Interview transcript:
Terry Gerton: You’ve got an interesting story of two cases in the Federal Claims Court that derive from a rescinded [Federal Acquisition Regulation (FAR)] rule. Let’s start with the bottom line up front.
Zach Prince: Sure. As the background for listeners, the system for award management, or SAM, is an important database that the government maintains for all prime contractors at least, and often a lot of subcontractors and recipients of grants, etc. You need to be registered on there, you need to updating your registration whenever there are any changes, but at least annually. It has big ramifications. Among those ramifications, at least until the changed recently was that if you allowed any lapse at all in the registration between the time you submitted a bid for a government contract and the time of award, then you would be rendered ineligible for that award. So draconian measures.
Terry Gerton: So you’ve got two situations here: One a large procurement and one a smaller procurement. Tell us about those cases.
Zach Prince: So the first is Zolon Tech. And this has been going on for a long time since at least 2022. This is for the National Geospatial Intelligence Agency. They’re trying to issue indefinite delivery, indefinite quantity, IDIQ contracts, for certain management functions that they seem to need. But this has be held up in protest since 2023. So 2023, Zolon was not one of the five best value offers. They protested based first on some issues with the technical evaluation. Those arguments don’t usually go very far because the agency has so much discretion. But then they caught on to the fact that three of the awardees had lapsed SAM registrations at some point in the procurement. And that ultimately was found to be a disqualifying factor, even though the agency did its best to issue an individual deviation from the FAR, so providing that the agency really doesn’t want to apply this rule in this case. That went to the Court of Federal Claims with the decision last year. They said, no, the agency can’t actually do that. It’s irrational for it to do that, even though we get the agency’s concerns that this is preventing it from getting its best value, still that’s what the regulations say, we can’t go beyond that.
Terry Gerton: And then the FAR rule was rescinded, right? And that changed the outcome again?
Zach Prince: Yeah, so what happened is that the FAR Council reacted to this interpretation, which, by the way, was the only interpretation that was plausible, because the regs said what they said. And the FAR Council said, actually, we never meant it. They should never have meant this. And I think that’s right, it was just poor drafting. And they said, from here on out, the FAR is amended to say, effective immediately, you only have to have your SAM registration in place at the time you submit the offer. And the time of award and then throughout contract performance, but that’s an administrative issue, administration issue rather, not a bid protest issue. The problem is the FAR amendment is a contract clause or really a solicitation clause. They amended the clause, but the solicitations that are out there already mostly are going to be using the older clause. So NGA here said, well, we’re going to change the version in the solicitation to become the new clause, so that we can consider as many offerors as we’d like to for best value, Zolon protested again, and said, the court said before, this was irrational, right? The agency can’t just change its mind. This is just to benefit these three offerors. Now, in this case, the courts said, oh, not so fast, because before the problem was we had the FAR saying one thing and the agency choosing to ignore it just for one procurement. Here, the FAR says something entirely different. Now the agency is using its discretion, which the FAR allows it to do, to change the solicitation to align with the current FAR provisions. That’s perfectly rational. This is good to go. Proceed with this procurement.
Terry Gerton: That’s a pretty twisted path through three years of protests.
Zach Prince: Yeah, it is. It is. And it really highlights the problems when the regulators don’t think carefully enough about the words they’re using and what they likely mean. And I tell clients this all the time, words matter. And you really need to be very cautious, particularly when you’re drafting a contract or putting out a regulation, to think about what the words you’re using could mean.
Terry Gerton: All right, so that was a big contract, a big protest with NGA. What’s the smaller case?
Zach Prince: So the other case is Analysis Studies and Training International and SOFIS, two protestors challenging an Air Force decision to exclude them from competition for procurement, which is to train and support an MQ-9 drone unit out in New Mexico. So the Air Force had excluded those two offerors because of issues with their SAM registration. One of them was because the company had made a mistake and hadn’t registered as a woman-owned small business. That’s not really an issue for us here because it’s not the SAM registration lapse. The other one was the SAM registration lapse. That is, at some point, very briefly between the time it submitted an offer and the time of award, its registration lapsed ,and the agency disqualified it. So it’s a different posture here because in the case, the first case we talked about, Zolon, the agency really wanted to expand the pool and include these offerors. It didn’t want to exclude them. It only did that after being forced to by the court and then never really did it because it continued the procurement in this corrective action posture. Here the Air Force had already excluded them and was trying to justify just maintaining that position and proceeding with the procurement. So the protester here argued that, well, the FAR rule changed and so it should have retroactive application. And the agency acted irrationally in failing to amend the solicitation to use the new rule. But the agency has discretion. The FAR is really clear that if there’s a change in the law in the regulations between the time solicitation is issued and award, the agency can, if it wants to, change the FAR clause that’s being used. But again, it doesn’t have to.
Terry Gerton: So two different cases, two different outcomes, all coming back to the same point. What should contractors and contracting officers take away from these two cases?
Zach Prince: I think contractors just generally need to be on top of their SAM registrations. And this is not a new lesson. I think anybody who’s in this space and has been paying attention over the last couple of years knows full well, SAM registrations matter. They need to updated regularly with accurate information. It’s not just a low level administrative task. You shouldn’t just give your lowest level administrative person access to your SAM profile and tell them to go and make sure this gets done. This should be a high-level requirement within an organization that you update regularly, that you set meeting reminders or whatever in your calendar well in advance of your annual deadline. Because this sometimes takes time. GSA is not always as prompt with validating SAM registration renewals as one would like them to be, so a month in advance to the deadline or more is probably the right timeframe because you don’t want to be in a situation where either you’re excluded from a competition because there’s an old clause left in there, or you could get to the time of award even under the new clause, and if your registration is expired, you can’t get the contract. So it matters.
Terry Gerton: Well, and as they’re going through the FAR review right now, you’ve got a lesson for regulators, right?
Zach Prince: Yeah, I do. I mean, I’m a little bit cynical and skeptical about this FAR revision, so I hope that doesn’t bleed in too much, but there have been many who have tried to revise the FAR over the years. There have been some changes that are important, but Ralph Nash, who is just excellent, recently spoke about this issue and noted that it doesn’t seem to him that there really needs to be changes in the FAR, there needs to be change in acquisition professional training, and how things are implemented. But set that aside. There is apparently some dramatic revision that’s underway. We’ll see what that looks like. Regulators need to be really cautious with what they put out, because words have meaning and sometimes those meanings aren’t going to be apparent until you’re in a protest or dispute years down the line.
Terry Gerton: So it sounds like at the bottom of all of this is attention to detail matters on the contracting side, keeping up your registration, on the regulator side, making sure the words you use are the words you mean.
Zach Prince: Absolutely right.
The post No surprise: Attention to detail matters in federal acquisition regulations first appeared on Federal News Network.