GAO Holds that SAM Registration Pertains to a Bidder’s Responsibility, Not Responsiveness of a Bid

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PilieroMazza PLLCOn December 16, 2020, the Government Accountability Office (GAO) sustained a protest by a contractor that was eliminated from a competition because its System for Award Management (SAM) registration had expired. Holding that registration in SAM pertains to a bidder’s responsibility, not the responsiveness of the bid, the GAO directed the agency to afford the bidder an opportunity to cure the matter after bid opening and before the award rather than finding the bidder to be ineligible for award. This holding should provide some comfort to contractors, particularly small businesses that may experience difficulties with SAM registrations while bidding for work.

In the protest of Master Pavement Line Corporation, B-419111, Dec. 16, 2020, the protester was determined to be the lowest bidder; however, following a review of the bid, the Department of Transportation, Federal Highway Administration (Agency) found the firm’s SAM registration was expired. Based on this finding, the Agency determined that the bid was nonresponsive. Master Pavement thereafter protested.

The GAO held that the Agency acted improperly when it rejected Master Pavement’s low bid as nonresponsive. Specifically, GAO explained that a responsive bid is one that will obligate the contractor to perform the exact thing called for in the solicitation. This is determined at the time of bid opening from the face of the bid documents, so unless something on the face of the bid reduces or modifies the bidder’s obligation to perform the terms of the solicitation, the bid is responsive.

In addition to reviewing the standard for responsiveness, GAO determined that FAR 14.405 establishes the rules for handling bids that contain minor informalities or irregularities. This covers immaterial defects that can be corrected without being prejudicial to the other bidders. It explains that a defect is “immaterial” when it has a “negligible effect on price, quantity, quality, or delivery.” If the defect is immaterial, FAR 14.405 directs the CO to allow the bidder an opportunity to cure or waive the deficiency.

GAO held that required representations can be cured or waived under FAR 14.405 when they are not material to the bid. Matters concerning contractor representations and certifications generally pertain to a bidder’s responsibility, not the responsiveness of the bid, according to the GAO. Therefore, because registration—or failure to register—in SAM does not affect a firm’s obligation to perform in accordance with the terms of the solicitation, compliance is not a matter of responsiveness, but rather a matter of responsibility. Therefore, the agency should have afforded the protester an opportunity to cure the matter after bid opening.

Although this decision may offer some reprieve for firms trying to get their registration completed before the submission of proposals, it is still important to maintain an active SAM registration. Following the GAO’s reasoning, a contractor may not be eliminated as non-responsive for such informalities but could be found to be a non-responsible bidder. Small businesses are somewhat insulated from such finding as the Small Business Administration (“SBA”) must make responsibility determination through the SBA’s Certificate of Competency Program, making it harder for agencies to disqualify them. Nonetheless, given the length of time that it can take to properly register with SAM and problems contractors could encounter with procuring agencies that place too much stock on the SAM registration requirement, contractors should still plan ahead to avoid the problems Master Pavement faced.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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