[Federal Register Volume 89, Number 218 (Tuesday, November 12, 2024)]
[Rules and Regulations]
[Pages 89472-89475]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-26062]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Part 52

[FAC 2025-01, FAR Case 2023-018; Item II; Docket No. FAR-2023-0018; 
Sequence No. 1]
RIN 9000-AO66


Federal Acquisition Regulation: Clarification of System for Award 
Management Preaward Registration Requirements

AGENCY: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Interim rule.

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SUMMARY: DoD, GSA, and NASA are issuing an interim rule amending the 
Federal Acquisition Regulation (FAR) to clarify System for Award 
Management preaward registration requirements.

DATES: 
    Effective date: November 12, 2024.
    Comment date: Interested parties should submit written comments to 
the Regulatory Secretariat Division at the address shown below on or 
before January 13, 2025, to be considered in the formation of the final 
rule.

ADDRESSES: Submit comments in response to FAC 2025-01, FAR Case 2023-
018 to the Federal eRulemaking portal at https://www.regulations.gov by 
searching for ``FAR Case 2023-018''. Select the link ``Comment Now'' 
that corresponds with ``FAR Case 2023-018''. Follow the instructions 
provided on the ``Comment Now'' screen. Please include your name, 
company name (if any), and ``FAR Case 2023-018'' on your attached 
document. If your comment cannot be submitted using https://www.regulations.gov, call or email the points of contact in the FOR 
FURTHER INFORMATION CONTACT section of this document for alternate 
instructions.
    Instructions: Please submit comments only and cite ``FAR Case 2023-
018'' in all correspondence related to this case. Comments received 
generally will be posted without change to https://www.regulations.gov, 
including any personal and/or business confidential information 
provided. Public comments may be submitted as an individual, as an 
organization, or anonymously (see frequently asked questions at https://www.regulations.gov/faq). To confirm receipt of your comment(s), 
please check https://www.regulations.gov, approximately two to three 
days after submission to verify posting.

FOR FURTHER INFORMATION CONTACT: For clarification of content, contact 
Mr. Benjamin Collins, Procurement Analyst, at 850-826-0058 or by email 
at <a href="/cdn-cgi/l/email-protection#4220272c28232f2b2c6c212d2e2e2b2c31022531236c252d34"><span class="__cf_email__" data-cfemail="2e4c4b40444f434740004d41424247405d6e495d4f00494158">[email protected]</span></a>. For information pertaining to status or 
publication schedules, or alternative instructions for submitting 
comments if https://www.regulations.gov cannot be used, contact the 
Regulatory Secretariat Division at 202-501-4755 or <a href="/cdn-cgi/l/email-protection#65223624370002360006250216044b020a13"><span class="__cf_email__" data-cfemail="490e1a081b2c2e1a2c2a092e3a28672e263f">[email protected]</span></a>. 
Please cite FAC 2025-01, FAR Case 2023-018.

SUPPLEMENTARY INFORMATION:

I. Background

    This interim rule revises the solicitation provision at FAR 52.204-
7, System for Award Management, to clarify the System for Award 
Management (SAM) preaward registration requirements in paragraph (b)(1) 
of the provision. DoD, GSA, and NASA published a final rule in the 
Federal Register at 83 FR 48691 on September 26, 2018, to update 
instructions for registration in SAM and correct an inconsistency 
involving timing of registration. One of the updates to the provision 
at FAR 52.204-7, System for Award Management,

[[Page 89473]]

included language that has been construed in some cases as levying a 
requirement for offerors to maintain a continuous, uninterrupted, 
registration during the entirety of the preaward process. This interim 
rule clarifies that the offeror must be registered at time of offer 
submission and at time of contract award, but would not be required to 
be registered at every moment in between those two points.

II. Discussion and Analysis

    Prior to the issuance of the September 26, 2018 rule, the FAR 
required registration in SAM at contract award in some instances (e.g., 
FAR 4.1102 and 52.204-7) and at the point of offer submission in others 
(e.g., FAR 52.204-8). The rule aimed to correct these inconsistencies.
    FAR 52.204-7(b)(1) was changed from ``By submission of an offer, 
the offeror acknowledges the requirement that a prospective awardee 
shall be registered in the SAM database prior to award, during 
performance . . .'' to ``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 . . . .''
    The predominant FAR text changes centered on ensuring offerors 
understood registration was required at the point of offer submission 
versus contract award--as that was the earliest point for assessing 
compliance.
    This particular change has proven to be pivotal in recent bid 
protest decisions by the Government Accountability Office (GAO) (e.g., 
TLS Joint Venture, LLC, B-422275, April 1, 2024) and the United States 
Court of Federal Claims (COFC) (e.g., Myriddian, LLC v. The United 
States, 165 Fed. Cl. 650 (May 23, 2023)). While the nature of the 
procurements and associated remedies varied, the decisions were uniform 
in highlighting FAR 52.204-7(b)(1) as requiring an offeror to be 
registered at the point of offer submission and maintain that 
registration through contract award.
    While this continuous, active, registration is the anticipated 
normal state expected of offerors and contractors conducting business 
via Federal contract, the Government is now directing that the minimum 
preaward registration compliance is at the points of offer submission 
(prior to offer evaluation) and contract award (prior to contract 
execution).
    Other FAR references (e.g., FAR 32.1110(a)(1), FAR 52.204-13) 
allude to a contractor being required to ``maintain'' registration; 
however, this is ``during contract performance, and through final 
payment'', which is after contract award. This requirement reflects the 
need to maintain SAM registration to support contract execution, namely 
to ensure payments can be mechanized. No other FAR text carries the 
``continuous'' preaward registration language. This rule also updates 
the provision at FAR 52.204-7, System for Award Management, to remove 
references to registration requirements applicable after contract award 
(i.e., ``during contract performance, and through final payment''). A 
pointer to FAR clause 52.204-13, System for Award Management 
Maintenance, has been added in the provision, however, to ensure 
offerors do not mistakenly perceive the removal of the language as a 
removal of the requirement if awarded a contract.

III. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold (SAT) and for Commercial Products (Including Commercially 
Available Off-the-Shelf (COTS) Items) or for Commercial Services

    This rule amends the provision at FAR 52.204-7, System for Award 
Management. However, this rule does not impose any new requirements on 
contracts at or below the SAT, for commercial products (including COTS 
items), or for commercial services. The provision continues to apply to 
acquisitions at or below the SAT, acquisitions for commercial products 
(including COTS items), and commercial services.

IV. Expected Impact of the Rule

    Offerors are required to be registered in SAM to participate in the 
Federal marketplace, with some exceptions listed in FAR 4.1102. 
Registration in SAM will be required upon submission of an offer or 
quote and at the time of the award as a result of this rule, which 
amends FAR 52.204-7(b)(1). Offerors will continue to be required to 
register in SAM to participate in the Federal marketplace. There is no 
increase in burden.
    This rule makes clear that a lapse in registration that occurs 
after offer submission and is corrected before contract award will not 
render an offeror ineligible for award under FAR 52.204-7(b)(1). The 
view that such a lapse makes an offeror ineligible has resulted in loss 
of resources for otherwise successful small business offerors (e.g., 
time and costs of litigation, lost income) and the Government (e.g., 
loss of best-value provider, delays in mission execution via intended 
contract solution).
    Ambiguity regarding the perceived intent at FAR 52.204-7(b)(1) has 
led to disparate agency interpretations and uncertainty in the 
acquisition community. In practice, contracting officers, in the 
preaward environment, generally verify registration status of offerors 
at the points of offer submission and contract award and not the time 
between those two points. Contracting officers typically do this 
registration review as part of a broader responsibility and 
qualification review in SAM (e.g., reviewing the entity's status for 
possible debarment, suspension, proposed debarment, or other 
Governmentwide exclusion).
    While the provision at FAR 52.204-7 speaks to offeror 
responsibilities and does not impose a requirement on agencies to 
confirm an offeror has been registered at any and all moments between 
offer submission and award, the recent COFC and GAO decisions make it 
clear that failure to do so imperils the award decision.
    In summary, this rule is expected to mitigate the risk of more 
litigation and mission delays.

V. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 (as amended by E.O. 14094) and 13563 
direct agencies to assess the costs and benefits of available 
regulatory alternatives and, if regulation is necessary, to select 
regulatory approaches that maximize net benefits (including potential 
economic, environmental, public health and safety effects, distributive 
impacts, and equity). E.O. 13563 emphasizes the importance of 
quantifying both costs and benefits, of reducing costs, of harmonizing 
rules, and of promoting flexibility. This is not a significant 
regulatory action and, therefore, was not subject to review under 
section 6(b) of E.O. 12866, Regulatory Planning and Review, dated 
September 30, 1993.

VI. Congressional Review Act

    Pursuant to the Congressional Review Act, DoD, GSA, and NASA will 
send this rule to each House of the Congress and to the Comptroller 
General of the United States. The Office of Information and Regulatory 
Affairs (OIRA) in the Office of Management and Budget (OMB) has 
determined that this rule does not meet the definition in 5 U.S.C. 
804(2).

VII. Regulatory Flexibility Act

    DoD, GSA, and NASA do not expect this interim rule to have a 
significant economic impact on a substantial number of small entities 
within the meaning of the Regulatory Flexibility

[[Page 89474]]

Act, 5 U.S.C. 601-612, because this rule makes a minor change in SAM 
registration requirements for offerors. This change will help small 
businesses stay eligible for contract awards. However, an Initial 
Regulatory Flexibility Analysis (IRFA) has been performed and is 
summarized as follows:

    DoD, GSA, and NASA are amending the FAR to clarify System for 
Award Management preaward registration requirements. This interim 
rule changes the provision at FAR 52.204-7, System for Award 
Management, to clarify that an offeror must be registered at time of 
offer submission and at time of contract award, but would not be 
required to be registered at every moment in between those two 
points. The current language has led to interpretations that have 
disrupted Government procurements and resulted in lost business 
opportunities for some companies, including small businesses.
    This interim rule addresses registration requirements for 
offerors in SAM. The implementation of SAM, which combined the 
functional capabilities of numerous legacy systems, was in response 
to the E-Government Act of 2002 (Pub. L. 107-347) to improve the 
management and promotion of electronic Government services and 
processes. Promulgation of the FAR is authorized by 40 U.S.C. 
121(c); 10 U.S.C. chapter 4 and 10 U.S.C. chapter 137 legacy 
provisions (see 10 U.S.C. 3016); and 51 U.S.C. 20113.
    This rule applies to entities, including small entities, that 
submit offers to the Federal Government for acquisitions that exceed 
the micro-purchase threshold. As of the end of calendar year 2023, 
of the 486,551 active registrants in SAM for ``all awards,'' 356,528 
(73 percent) represented their size as small for their primary North 
American Industry Classification System code. It is estimated that 
not more than half of those small entities will submit an offer in a 
given year.
    This rule does not introduce any new reporting or recordkeeping 
requirements. Small entities that do business with the Federal 
Government are already familiar with SAM registration requirements. 
The burden to provide the information required by the provision at 
FAR 52.204-7, System for Award Management, is covered by OMB Control 
Number 9000-0189, Certain Federal Acquisition Regulation Part 4 
Requirements: FAR Sections Affected: 52.204-3, 52.204-6, 52.204-7, 
52.204-12 thru 52.204-15, 52.204-20, 52.204-23, 52.212-1(j), 52.212-
3(b), and 52.212-3(l). However, no changes to this information 
collection requirement are made by this interim rule.
    The rule does not duplicate, overlap, or conflict with any other 
Federal rules.
    There are no available alternatives to the interim rule to 
accomplish the desired objective. The changes in this rule help 
preserve the Government's intent for SAM preaward registration 
requirements and protect offerors from unintended consequences of 
momentary lapses in registration. Thus, it is not possible, or 
desirable, to exempt small entities from coverage of the rule.

    The Regulatory Secretariat Division has submitted a copy of the 
IRFA to the Chief Counsel for Advocacy of the Small Business 
Administration. A copy of the IRFA may be obtained from the Regulatory 
Secretariat Division. DoD, GSA, and NASA invite comments from small 
business concerns and other interested parties on the expected impact 
of this interim rule on small entities.
    DoD, GSA, and NASA will also consider comments from small entities 
concerning the existing regulations in subparts affected by the rule in 
accordance with 5 U.S.C. 610. Interested parties must submit such 
comments separately and should cite 5 U.S.C. 610 (FAR Case 2023-018), 
in correspondence.

VIII. Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. 3501-3521) applies to the 
information collection described in this rule; however, these changes 
to the FAR do not impose additional information collection requirements 
to the paperwork burden previously approved under OMB Control Number 
9000-0189, Certain Federal Acquisition Regulation Part 4 Requirements: 
FAR Sections Affected: 52.204-3, 52.204-6, 52.204-7, 52.204-12 thru 
52.204-15, 52.204-20, 52.204-23, 52.212-1(j), 52.212-3(b), and 52.212-
3(l).

IX. Determination To Issue an Immediately Effective Interim Rule

    A determination has been made under the authority of the Secretary 
of Defense, the Administrator of General Services, and the 
Administrator of the National Aeronautics and Space Administration that 
urgent and compelling reasons exist to promulgate this interim rule 
effective immediately without prior opportunity for public comment, see 
41 U.S.C. 1707(d). This action is necessary to protect contractors and 
the Federal Government from the costs and delays of bid protest 
litigation associated with the provision at FAR 52.204-7, System for 
Award Management.
    DoD, GSA, and NASA attempted to clarify the timing requirements for 
registration in SAM through a final rule in the Federal Register at 83 
FR 48691 on September 26, 2018. Prior to the aforementioned rule the 
provision at 52.204-7 stated an offeror needed to be registered ``prior 
to award'' whereas other areas of the FAR required offerors to be 
registered with the submission of the offer and at the time of award. 
The 2018 rule was intended to clarify that ``prior to award'' meant 
both at the time of offer submission and at award.
    Since the rule was issued, however, post-award bid protests have 
increasingly focused on temporary lapses in registration, between offer 
submission and contract award, by the apparently successful offeror. 
The May 23, 2023, Myriddian, LLC v. United States decision perpetuated 
an interpretation that the 2018 rule introduced a new requirement for 
absolutely uninterrupted, continuous, registration during the entirety 
of the preaward period with failure to do so rendering an offeror 
ineligible for award. After the Myriddian decision, bid protests have 
continued to be filed on lapses of registration (see, e.g., Hanford 
Tank Disposition Alliance, LLC v. United States (June 23, 2023); 
Independent Rough Terrain Center, LLC v. United States (July 1, 2024); 
TLS Joint Venture, LLC, B-422275 (April 1, 2024); VivSoft Technologies, 
LLC, B-421561.15, B-421561.17 (April 11, 2024); Zolon PSC II, LLC v. 
United States (August 2024)). The 2018 rule's purpose was clarifying in 
nature and not intended to introduce new requirements with such severe 
ramifications for offerors.
    The unintended interpretation applied in recent bid protest 
decisions represents an unwitting barrier to entry and significant 
disruption to the industrial base and the Federal agencies they 
support, which warrants immediate action. If left unclarified, 
perpetuation of this interpretation will:
    (1) Introduce significant risk of lost income for contractors, 
particularly small businesses, due to temporary lapses in registration 
often for minor and technical reasons;
    (2) Put agencies at unnecessary high risk for the cost and delay of 
protests if award is made to an offeror that had a temporary lapse in 
registration between offer submission and award;
    (3) Cause undue confusion and frustration for small businesses 
working through registration renewals and attempting to win Federal 
contracts;
    (4) Cause undue confusion and frustration for contracting officers 
attempting to verify compliance with the registration requirement; and
    (5) Unnecessarily complicate the ability of the Government to meet 
its mission needs with best-value solutions.
    Issuing an immediately effective interim rule will allow the 
Government to issue, in a timely manner, the needed clarification to 
accurately preserve preaward registration requirements for offerors 
while also eliminating unintended litigation risks presented to 
contractors and their agency customers,

[[Page 89475]]

which divert resources, deny business earned income, and hamper mission 
success. This rule simply clarifies preaward registration requirements, 
so there is little risk the interim rule will impose a requirement on 
the public on which they have not already had the opportunity to 
comment. However, pursuant to 41 U.S.C. 1707 and FAR 1.501-3(b), the 
Department of Defense, General Services Administration, and National 
Aeronautics and Space Administration will consider public comments 
received in response to this interim rule in the formation of the final 
rule.

List of Subjects in 48 CFR Part 52

    Government procurement.

William F. Clark,
Director, Office of Government-wide Acquisition Policy, Office of 
Acquisition Policy, Office of Government-wide Policy.
    Therefore, DoD, GSA, and NASA amend 48 CFR part 52 as set forth 
below:

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
1. The authority citation for 48 CFR part 52 continues to read as 
follows:


Authority:  40 U.S.C. 121(c); 10 U.S.C. chapter 4 and 10 U.S.C. chapter 
137 legacy provisions (see 10 U.S.C. 3016); and 51 U.S.C. 20113.

0
2. Amend section 52.204-7 by revising the date of the provision and 
paragraph (b)(1) to read as follows:


52.204-7   System for Award Management.

* * * * *
System for Award Management (Nov 2024)
* * * * *
    (b)(1) An Offeror is required to be registered in SAM when 
submitting an offer or quotation and at time of award (see FAR clause 
52.204-13, System for Award Management Maintenance, for the requirement 
to maintain SAM registration during performance and through final 
payment).
* * * * *
[FR Doc. 2024-26062 Filed 11-8-24; 8:45 am]
BILLING CODE 6820-EP-P


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