement to determine whether Zolon had a substantial chance of receiving a contract if offerors with lapsed SAM registrations are excluded from the re-evaluation. However, the court did find that Zolon was non-trivially injured by having to compete with 21 offerors for five awards, three of which would be ineligible to compete absent the deviation, versus 18 offerors. Simply, the inclusion of ineligible offerors in the competition for the contract award that Zolon sought amounted to a non-trivial competitive injury. Judge Kathryn Davis enjoined NGA from proceeding under its original plans.

GAO Will Not Read in Missing Clauses into Solicitations Even If Required

Recent GAO decisions further highlight the delicate landscape of SAM registrations for contractors. Last week, GAO published a decision sustaining a protest finding that the agency unreasonably determined that the protester was ineligible for a task order award due to a temporary lapse in its SAM registration where FAR 52.204-7 was not included in the solicitation. In Maxim Healthcare Staffing Services, Inc., Maxim Healthcare Staffing Services, Inc. (Maxim) protested the exclusion of its proposal from consideration due to its temporary lapse in SAM registration. Maxim had previously been awarded the task order, but during corrective action in response to a prior GAO protest, the agency terminated Maxim's task order based on the fact that Maxim's SAM registration lapsed for over one month, which coincided with the deadline for proposal submissions. Maxim protested arguing that the agency's exclusion of its proposal from consideration was unreasonable and contrary to the solicitation because the solicitation did not state that the proposal would be rejected if an offeror's SAM registration had lapsed and did not include FAR 52.204-7, which does not apply to task order competitions. GAO ultimately found that the agency's conclusion was unreasonable because the FAR provision was not present in either the task order solicitation or Maxim's Indefinite Delivery Indefinite Quantity (IDIQ) contract. GAO further declined to follow the agency's position that GAO should read FAR provision 52.204-7 into the solicitation as prescribed by FAR section 4.1105(a)(1) or alternatively because it was included in the IDIQ solicitation. Finally, citing its decision in Vivsoft Techs, LLC, GAO elaborated that it will not impose a requirement that mandatory provisions be incorporated into solicitations by operation of law when they have been omitted by an agency. 

Key Takeaways

The Zolon decision serves as a reminder to contractors of the importance of maintaining an active SAM registration during the entire procurement process. A lapse of even one day in a company's SAM registration during the evaluation period like that of one of the offerors in the CLOVER procurement could lead to a company being ineligible for award. Contractors should ensure that they have procedures in place to check the expiration date of the company's SAM registration and start the re-registration process with enough time so that there is no lapse in registration. These processes should be in place for each entity under the contractor's umbrella that may submit a proposal in response to a solicitation.

Likewise, the Maxim decision illustrates GAO's view that the Christian doctrine has no place in the formation of contracts, only the administration. As a result, unless FAR 52.204-7 or the appropriate clause is expressly stated or incorporated into a solicitation, an agency will be held to the ground rules as stated, not those that were intended. The same applies to SAM registration.  

If you have any questions about the Zolon or Maxim decisions, maintaining an active SAM registration, or bid protests generally, please contact one of the Miller & Chevalier attorneys listed below:

Scott N. Flesch, sflesch@milchev.com, 202-626-1584

Alexandra S. Prime, aprime@milchev.com, 202-626-5940

Jason N. Workmaster, jworkmaster@milchev.com, 202-626-5893

Alex L. Sarria, asarria@milchev.com, 202-626-5822

Ashley Powers, apowers@milchev.com, 202-626-5564

Connor W. Farrell, cfarrell@milchev.com, 202-626-5925

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