On May 23, 2023, the Court of Federal Claims (COFC) granted a preliminary injunction halting the award and performance of a contract awarded to Cloud Harbor Economics, LLC Cloud Harbor from the Department of Health and Human Services, Centers for Medicare & Medicaid Services (HHS). Myriddian, LLC successfully protested the award based on Cloud Harbor’s failure to comply with the SAM.gov registration requirements of Federal Acquisition Regulations (FAR) §52.204-7.

FAR §52.204-7(b)(1) states that all offerors are “required to be registered in SAM when submitting an offer or quotation, 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.”

HHS issued a solicitation for an SBA 8(a) set-aside contract for a firm-fixed price contract for methodologies to ensure consistent coding of Medicare and Medicaid claims under the National Correct Coding Initiative program. Cloud Harbor was the initial awardee, at a contract price of $11,079,372.43, with HHS determining that Cloud Harbor provided the best value to the government.

Cloud Harbor was actively registered with SAM on November 21, 2022, when it submitted its proposal. Cloud Harbor was also actively registered with SAM on March 9, 2023, when the contract was awarded. So why did the COFC hold that Cloud Harbor violated FAR §52.204-7(b)(1) and enjoin award of the contract to Cloud Harbor? Cloud Harbor had let its SAM registration lapse for a mere 17 days during the period between submission of its proposal and the award decision.

The COFC held that §52.204-7(b)(1) was unambiguous: even a short lapse between submitting an offer and grant of the award still constitutes a violation of §52.204-7(b)(1) that precludes award of the contract—and there is no room for agency discretion, regardless of how minor the lapse may seem. The COFC explained that:

It would be nonsensical to carve out an exception for FAR 52.204-7’s continuity requirement. The United States fails to distinguish the harms arising from a failure to be registered in SAM when an offer is submitted or when the Agency issues an award—both of which the United States seems to believe are fatal—from the harm arising from a failure to be continuously registered as required by FAR 52.204-7(b)(1). (Tr. 7:1–8, 8:8–9:2). Likewise, the Court declines to draw a distinction based on the duration of the registration lapse. Just as the FAR does not account for any number of days delay in registration at the time an offeror submits its bid or following the agency’s award decision, the FAR does not permit such unrestrained agency discretion. FAR 52.204-7. Such discretion would disqualify some offerors altogether while disregarding the avoidable blunders of others.

What is the takeaway for federal contractors?

Keep your registration active at all times. Develop good habits with these simple tips:

  • Verify you know your expiration date. Check your expiration date and make note of it. On SAM, look up your company and verify you have the correct expiration date on your calendars. Checking SAM regularly can also help your business keep track of important updates or new procedures.
  • Find out who in your company can renew. Ensure that more than one employee has access to the login information for your SAM account. If you own a small business with only one employee responsible for checking SAM and they get sick, go on vacation, take a leave of absence, or leave the company, you do not want to be on the eve of your expiration date when you realize no one in the company has the password or access to SAM.gov with the ability to manage your registration.
  • Don’t delay. Remember that you can renew your registration quickly‎ if you are not making any major changes to your company information. If your expiration date is coming up, be proactive to avoid being in a situation where you may lapse for as little as a day in the middle of a bidding process and lose out on the opportunity to be awarded a contract.

This article summarizes aspects of the law and does not constitute legal advice. For legal advice for your situation, you should contact an attorney.

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