The Court of Federal Claims (COFC) recently interpreted FAR Clause 52.204-7, which requires offerors to register in the System for Award Management (SAM), to indicate that even a slight lapse in a contractor’s SAM registration status could disqualify them from potential award.
The Case Before the Court
COFC recently granted a preliminary injunction in Myriddian, LLC v. U.S., No. 23-443 (Fed. Cl. May 23, 2023) staying performance of a contract solicited by the Department of Health and Human Services (HHS) to provide methodologies that ensure consistent coding of Medicare and Medicaid claims under the National Correct Coding Initiative program. The solicitation indicated the procurement was a negotiated procurement under FAR Part 15 and required all offerors to comply with its terms and conditions to be eligible for award. Most importantly, the solicitation included FAR 52.204-7, which reads, “an Offeror is required to be registered in SAM when submitting an offer or quote, 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 resulting from this solicitation.”
In November 2022, offerors, including Cloud Harbor Economics, LLC (Cloud Harbor) and Myriddian, LLC (Myriddian), submitted their proposals. Cloud Harbor was determined to be the best value and was awarded the contract in March 2023. Myriddian promptly protested the award claiming Cloud Harbor was ineligible to receive the award because it failed to comply with the mandatory solicitation requirement outlined in FAR Clause 52.204-7.
Cloud Harbor was registered in SAM when it submitted its proposal in November 2022 and when HHS made the award decision on March 9, 2023. However, Cloud Harbor’s registration lapsed for a brief 17-day period from February 12, 2023 to March 1, 2023. Myriddian argued that the language in FAR Clause 52.204-7 requires an offeror maintain an active registration in SAM continuously throughout the entire procurement process. Any lapse in registration violates this requirement. Consequently, Myriddian argued Cloud Harbor was ineligible for the award because it did not comply with the solicitation requirements when it let the registration lapse.
The Court agreed, denying HHS’s arguments that the lapse was correctable and non-fatal. Specifically, it interpreted FAR Clause 52.204-7 as mandatory and non-waivable. Therefore, it was irrelevant that Cloud Harbor reactivated its registration prior to the contract award because it already violated the FAR 52.204-7 by allowing its registration to lapse. Myriddian was granted the injunction, and the Court ordered a stay of performance on the contract until resolution of the bid protest.
- Don’t let your SAM registration lapse. COFC’s interpretation of FAR Clause 52.204-7 in Myriddian, LLC v. U.S. emphasizes the importance of maintaining a current SAM registration. Allowing your registration to lapse for any amount of time when you are in the process of bidding on—or while performing—a government contract may deem you ineligible for award or in violation of the contract.
- Consider government processing time. In addition to maintaining an active registration, FAR Clause 52.204-7(d) warns offerors to consider the processing time associated with registering in SAM. This notice indicates that offerors should not submit proposals until their registration is complete and that a delay in receiving registration confirmation from the government will not be a valid excuse for failure to have an active registration at the time of proposal submission.
- FAR 52.204-7 is mandatory in most awards. The requirement to maintain an active SAM registration is a mandatory clause in most solicitations and awards. There are a few circumstances where the clause may not be included, such as in contracts where the work will be performed completely outside of the United States or in certain high stake military operations. However, even in these situations, FAR 52.204-7—though not mandatory—may still be included.