As government contractors are all too aware, the transition from DUNS numbers to the SAM assigned Unique Entity Identifier (UEI) is causing a myriad of problems, which are jeopardizing contractor payments, awards, and ability to bid on opportunities. Since the April 4, 2022, implementation of the SAM assigned UEI and entity validation through SAM, PilieroMazza is seeing a wide range of SAM registration and renewal issues resulting in numerous entities’ SAM registrations expiring and new joint ventures unable to register in SAM. PilieroMazza attorneys are working with clients whose Federal Service Desk (FSD) tickets are submitted and pending for over two months and, in some instances, PilieroMazza clients have contacted their Congressperson in order to have their expired or deleted SAM registrations returned to active status. In this blog, PilieroMazza discusses major issues in the new SAM system and their impact on contract bidding and administration.
Unlike Dunn & Bradstreet, which validated entity information via the formation documents and employer identification number uploaded at the time of registration as well as through public records, it is unclear what process SAM uses to validate an entities’ existence, year of formation, and/or address and, as a result, we are seeing a marked increase in entity validation failures, including:
- SAM not finding newly formed entities, which adversely impacts how quickly newly formed joint ventures’ registrations are processed and, in many cases, they are not active in time for the joint venture to bid on opportunities. We are encountering registrations pending in SAM for over five weeks. This is especially troublesome because JVs are formed with the intention of bidding on specific contracts. In its current state, SAM is adversely affecting companies’ ability to “stand up” joint ventures in time to bid, which is certainly detrimental to small businesses across the board.
- SAM finding an entity but not finding the entity’s full and correct legal name. For example, the “LLC” or “Inc.” suffix may be missing, the period after “Inc.” may be missing, or SAM finds the company using the abbreviation “Corp.” but the state formation filing ends in “Corporation”. These legal name “discrepancies” seem minor, and we are seeing entities select the name SAM finds and go through the SAM renewal and registration process only to have the Defense Logistics Agency reject the registration with the instruction to return to SAM and create an incident. PilieroMazza is coming across these incident tickets in submitted status for more than two months and in some cases are more than two months and still pending.
- SAM finds a company at an address, but the address is missing the suite number. Some companies input their address as “Street Number, Street Name, Suite (or Ste.) Number” all on one line, which is the preferred way for SAM; however, some do not and, as a result, SAM will find a company at their street address, but without their suite number. PilieroMazza is seeing entities select the address SAM finds and goes through the SAM renewal and registration but receive a CAGE validation failure for the missing suite number with the instruction to return to SAM and create an incident. These incident tickets are in submitted status for more than two months and in some cases are still pending.
- SAM finds the entity but is unable to validate the year of formation. Several companies’ entity validation fail because the year of formation, which is reflected at the state level on their formation documents and which is reflected in their current SAM registration, is not the information that SAM finds. PilieroMazza submitted a FSD ticket for this issue, which is pending since June 2, 2022.
Compounding the issues is that once the FSD is finally able to validate an entity, if that entity is returned to SAM for any reason, there appears to be no audit trail that enables SAM to validate the entity without the entity having to start over and go through the entire incident ticket process. We recently saw this twice where DLA sent a request for additional information, which was unfortunately missed by the entity representatives. As a result, the entity registration was returned to SAM and both companies had to start their renewal over. Unfortunately, in both cases, SAM was again unable to validate the entity information and both companies had inactive SAM registrations for over two months.
Additionally, and equally as troublesome, is unlike the prior SAM system, which allowed the entity administrator to log-in and update the company’s bank account information, the new system requires the entity administrator to deactivate the company’s SAM registration, which deletes the registration, in order to update the bank account. This process is counterproductive and is in direct conflict with the way government contractors operate—a contractors’ SAM registration should never have to be deactivated to be updated—especially at a time when SAM is unable to validate entities at an alarming rate. Once the registration is deactivated, the record is completely deleted from SAM and the entity has to start the registration process over from the beginning. As mentioned above, if there was an initial entity validation issue, that issue presents itself again to the “newly” registering entity and, as a result, the registration is deleted pending FSD addressing the incident ticket, which at this time, can be well over two months. Of course, this jeopardizes the contractor’s ability to receive payments, awards and, if applicable, their FCL. It is PilieroMazza’s hope that the requirement that a contractor deactivate their SAM in order to update their bank account is addressed and remedied quickly.
In its current state, SAM is detrimental to the success of government contractors as a whole and, if permitted to continue as is, is likely to have a significant negative impact on small businesses. Until recently, there was no way to contact anyone at the FSD above the Help Desk Call Center. However, earlier this week, PSC circulated an email stating that “GSA officials . . . have acknowledged ‘the issues are systemic… and GSA is working everyday on addressing’ them. In the interim, the GSA Ombudsman has offered to help escalate specific member issues.” Additionally, PSC advised: “If you are experiencing challenges, please send an email to email@example.com an include: (1) the legal name of the entity; (2) the UEI number; (3) the FSD ticket #(s); and (4) a summary of the issue(s), which may include any urgencies (e.g., not getting paid, not being able to bid). Please do not submit documentation with personal identifiable information (PII), financial, or other confidential information to the Ombudsman’s office.”
PilieroMazza attorneys are tracking developments related to SAM. If you have questions concerning this blog, please contact the author, Cy Alba, of the Firm’s Government Contracts Group, and special thanks to Senior Paralegal Melissa Grodi for her deep knowledge of SAM.gov, for helping the many clients who are struggling with these issues, and for her invaluable assistance with this post.