The System for Award Management (SAM) has undergone significant changes under the Revolutionary FAR Overhaul (RFO). This RFO initiative is an effort by the Office of Federal Procurement Policy (OFPP), the Federal Acquisition Regulation (FAR) Council, and the General Services Administration (GSA) to support sound procurement for government contracts. It is being initiated in an effort to unveil Ultimate Beneficial Owners (UBO) in organizations that are part of complex corporate structures that often are construct to hide entities involved in illicit and hostile activities.
What SAM Changes Mean for Businesses
The System for Award Management is a U.S. government e-procurement system that collects and manages data from suppliers, allowing them to register to do business with the federal government. SAM simplifies the process for vendors and federal agencies by providing a single platform for managing entity information.
Under the revised arrangement, which is expected to be implemented in January of 2026, all businesses will need to provide representations and certifications that are specific to the entity when registering for SAM. It is stressed that organizations pay special attention to SAM interactions as this transition period may require duplicative efforts with regards to registration updates. It is, however, anticipated that the revised process will be more efficient and easy to navigate.
Complex Corporate Structures Concealing Illicit Actions
Complex corporate structures can obscure ultimate ownership of listed entities by using multiple layers of ownership across different jurisdictions. This makes it difficult, if not impossible to trace who is really in control. Organizations often use shell companies, trusts, and nominee arrangements, to separate legal ownership from beneficial ownership. This can make it easier to launder funds, evade sanctions, and circumvent regulations.
The U.S. government is focusing on these issues from all sides. This includes government acquisitions, law enforcement against organizations involved in narcotics smuggling, and regulations preventing export of sensitive technologies to protect U.S. national security and foreign policy.
Bureau of Industry and Security Affiliates Rule
The Bureau of Industry and Security published its interim final Affiliates rule in September of this year. This rule would expand export restrictions to foreign entities that are owned by 50% or more by listed parties. This would include parties on the Entity and Military End User (MEU) lists. It would also place the onus of parsing obscured corporate ownerships on exporters, increasing the potential for involuntary violations of the Export Administration Regulations (EAR).
This so called 50% Rule has been temporarily delayed for one year, starting from November 10, 2025, as part of trade negotiations between the U.S. and China. This pause allows exporters and compliance teams time to adjust to the rule’s requirements before it is reinstated on November 10, 2026.
CVG Strategy Export Compliance Management Programs
Changes to the System for Award Management show the government’s intention to reveal dishonest corporate structures that hide harmful entities. These efforts are being shared by other federal agencies to prevent the illegal export of strategically significant technologies. As such, exporters should be on guard to ensure that parties to transactions are above board to prevent unintentional violations of export regulations.
Export Compliance Management Programs establish clearly defined policies and procedures for all departments within an organization. They ensure that registration, item classifications, license applications, denied part screening, and security measures are taken that will prevent violation. They also ensure that training, auditing, and record keeping are maintained according to requirements.
CVG Strategy can help you understand revisions to the International Traffic in Arms Regulations (ITAR) and the Export Administration Regulations (EAR), and help you establish a coherent and effective export compliance program. We can perform export control classifications, perform audits, assist in filings for export licenses and educate your team. Regardless of whether your business falls under EAR or ITAR, CVG Strategy has the expertise to help.