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Fraudulent SAM Accounts Lead to More Complicated SAM Registration Requirements

GSA recently announced it is supporting an Inspector General investigation into alleged, third-party fraudulent activity in the System for Award Management(“SAM”). The GSA announcement suggests that fraudulent SAM accounts may have been used to divert certain federal payments to unauthorized bank accounts. The announcement does not elaborate on the scope of potentially impacted entities or the amount of misdirected payments at issue. GSA has advised impacted entities to validate their SAM registration and confirm their financial information. Although GSA has indicated it has or will reach out to impacted entities, contractors would be well advised to confirm independently the accuracy of their current SAM registration.

Additionally, in an effort to prevent future fraudulent activity, GSA is now requiring that anyone seeking to register a new entity in SAM provide an original, signed, and notarized letter identifying the authorized Entity Administrator. Although this new requirement appears straightforward on the surface, the Federal Service Desk has established detailed requirements for the contents of the letter. These requirements prescribe, among other things, that the notarized letter must be signed by an entity’s president, CEO, or other authorized individual and include template language certifying to the identity of the Entity Administrator. Further, an entity must indicate in the letter whether it permits a third-party company administrator to access its SAM registration and, if so, identify the authorized third party. Contractors enrolling a new entity should closely review these additional requirements to ensure that the registration can be completed without delay.

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About this Author

Scott Freling, Government Contracts Lawyer,  Covington Law Firm

Scott Freling divides his practice between working with civilian and defense contractors on traditional government contracts matters and representing buyers and sellers, including a number of private equity firms, in complex M&A deals involving a government contractor.

Mr. Freling represents contractors at all stages of the procurement process and in their dealings with federal, state, and local government customers. In addition, he counsels clients on compliance matters and risk mitigation strategies, including obtaining SAFETY Act liability protection for...

Alexander Hastings, Litigation and e-discovery lawyer, Covington

Alex Hastings advises clients across a broad range of government contracting issues, including advising clients in transactional matters involving government contractors and assisting defense contractors and pharmaceutical companies in securing and performing government contracts.

Mr. Hastings also advises clients concerning best practices in e-discovery. He assists in investigations and litigations that involve complex e-discovery issues and has represented clients in matters involving the U.S. Department of Justice, Securities and Exchange Commission and the United States International Trade Commission.