Ten Mistakes Federal Contractors Make When Attempting to Register Their Entity in SAM

I’ve been a PTAC counselor for over five years. In that time, I’ve helped a lot of federal contractors register their entities in the System for Award Management (SAM), but I’ve also had the opportunity to review many entity registrations that contractors completed (or attempted to complete) themselves. This is a list of some of the more frequent mistakes I see contractors make when they do not have assistance with their SAM registration. This list is not based on any scientific research, but simply my observations. I have numbered them based on where the mistake occurs in the registration, not on the frequency of occurrence.

Mistake #1: Only creating a user account

When someone says that you have to be registered in SAM to do business with the federal government, what they really mean is that your entity has to be registered in SAM. To do so, first you have to create a user account, then you can register your entity.

When I get a call from a federal contracting officer who tells me they are working with a new contractor who claims to be registered in SAM, but they can’t find them in the system, it usually means that the contractor set up a user account in SAM and stopped, thinking that they had registered.

Mistake #2: Registering under an assumed business name instead of their legal business name

A contract can only be entered into by legal persons or legal entities (such as a limited liability company, a partnership, or a corporation). An assumed business name, also known as a trade name, fictitious name, or DBA (for “doing business as”), is not a legal person or legal entity. Therefore, it should not be used as your legal business name when you register in SAM.

What’s tricky about this is that your company name is pulled into SAM from Dun & Bradstreet, so if the name associated with your DUNS (Data Universal Numbering System) number is wrong, it needs to be corrected with D&B before registering your entity. You also have to wait 1-2 business days after making corrections with D&B before those changes can be pulled into SAM.

Sole proprietors seem to make this mistake more often than others. If you’re a sole proprietor, your legal business name is your given name, in the format “(last name), (first name) (middle initial).” If you want to include your trade name, D&B has a separate field for that, which does get pulled into SAM along with your legal business name.

Mistake #3: Registering for federal financial assistance only

One of the very first questions you encounter when registering your entity in SAM is about your intent (see below).

The second option takes you through a much shorter registration process, but when you’re done, you will not be eligible to sell your goods or services to the federal government. You have to choose the first option for that.

I don’t know why contractors make this mistake. For the longest time, I figured they were just choosing the path of least resistance, but it may be that they didn’t know the difference between grants and contracts (Many people don’t). It’s also possible that contractors had previously been registered in SAM for grants or loans and didn’t realize that they had to do something different when they made the decision later to pursue federal contracting opportunities.

Mistake #4: Entering a personal or company phone number in the “A.C.H U.S. Phone” field

I’m not a betting man, but if someone gave me access to a random entity registration completed by a contractor without PTAC assistance and asked me to wager money on one field that would be filled out incorrectly, I would bet all my money on “A.C.H U.S. Phone” (see below).

The help window for the field says “Enter the U.S. phone number for your bank’s Automated Clearing House (ACH) coordinator or department in case there is a problem with your EFT transfer,” but people put their own phone number in there. They will also sometimes fill in their own fax number and email address in this section, but those are optional fields, so more often, those are left blank.

Mistake #5: Not including affiliated companies when calculating total receipts and number of employees

Most of my clients are small. Really small. They own one business and they are the only owner of that business, or they might share ownership with a spouse or partner who doesn’t own any other businesses. This section is relatively straightforward for contractors who fall in that category.

Where contractors get this wrong is when affiliated companies are involved. What constitutes an affiliated company can get tricky, but “Generally, affiliation exists when one business controls or has the power to control another or when a third party (or parties) controls or has the power to control both businesses. Control may arise through ownership, management, or other relationships or interactions between the parties.” If you want to learn more, I would encourage you to read the Small Business Administration’s size and affiliation rules, but in the most basic example, a married couple shares ownership in Company X, but one partner is also the sole owner of Company Y. Those companies would be considered affiliated, so the figures provided for total receipts and the number of employees should be totals from both companies combined.

I hate to make a blanket statement like this, but every time I’ve reviewed an entity registration completed by a contractor on their own where affiliated companies were involved, they did not include figures from those affiliated companies in their calculations. You can get in a lot of trouble if the numbers you enter make it look like you are a small business, but you are actually a large business (through affiliation). This is one section of SAM, and there are many, where I wished contractors fully understood the ramifications of their responses.

Mistake #6: Using only retail or wholesale NAICS codes if you are a retailer or wholesaler

An important thing to know about federal contracting is that contracting officers are required to use a manufacturing NAICS (North American Industry Classification System) code when they are procuring goods. Those codes begin with a “3.” If you are a retailer or wholesaler, you will never see a solicitation with a NAICS code that most accurately describes your business, which would be a code that begins with a “4.”

So, when it comes to registering your entity in SAM, you can include wholesale and/or retail NAICS codes if you want, but you should really be including manufacturing NAICS codes that represent all the products you carry. I hear the protestation from contractors all the time, ” But we don’t manufacture X.” I know, but if you want buyers to find you in SAM or the Dynamic Small Business Search, you need to have the NAICS codes in your profile that contracting officers use for procurement.

Mistake #7: Inadvertently self-certifying as a Small Disadvantaged Business

Just because this is #7, I don’t want you to think it’s not important. This one and #5 can probably get you in the most trouble.

A Small Disadvantaged Business (SDB) is at least 51% owned by one or more people who are both socially and economically disadvantaged. There are no set-asides for SDBs, but the federal government’s goal is to award at least 5% of federal contracting dollars to SDBs. I regularly come across companies that do not meet these requirements, the owners know they don’t meet these requirements, yet they have self-certified as SDBs in SAM. Why is that?

It could be that they are trying to get through the registration too fast and they are not reading everything, but I think some of the blame should be attributed to poor design. As you can see below, the question (highlighted in yellow) appears first, then there are three paragraphs, a chart, and a “VIEW MORE” button before you get to the drop-down box where you input your answer (see red arrow). In this example, the company only has one NAICS code, but think about what this chart would look like if a company had ten or more NAICS codes. By the time you got to the drop-down box, you wouldn’t be able to see the question anymore. If you’re a small business, you’d be staring at a chart where all ten lines says “Y” in the “Small Business?” column. Then you get to a box where the options are “Yes” or “No,” but you don’t see the question. What do you do?

It’s an easy mistake to make, but I should mention that there are penalties for misrepresentation, so if you’ve made this mistake yourself, now would be a good time to correct that.

Mistake #8: Not filling out their SBA profile

The last page of your entity registration before the final review page looks like this (see below). The light-blue box titled “Page Description” explains why it is important for small businesses to fill out their SBA profile, but roughly a third of them do not. Why not? I have a few theories:

  1. By the time they get to this page, they are wiped out and just want to be done with this never-ending registration. If the system lets them hit “SAVE AND CONTINUE” without filling anything out, they will.
  2. The process is convoluted. To fill out your SBA profile, you click on the button circled in red. That opens the SBA Supplemental Pages in a new tab of your web browser. Once you go through all the pages on the SBA website, you have to switch back to the other browser tab to complete your entity registration.
  3. The link to the SBA Supplemental Pages is down more often than it should be, so sometimes you can’t fill out your SBA profile even if you want to. 

Mistake #9: Not responding to an email from the CAGE code office correctly, quickly enough, or at all

Once you’ve made it through all of the pages of an entity registration and clicked “SUBMIT,” you may not be done. If the Commercial and Government Entity (CAGE) Code Office determines there is a discrepancy in your registration that must be addressed, you will receive an email with the subject line “RESPONSE REQUIRED Commercial and Government Entity (CAGE) Code Office – System for Award Management (SAM) Registration – Verification needed,” followed by your entity’s DUNS number. The email will have a series of questions that must be responded to within three business days. If you don’t respond to the email, you respond too late, you don’t follow their instructions exactly, or they don’t like your answers, your entity registration will be rejected and you will have to resubmit. Something as simple as changing the subject line when you reply with your answers can cause a rejection.

What constitutes a “discrepancy?” It could be that another company has a name that is similar to the name of your company, or a previous occupant of your building had previously registered in SAM with the same physical address.

Mistake #10: Not submitting their entity administrator authorization letter 

In March 2018 an additional security requirement was added to the entity registration process. After submitting your entity registration online, you are now required to mail a physical letter to the Federal Service Desk, identifying the authorized administrator for your entity in SAM. The letter must be signed by someone with signatory authority, like an executive, officer, or partner, and notarized by a notary public.

If you don’t read all the instructions presented to you after you click “SUBMIT” in SAM, you will not know this, and if the Federal Service Desk does not receive your letter within 60 days of your entity registration becoming active, they reserve the right to deactivate your registration.

Posted 6/22/20