December 23, 2024

How Flaws in Your SAM Registration Can Get You Into Trouble

Every federal contractor knows SAM, but not all of them realize that how they respond to SAM can make or break their success as a provider of services or goods to the federal government.

SAM is the System for Award Management, maintained by the federal government as an information tool, registration process, and database for companies who contract with, or want to contract with, the many federal agencies. A company must register with SAM before bidding on a federal contract and must update and renew its SAM registration annually. For more information on SAM and federal contractor obligations, see our October 26, 2021 posting, “Do You Know SAM?”

Answering questions posed in the SAM registration process may not seem to be a high business priority. Two recent cases, however, point to how important it is to provide timely and accurate information to SAM:

  • Cloud Harbor Economics, LLC, was awarded a contract with the Department of Health and Human Services. A competitor protested the award based on Cloud Harbor’s SAM registration information. The competitor claimed that the company had not been properly registered on SAM. Cloud Harbor was actively registered with SAM on the date it submitted its proposal to the federal agency and was actively registered with SAM when the contract was awarded. Unfortunately, records show that the company had not completed a timely renewal of its SAM registration during the time between the response and the award. Its SAM registration was expired for 17 days during that period. The Court of Federal Claims granted a preliminary injunction halting the contract award to Cloud Harbor on the grounds that the regulations require contractors to be continuously registered between submitting an offer and the award of the contract. (Myriddian, LLC v. U.S., May 23, 2023)
  • CWS Marketing Group, Inc. successfully bid on a contract with the Internal Revenue Service. The contract was one reserved for small businesses as defined under relevant federal regulations. A competitor sued under the False Claims Act on the grounds that the successful bidder had understated its size and did not qualify as a small business under the federal regulations. Federal contractors certify information during their annual SAM renewal, including updating information about their annual receipts. One of the factors in determining eligibility as a small business is the average annual receipts of the business.  The competitor claimed that CWS wrongfully subtracted certain expenses from their receipts in order to claim qualifying annual receipts under the regulation. Granting a partial summary judgment against CWS, the U.S. District Court for the District of Columbia found that the way the company had calculated receipts was wrong. (U.S. ex rel. Bid Solve, Inc. v. CWS Marketing Group, Inc., May 18, 2023)

Lesson for all federal contractors: Review your SAM registration regularly and check the regulations every time you provide information to SAM. Don’t rely on what the certification questions appear to be asking—look it up and get legal advice if you have any questions.