SAM-We-Are Not

I know this is going to sound obvious, but if you want to be a prime contractor with the federal government, you have to register in SAM.

I know, I know. Look, I know. It sounds obvious. And I know it sounds like a pain.

But we've talked about how it important it is to have your paperwork in order. If you don't have your paperwork in order, you can lose a contract. And just last week, the Court of Federal Claims published a case involving the US Army Corps of Engineers ("USACE") that feels like Exhibit A:

[T]he Court also finds that USACE had a rational basis for its determination that Thalle/Nicholson’s proposal was ineligible for award because Thalle/Nicholson was not registered in SAM as required by Federal Acquisition Regulation (“FAR”) 52.204-7.

Let me say that louder for folks in the back: a company was denied a government contract because it wasn't registered in SAM.

And let me just emphasize this as much as possible: a company lost a $76 million contract because it was not registered in SAM.[1]

How did this happen, you might wonder? It's pretty simple:

USACE called the President of Thalle Construction Co., Inc. on May 6, 2022, to inquire about the SAM registration status of the Thalle/Nicholson Joint Venture. USACE advised that “the government had Thalle registered in SAM . . . and Nicholson was registered in SAM. . . but Thalle Nicholson JV was not” and requested that Thalle/Nicholson “confirm if their Joint Venture was registered in SAM” and “provide that information.” In response, the President informed USACE that “they were not registered in SAM as a JV (Joint Venture), but if [USACE] could confirm an award to Thalle/Nicholson, they would register as a JV.” The President further stated that “they did submit a Joint Venture Agreement Legal Document with their solicitation proposal” and that “[t]he legal document was their only confirmation as a JV.”

You can't do that. You just can't. If you want to have a JV, you can't just say "we've got a Joint Venture Agreement, it's going to be fine". There are formalities! And one of those formalities is that you need the JV itself to be registered in SAM.[2] You can't rely on the registrations of the individual companies that are part of the JV. The JV itself needs to be registered.

Now, smarter people than me have weighed in on this opinion and offered their perspective. For example, they cited a GAO opinion issued last year that suggests that there may be some flexibility. And yet, let me recite some facts from that opinion:

The protester represents that on October 26, some two weeks after the agency issued the RFP, it incorporated as a joint venture and, thereafter, on November 15, submitted its application for registration in SAM.... CGS represents that it tried unsuccessfully several more times to register in the SAM before the deadline for submission of proposals. The protester states that on December 14, it submitted its proposal to the agency but, as of that time, it did not have an active registration in SAM. By letter dated January 4, 2022, the agency advised CGS that its proposal had been excluded from consideration because the firm did not have an active SAM registration at the time of proposal submission.

Folks. Obviously, none of this is ever legal advice or business development advice etc, but if you're going to use a Joint Venture to bid a contract, you might not want to wait two weeks to incorporate that JV and start the SAM registration process. You might not want to wait until the agency reaches out to you to ask about your SAM status. You might want to start registering right away.[3] Just sayin'.

I guess what I'm trying to say here is that unpopulated joint ventures are fun and whatnot, but there are rules and you gotta play by them.

[1] I know that the emphasis feels a bit extra, but I am not going to lie: I spent an evening in fetal position rocking back and forth imagining how awful I'd feel if this happened to me.  

[2] FAR 52.204-7 states: "An Offeror is 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."

[3] It even says so in the FAR clause! "Processing time should be taken into consideration when registering. Offerors who are not registered in SAM should consider applying for registration immediately upon receipt of this solicitation."

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