dgmgrl will allow you to do many activity thru sys user, but certain activity needs non sys user.
This error is due to non-sys user. Authentication issue is due to the account sysdg status. This account should be open in both primary and standby
Database comes with sysdg account with locked and expired, unlock and set the password.
Now the observer should start.
DGMGRL> start observer
[P003 01/14 15:53:45.14] Authentication failed.
DGM-16979: Unable to log on to the primary or standby database as SYSDBA
Failed.