The recent GAO protest decision involving D+S International, LLC highlights a critical and nuanced issue in government procurement regulations, specifically surrounding the requirement for System for Award Management (SAM) registration. This case stems from a protest filed by D+S, whose proposal for a Department of State solicitation was excluded due to the failure to register a de facto joint venture in SAM. The protest was dismissed as untimely because the defect in the solicitation—a requirement that seemingly could not be fulfilled—was apparent on the face of the solicitation, and no challenge was raised prior to the submission deadline.

The solicitation in question required entities organized as joint ventures, including de facto joint ventures, to have an active SAM registration at the time of submission. It also mandated that the entity qualifying as a "U.S. Person" under the Security Act of 1986 be the same entity registered in SAM. While D+S qualified under the Security Act using a de facto joint venture arrangement, this type of joint venture, by definition, lacks the legal structure necessary for SAM registration. This led to the disqualification of D+S's proposal.

The case demonstrates the inherent contradictions in regulatory requirements. On one hand, the Security Act and its implementing regulations explicitly permit de facto joint ventures to qualify as U.S. Persons eligible to compete for certain contracts. On the other hand, the SAM registration system requires a legally formed entity with a formal business structure, making compliance impossible for de facto joint ventures. This regulatory conflict is not new; similar issues have been raised and adjudicated in previous cases, such as Pernix Federal, LLC, where the Government Accountability Office (GAO) sustained a protest under the "significant issue" exception to timeliness rules.

In its defense, the Department of State argued that D+S should have anticipated this impossibility and either restructured its joint venture into a formal legal entity or challenged the solicitation requirement before submitting its proposal. The GAO agreed, dismissing the protest as untimely. The decision underscores the principle that offerors have an affirmative obligation to seek clarification of patent ambiguities in solicitations before proposal deadlines. Failure to do so precludes later challenges, regardless of the merits of the protest.

This case carries important implications for government contractors, particularly those utilizing nontraditional organizational structures such as de facto joint ventures. Contractors must scrutinize solicitation requirements closely, identify potential conflicts or ambiguities, and act proactively to resolve them. The burden lies on offerors to reconcile regulatory inconsistencies, even when the contradictions arise from government-imposed requirements.

The broader issue remains unresolved: how can government procurement regulations be harmonized to accommodate both the flexibility of arrangements like de facto joint ventures and the rigid requirements of systems like SAM? The lack of resolution creates a barrier for firms seeking to participate in government procurements, particularly small businesses or those relying on partnerships with related entities. Until the regulatory framework is clarified or revised, contractors must navigate these contradictions with care, ensuring compliance wherever possible and addressing ambiguities early in the process.

In conclusion, the D+S International decision serves as a cautionary tale for contractors and a call to action for procurement policymakers. The case illustrates the need for both contractors and government agencies to address regulatory conflicts proactively to foster a more accessible and efficient procurement process. While the GAO's dismissal of the protest is legally sound, it highlights a systemic issue that warrants attention to prevent similar challenges in the future.

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