Allowing SAM registration to lapse triggers immediate disqualification from federal contracts, rejection of pending bids, and suspension of payments for existing work. Companies lose eligibility to apply for grants, face potential False Claims Act liability, and experience significant operational disruptions. The reactivation process requires notarized documentation with processing delays of 2-10 days. Organizations must maintain active SAM status to avoid these severe consequences that can impact both immediate operations and long-term federal contracting opportunities.
Contract and Financial Impacts of an Inactive SAM Registration
When a contractor’s System for Award Management (SAM) registration becomes inactive, the repercussions ripple throughout the entire federal contracting process.
Immediate contract disqualification occurs even with temporary lapses of less than 24 hours, rendering all pending bids non-compliant. Agencies must reject offers from contractors with inactive registrations, regardless of how qualified the vendor may be.
Federal contractors face immediate disqualification with even brief SAM registration lapses, nullifying otherwise compliant bids regardless of qualifications.
Payment issues create severe financial strain, as federal payment systems cannot process invoices to contractors with lapsed registrations. This disruption extends beyond prime contractors to subcontractors, creating cascading financial impacts. Regular monitoring of status is essential to prevent these financial disruptions. Annual renewal is legally required to maintain verification status and eligibility for all federal opportunities.
The Myriddian precedent confirms that GAO will uphold disqualifications based solely on SAM inactivity, even if the lapse occurs between bid submission and award announcement. However, GAO has consistently classified an inactive SAM registration as an immaterial defect that contracting officers have discretion to allow for correction.
Contractors may also face additional penalties, including bid bond forfeitures and administrative reactivation fees.
Grant Ineligibility and Administrative Delays
Beyond contract disqualification, inactive SAM registration severely impacts federal grant opportunities, creating both immediate and long-term consequences for organizations reliant on government funding. Organizations with lapsed registrations cannot submit grant applications through federal portals and risk suspension of existing funding streams. The lapsed status creates a competitive disadvantage when pursuing limited federal funding opportunities against compliant organizations. Maintaining continuous registration is vital as it directly impacts CPARS evaluations, affecting an organization’s reputation with federal agencies. Nonprofits with inactive registrations lose critical visibility to potential federal funders who rely on SAM to identify qualified recipients.
| Consequence | Impact |
|---|---|
| Application Access | Complete loss of ability to submit new grant applications |
| Funding Disbursement | Suspension of payments for approved grants |
| CAGE Code Status | Deactivation affects grant compliance requirements |
| Competitive Standing | Reduced priority status in applicant pools |
Administrative delays compound these challenges, as reactivation processes can take weeks. System processing lags during high-volume periods, verification procedures, and coordination with third-party administrators frequently result in missed grant deadlines. These timing issues create significant barriers to funding access, especially during critical application cycles.
Operational Disruptions and Legal Compliance Risks
Organizations with inactive SAM registrations face severe operational disruptions that extend far beyond basic administrative inconveniences. When registrations lapse, companies immediately lose eligibility to bid on federal contracts, while existing payments may stall due to invalid status in federal payment systems. Since SAM registration requires annual renewal, setting calendar reminders at least one month before expiration is essential to prevent these disruptions.
Many contractors must undergo operational restructuring to compensate for these revenue interruptions.
According to recent statistics, there are 34,777 inactive companies in the SAM database that cannot engage with the federal government.
The registration consequences also create significant compliance challenges. Inactive status violates Federal Acquisition Regulation 4.1102, potentially voiding existing contract obligations. Companies risk False Claims Act liability if they submit bids with expired credentials.
SAM.gov serves as the official portal for validating and storing critical business information required by federal agencies during the procurement process.
Reactivation requires notarized documentation with processing delays of 2-10 days, during which contractors remain ineligible for federal work. These issues may trigger increased audit scrutiny of past submissions, creating additional administrative burdens for affected organizations.
Frequently Asked Questions
How Long Does It Take to Reactivate an Expired SAM Registration?
Standard SAM reactivation processes typically initiate immediately upon submission but may require 10 business days for completion. Complex cases requiring additional verification can extend the registration timeline to several weeks or months.
Can Subcontractors Work on Federal Projects With Inactive SAM Registrations?
Yes, subcontractors can legally work on federal projects with inactive SAM registrations. Federal compliance does not mandate SAM registration for subs, though prime contractors may impose additional subcontractor limitations through contractual requirements.
Are There Penalties for Bidding With an Expired Registration?
Bidding with an expired SAM registration results in automatic disqualification from consideration. Additional bidding consequences include potential bid protests and removal from vendor lists. Registration penalties may include administrative sanctions for misrepresentation.
Will SAM Send Notifications Before My Registration Expires?
SAM typically sends automatic email notifications and registration reminders to the entity’s registered points of contact approximately 60, 30, and 15 days before expiration. However, entities should not rely solely on these alerts.
Can International Businesses Maintain SAM Registration From Abroad?
International businesses can maintain SAM registration from abroad, though international compliance presents unique challenges. They typically require U.S.-based liaisons for IRS/EIN documentation and must guarantee precise data alignment across all systems.