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SAM Exclusion – System for Award Management Exclusions

SAM Exclusion – System for Award Management Exclusions

SAM ExclusionA SAM exclusion party is any person or entity that is disqualified or deemed ineligible from being awarded contracts involving Federal funds. The System for Award Management (SAM) is a federal government network.  It gathers, validates, maintains, and disseminates data about individuals and companies eligible for contract awards. The SAM database contains a list of all contractors who have been approved to do business with the federal government. Moreover, it includes a list of companies that are not permitted to bid on contracts. Before engaging in a contract, agencies must use SAM to ensure that the entity is not a disqualified party.

SAM consolidates many different government databases.  The SAM system is used by government organizations to locate potential contractors.  Additionally, it helps them analyze information about vendors that have submitted bids.  Moreover, federal purchasers and GSA contractors can identify which parties are not eligible for federal procurement.  If you have “an active exclusion,” the agency will not do business with you. A corporation may be denied government contracts for a variety of reasons.

What is a SAM Exclusion?

Any individual or corporation that has been suspended or barred from doing business with federal funding is considered a SAM exclusion party. A suspended individual or corporation typically cannot receive federal funds for a specified length of time.  Or, until a specific criterion is met. Beneficiaries receiving federal funding are not permitted to enter into contracts with excluded companies under any circumstances.

According to 2 CFR 200.213, non-federal entities cannot contract or do business with any person or entity that has been debarred, suspended, or deemed ineligible to receive federal funds. SAM.gov is the official site used by the federal government to document and track the eligibility of an individual or entity to receive federal funds.  An exclusion record identifies parties excluded from receiving Federal contracts, certain subcontracts, and certain types of Federal financial and non Financial assistance and benefits. Exclusions are also referred to as suspensions and debarments. (Source: sam.gov)

Why Does a SAM Exclusion Occur? 

  • Barred from entering the United States – If a potential contractor is barred from entering the United States for whatever reason.  They are not permitted to do business with the government or function as the Entity Administrator for a company seeking to bid on federal contracts. Being prevented from entering the United States for whatever reason renders an entity ineligible for government contracts.  It places them on the SAM exclusion list as a result.
  • National Security Risk – If an entity violates national security protocols, it will be barred. Any infractions of these national security norms may result in disqualification from SAM.  As a result, they are ineligible for future government contracts. This could be a temporary or permanent exclusion from SAM.  It depends on the severity of the infraction and the number of past violations.
  • Tax Fraud – Other grounds for exclusion could be a past conviction of tax fraud. Tax evasion, sometimes known as tax fraud, is an illegal attempt to avoid paying your taxes. If you are guilty of tax fraud, your name is added to the SAM exclusion list. In this instance, you are considered to owe the government money and to have violated federal law. Even an individual that has defaulted on student loan obligations may be barred.
  • Unethical behavior – Basically, if you owe the government money or have broken federal laws, you may be subject to a SAM exclusion. When a government agency feels that an entity or individuals inside that entity have acted unethically, they may opt to seek their exclusion from future government contracts.

What is the Purpose of the SAM Exclusion List?

The goal is to establish a comprehensive list of individuals and businesses barred from federal contracts or federally-approved subcontracts.  This exclusion extends to certain types of federal financial and nonfinancial aid and benefits, by federal government agencies. The system is designed to keep agencies up to date on administrative and legislative exclusions that occur across the Federal Government. Actions may be taken under the Federal Acquisition Regulation (FAR) or under individual agency rules.  For example, the Government-wide Nonprocurement Suspension and Debarment Common Rule [68 FR 66533], or other specific statutory authority.

SAM Exclusion Vs. Excluded Parties List System (EPLS)

The General Services Administration (GSA) announced that data would be transferred from the well-known Excluded Parties List System (EPLS).  The System for Award Management (SAM) is a newer and more comprehensive system. Its implementation results in a more efficient federal government contracting process. However, those outside the government contracting process may be unfamiliar with EPLS.  Nevertheless, it was utilized by the majority of managed care providers to screen for excluded individuals and corporations.  Unfortunately, the EPSL has now become outdated. As a result, many businesses are scrambling to figure out how to utilize the SAM exclusion list.  However, this is necessary in order to comply with established regulatory guidelines.

The EPLS was a distinct list for healthcare-related services.  And, it included individuals and businesses who have been forbidden or suspended from conducting business with the federal government.  These were referred to collectively as excluded parties. As a result, government agencies used the EPLS as part of the new vendor procurement process.  It helped to ensure that a potential individual or company was not barred from participating in federal contracting. Recently, there has been discussion regarding whether healthcare organizations and non-governmental groups should filter EPLS. Often, managed care organizations participate in government-funded programs like Medicare and Medicaid.  However, they are not government agencies. Furthermore, those entering into contracts with a managed care company are not entering into a contract with the government.

SAM – Federal Procurement Consolidation

SAM streamlines the procurement process for the federal government.  The new system combines various databases that are frequently reviewed throughout that process. At the moment, SAM combines the Central Contractor Registration / Federal Agency Registration (CCR / FedReg), the Online Representations and Certifications Application (ORCA), and the EPLS into a single online website.

Central Contractor Registry (CCR)

The Central Contractor Registry (CCR) is the main database that federal agencies utilize to find GSA contractors. When federal buyers look for business under the GSA Schedule, they will most likely visit this page. The CCR includes detailed information, including approved and available contractors. It is designed to be used by both government purchasers and federal purchasing officers.

Federal Agency Registration (Fedreg)

Federal Agency Registration (Fedreg) establishes policies and controls the management of federal property and records. Thus, it assists contractors in managing bids and offers efficiently.  It covers:

  • Construction for building construction and operation
  • Supply procurement and distribution
  • Utilization and disposal of real and personal property,
  • Transportation – travel and fleet management
  • Communications management
  • ADP – management of the governmentwide automatic data processing resources program.

Online Representations And Certifications Application (ORCA)

The paper-based Reps & Certs (Reps & Certs) approach was replaced by the Online Representations and Certifications Application (ORCA). This technology allows GSA contractors to pursue government processes that are conducted online. The tool collects, maintains, and evaluates a significant number of FAR-required representations and certifications that were formerly contained in solicitations. Firms must first register with ORCA and become active users of CCR before responding to specific solicitations.

Excluded Parties List System (EPLS)

The Excluded Parties List System (EPLS) is an online registry of individuals and organizations.  It names individuals and entities who are not eligible for GSA contracts or aid from the US government. Individual data discovered on the SAM exclusion list must be verified by the federal agency. Also, they are required to go directly to the specific agency for further instructions. Next, they must enter the Dun & Bradstreet number for the excluded party in the organization’s form. There are further actions that must be performed to authenticate individual excluded parties.

What is the difference between a SAM Exclusion and a Sanction?

Punishment is imposed when an entity is judged to violate administrative regulations, or civil statutes, or perform criminal acts. These activities can lead to restrictions, license revocation, suspension, or voluntary surrender of license.  However, serious infractions may result in exclusion from any federal or state-funded program including Medicare or Medicaid.

  • A sanction – is a punitive or coercive measure or action that results from a failure to comply with a law, rule, or order. It can also result from engaging in a criminal offense.
  • An exclusion – is a severe administrative consequence that results in the placement of an individual on an exclusion list. If you have an active exclusion, federal agencies will not do business with you.

Is a SAM Exclusion Permanent?

While exclusion is obviously unfortunate, it is not always the end of the story. In some situations, the exclusion is just temporary.  Once it expires, firms are able to ask to be restored and begin bidding on contracts again. Of course, most businesses or entities will never have to worry about being on the exclusions list.  Statistically, most government contractors do not engage in unethical or criminal behavior.

The simplest approach to preventing a SAM exclusion is to ensure that all of your business procedures comply with current federal standards. Therefore, read each bid carefully.  Also, guarantee that your organization can offer the necessary services or products.  Finally, ensure that they comply with federal requirements.

Up Next: What Is Default Risk?

Default RiskDefault risk is a component of credit risk.  It represents the danger linked to lending money that a borrower may not be able to fully repay.  Every lender assumes a degree of risk that a borrower may fail to make the due payments on their debt obligation. Almost all types of credit extensions expose lenders and investors to default risk. As a result, a higher level of default risk requires a larger necessary return.  In turn, this dictates a higher interest rate to compensate for the additional risk. Creditworthiness is measured and reported by credit rating agencies through the ratings they give.

Debt securities are financial assets that entitle their owners to a stream of interest payments. Unlike equity obligations, debt obligations require the borrower to repay the principal borrowed. The interest rate for debt security will depend on the perceived creditworthiness of the borrower. A default risk premium is an additional cost of incurring risk when investing in risk-based securities. It is the gap between the risk-free rate and the rate offered by high-risk securities. This premium is a method of recruiting customers by offering high-interest rates or low buying costs. It is a safeguard against the risk of bearer securities.

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