Federal Acquisition Regulation: Clarification of System for Award Management Preaward Registration Requirements, 89472-89475 [2024-26062]
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89472
Federal Register / Vol. 89, No. 218 / Tuesday, November 12, 2024 / Rules and Regulations
Security Council (FASC) and published
in the System for Award Management
(SAM) at https://www.sam.gov (section
1822 of the National Defense
Authorization Act for Fiscal Year 2024,
Pub. L. 118–31, 41 U.S.C. 3901 note
prec.).
FASC-prohibited unmanned aircraft
system means an unmanned aircraft
system manufactured or assembled by
an American Security Drone Act—
covered foreign entity.
Unmanned aircraft means an aircraft
that is operated without the possibility
of direct human intervention from
within or on the aircraft (49 U.S.C.
44801(11)).
Unmanned aircraft system means an
unmanned aircraft and associated
elements (including communication
links and the components that control
the unmanned aircraft) that are required
for the operator to operate safely and
efficiently in the national airspace
system (49 U.S.C. 44801(12)).
(b) Prohibition. The Contractor is
prohibited from—
(1) Delivering any FASC-prohibited
unmanned aircraft system, which
includes unmanned aircraft (i.e.,
drones) and associated elements
(sections 1823 and 1826 of Pub. L. 118–
31, 41 U.S.C. 3901 note prec.);
(2) On or after December 22, 2025,
operating a FASC-prohibited unmanned
aircraft system in the performance of the
contract (section 1824 of Pub. L. 118–31,
41 U.S.C. 3901 note prec.); and
(3) On or after December 22, 2025,
using Federal funds for the procurement
or operation of a FASC-prohibited
unmanned aircraft system (section 1825
of Pub. L. 118–31, 41 U.S.C. 3901 note
prec.).
(c) Procedures. The Contractor shall
search SAM at https://www.sam.gov for
the FASC-maintained list of American
Security Drone Act—covered foreign
entities prior to proposing, or using in
performance of the contract, any
unmanned aircraft system. Additionally,
the Contractor shall ensure any effort or
expenditure associated with a FASCprohibited unmanned aircraft system is
consistent with a corresponding
exemption, exception, or waiver
determination expressly stated in the
contract.
(d) Exemptions, exceptions, and
waivers. The prohibitions in this clause
do not apply where the agency has
determined an exemption, exception, or
waiver applies and the contract
indicates that such a determination has
been made. See sections 1823 through
1825 and 1832 of Public Law 118–31 (41
U.S.C. 3901 note prec.) for statutory
requirements pertaining to exemptions,
exceptions, and waivers.
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(e) Subcontracts. The Contractor shall
insert the substance of this clause,
including this paragraph (e), in all
subcontracts and other contractual
instruments, including subcontracts for
the acquisition of commercial products
or commercial services.
(End of clause)
■ 9. Amend section 52.244–6 by—
■ a. Revising the date of the clause; and
■ b. Redesignating paragraph
(c)(1)(xxiii) as paragraph (c)(1)(xxiv) and
adding a new paragraph (c)(1)(xxiii).
The revision and addition read as
follows:
52.244–6 Subcontracts for Commercial
Products and Commercial Services.
*
*
*
*
*
Subcontracts for Commercial Products
and Commercial Services (Nov 2024)
*
*
*
*
*
(c)(1) * * *
(xxiii) 52.240–1, Prohibition on
Unmanned Aircraft Systems
Manufactured or Assembled by
American Security Drone Act—Covered
Foreign Entities (Nov 2024) (Sections
1821–1826, Pub. L. 118–31, 41 U.S.C.
3901 note prec.).
*
*
*
*
*
[FR Doc. 2024–26061 Filed 11–8–24; 8:45 am]
BILLING CODE 6820–EP–P
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
Department of Defense (DoD),
General Services Administration (GSA),
and National Aeronautics and Space
Administration (NASA).
ACTION: Interim rule.
AGENCY:
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
SUMMARY:
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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
benjamin.collins@gsa.gov. 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
GSARegSec@gsa.gov. 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,
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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
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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).
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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
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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 EGovernment 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
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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
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‘‘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,
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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.
52.204–7
List of Subjects in 48 CFR Part 52
Government procurement.
BILLING CODE 6820–EP–P
William F. Clark,
Director, Office of Government-wide
Acquisition Policy, Office of Acquisition
Policy, Office of Government-wide Policy.
DEPARTMENT OF DEFENSE
DATES:
GENERAL SERVICES
ADMINISTRATION
ADDRESSES:
*
*
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]
PART 52—SOLICITATION PROVISIONS
AND CONTRACT CLAUSES
48 CFR Chapter 1
[Docket No. FAR–2024–0051, Sequence No.
6]
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.
2. Amend section 52.204–7 by
revising the date of the provision and
paragraph (b)(1) to read as follows:
■
This document is issued
under the joint authority of DoD, GSA,
and NASA. This Small Entity
Compliance Guide has been prepared in
accordance with section 212 of the
Small Business Regulatory Enforcement
Fairness Act of 1996. It consists of a
summary of the rules appearing in
Federal Acquisition Circular (FAC)
2025–01, which amends the Federal
Acquisition Regulation (FAR).
Interested parties may obtain further
information regarding these rules by
referring to FAC 2025–01, which
precedes this document.
SUMMARY:
November 12, 2024.
The FAC, including the
SECG, is available at https://
www.regulations.gov.
NATIONAL AERONAUTICS AND
SPACE ADMINISTRATION
1. The authority citation for 48 CFR
part 52 continues to read as follows:
Small Entity Compliance Guide
(SECG).
*
Therefore, DoD, GSA, and NASA
amend 48 CFR part 52 as set forth
below:
■
ACTION:
89475
Federal Acquisition Regulation;
Federal Acquisition Circular 2025–01;
Small Entity Compliance Guide
Department of Defense (DoD),
General Services Administration (GSA),
and National Aeronautics and Space
Administration (NASA).
AGENCY:
For
clarification of content, contact the
analyst whose name appears in the table
below. Please cite FAC 2025–01 and the
FAR Case number. For information
pertaining to status or publication
schedules, contact the Regulatory
Secretariat Division at 202–501–4755 or
GSARegSec@gsa.gov. An asterisk (*)
next to a rule indicates that a regulatory
flexibility analysis has been prepared.
FOR FURTHER INFORMATION CONTACT:
RULES LISTED IN FAC 2025–01
Item
Subject
*I ........
*II .......
Prohibition on Unmanned Aircraft Systems from Covered Foreign Entities .............................................
Clarification of System for Award Management Preaward Registration Requirements ...........................
SUPPLEMENTARY INFORMATION:
Summaries for each FAR rule follow.
For the actual revisions and/or
amendments made by these FAR rules,
refer to the specific item numbers and
subjects set forth in the documents
following these item summaries. FAC
2025–01 amends the FAR as follows:
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Item I—Prohibition on Unmanned
Aircraft Systems From Covered Foreign
Entities (FAR Case 2024–002)
This interim rule amends the FAR to
implement a prohibition on procuring,
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FAR case
operating, or using Federal funds on,
unmanned aircraft systems (e.g., drones)
that are manufactured or assembled by
an American Security Drone Actcovered foreign entity. This rule
implements the American Security
Drone Act of 2023 (subtitle B, title XVIII
of the National Defense Authorization
Act for Fiscal Year 2024, Pub. L. 118–
31, 41 U.S.C. 3901 note prec.). This rule
applies to all solicitations and contracts,
including contracts at or below the
micro-purchase threshold and to
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2024–002
2023–018
Analyst
Collins.
Collins.
contracts for commercial products
(including commercially available offthe-shelf items) or for commercial
services. The change is not expected to
have a significant economic impact on
a substantial number of small entities.
This interim rule is being implemented
as a national security measure to protect
sensitive Government information and
operations.
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]]>Agencies
[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 [email protected]. 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 [email protected].
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
