[Federal Register Volume 64, Number 117 (Friday, June 18, 1999)]
[Rules and Regulations]
[Pages 32926-32945]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-15217]



[[Page 32925]]

_______________________________________________________________________

Part II





Department of Transportation





_______________________________________________________________________



Federal Aviation Administration



_______________________________________________________________________



14 CFR Parts 14 and 17



Procedures for Protests and Contract Disputes; Amendment of Equal 
Access to Justice Act Regulations; Final Rule

  Federal Register / Vol. 64, No. 117 / Friday, June 18, 1999 / Rules 
and Regulations  

[[Page 32926]]



DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Parts 14 and 17

[Docket No. FAA-1998-4379; Amendment No. 14-0317-01]
RIN 2120-AG19


Procedures for Protests and Contract Disputes; Amendment of Equal 
Access to Justice Act Regulations

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This document provides regulations for the conduct of protests 
and contract disputes under the Federal Aviation Administration 
Acquisition Management System (AMS). Also, the Federal Aviation 
Administration (FAA) regulations governing the application for, and 
award of, Equal Access to Justice Act (EAJA) fees are amended to 
include procedures applicable to the resolution of protests and 
contract disputes under the AMS, and to conform to the current EAJA 
statute.

EFFECTIVE DATE: June 28, 1999.

FOR FURTHER INFORMATION CONTACT: Marie A. Collins, Staff Attorney, and 
Dispute Resolution Officer, FAA Office of Dispute Resolution for 
Acquisition, AGC-70, Room 8332, Federal Aviation Administration, 400 
7th Street, SW., Washington, DC 20590, telephone (202) 366-6400.

SUPPLEMENTARY INFORMATION:

Availability of Final Rules

    An electronic copy of this document may be downloaded, using a 
modem and suitable communications software, from the FAA regulations 
section of the Fedworld electronic bulletin board service (telephone: 
703-321-3339), the Government Printing Office's electronic bulletin 
board service (telephone: 703-321-1661), or the FAA's Aviation 
Rulemaking Advisory Committee Bulletin Board service (telephone: 800-
322-2722 or 202-267-5948).
    Internet users may reach the FAA's web page at http://www.faa.gov/
avr/arm/nprm.htm or the Government Printing Office's webpage at http://
www.access.gpo.gov/nara for access to recently published rulemaking 
documents.
    Any person may obtain a copy of this final rule by submitting a 
request to the Federal Aviation Administration, Office of Rulemaking, 
ARM-1, 800 Independence Avenue, SW., Washington, DC 20591, or by 
calling (202) 267-9680. Communications must identify the amendment 
number or docket number of this final rule.
    Persons interested in being placed on the mailing list for future 
Notices of Proposed Rulemaking and Final Rules should request from the 
above office a copy of Advisory Circular No. 11-2A, Notice of Proposed 
Rulemaking Distribution System, that describes the application 
procedure.

Small Entity Inquiries

    The Small Business Regulatory Enforcement Fairness Act of 1996 
(SBREFA) requires the FAA to report inquiries from small entities 
concerning information on and advice about compliance with statutes and 
regulations within the FAA's jurisdiction, including interpretation and 
application of the law to specific sets of facts supplied by a small 
entity.
    If your organization is a small entity and you have a question, 
contact your local FAA official. If you do not know how to contact your 
local FAA official, you may contact Charlene Brown, Program Analyst 
Staff, Office of Rulemaking ARM-27, Federal Aviation Administration, 
800 Independence Avenue SW., Washington, DC 20591, (888) 551-1594. 
Internet users can find additional information on SBREFA in the ``Quick 
Jump'' section of the FAA's web page at http://www.faa.gov and may send 
electronic inquiries to the following internet address: 9-AWA-
[email protected].

Background

Statement of the Problem

    In accordance with Congressional mandate, the FAA procures, 
acquires, and develops services as well as material in support of its 
mission of safety in civil aviation. Prior to April 1, 1996, several 
major FAA acquisitions under the Government-wide acquisition system 
were substantially behind schedule and experienced large cost over 
runs. Both the Administration and the Congress became concerned that 
the safety mission of the FAA might suffer from the inefficiency of the 
then existing acquisition system, including its dispute resolution 
system.
    In the Fiscal Year 1996 Department of Transportation Appropriations 
Act, Public Law 104-50, 109 Stat. 436 (November 15, 1995), the Congress 
directed the FAA ``to develop and implement, not late than April 1, 
1996, an acquisition management system that addressed the unique needs 
of the agency and, at a minimum, provided for more timely and cost 
effective acquisitions of equipment and materials.'' In that Act, the 
Congress gave the FAA authority to create a new acquisition system, 
``notwithstanding provisions of Federal Acquisition law.'' In addition, 
Congress specifically instructed the FAA not to use certain provisions 
of federal acquisition law. In response, the FAA developed the AMS for 
the management of FAA procurement. The AMS is a system of policy 
guidance that maximizes the use of agency discretion in the interest of 
best business practice.
    As part of the AMS, the FAA created the Office of Dispute 
Resolution for Acquisition (ODRA) to facilitate the Administrator's 
review of procurement protests and contract disputes. Notice of 
establishment of the ODRA was published on May 14, 1996, in the Federal 
Register (61 FR 24348). In that notice, the FAA stated it would 
promulgate rules of procedure governing the dispute resolution process. 
Currently, procedures and other provisions related to dispute 
resolution are negotiated and included or referenced in all FAA 
Screening Information Requests (SIRs) and contracts. The FAA has 
determined that it will be more effective and efficient to establish by 
rulemaking the dispute resolution procedures that apply to protests 
concerning SIRs and contract awards, and to disputes arising from 
established contracts. The rule is designed to contain the minimum 
procedures necessary for efficient and orderly resolution of protests 
and contract disputes arising under the AMS.
    The FAA Dispute Resolution Process, and the procedures implementing 
that process, are based upon the powers Congress delegated to the 
Administrator of the FAA under Title 49, United States Code, Subtitle 
VII (49 U.S.C. 40101, et seq.). These delegated powers include the 
administrator's power to procure goods and services, and to investigate 
and hold hearings regarding any matter placed under the Administrator's 
authority. In the Federal Aviation Reauthorization Act of 1996, Pub. L. 
104-264 (October 9, 1996), the Congress amended 49 U.S.C. 106(f) to 
make the Administrator of the FAA the final authority over the FAA 
acquisition process and FAA acquisitions.
    These FAA dispute resolution procedures encourage the parties to 
protests and contract disputes to use Alternative Dispute Resolution 
(ADR) as the primary means to resolve protests and contracts disputes, 
in consonance with Department of Transportation and FAA policies to 
utilize ADR to the maximum extent practicable. Under these procedures, 
the ODRA actively encourages parties to consider ADR techniques such as 
case evaluation,

[[Page 32927]]

mediation, arbitration, or other types of ADR.
    The procedures for protests and contract disputes anticipate that, 
for a variety of reasons, certain disputes are not amenable to 
resolution through ADR. In other cases, ADR may not result in full 
resolution of a dispute. Thus, there is provision for a Default 
Adjudicative Process. The EAJA, 5 U.S.C. 504, can apply in instances 
where an eligible protester or contractor prevails over the FAA in the 
Default Adjudicative Process. Title 14 of the Code of Federal 
Regulations (CFR), Part 14 is amended to provide guidance for the 
conduct of EAJA applications under the dispute resolution regulations 
promulgated in 14 CFR part 17.

Discussion of Comments

    Two comments were received on the proposed rule from the American 
Bar Association Section of Public Contract Law (ABA) and the Associated 
General Contractors of American (AGC). The ABA submitted both draft and 
final comments.
    The comments of both the ABA and AGC generally supported the goals 
of the proposed rule and endorsed its emphasis on ADR techniques. The 
comments of the AGC raised only two points and, with respect to those 
two points, indicated general agreement with the comments filed by the 
ABA. The two points raised by the AGC pertain to sections of the 
proposed rule that had dealt with matters of contract administration--
the obligation to continue work pending resolution of a contract claim, 
and the accrual of interest on a contract claim. The ABA, in addition 
to addressing those points, sets forth a variety of comments outlining 
concerns with the proposed rule. These pertain to, among other things: 
(1) Whether the ODRA has exclusive jurisdiction over protests and 
contract disputes under the AMS, and the continued applicability of 
both the Tucker Act and the Contract Disputes Act (CDA); (2) 
procurement suspensions in the context of a bid protest; (3) discovery; 
(4) the opportunity for a hearing; (5) time limitations for the filing 
of contract disputes; and (6) basic definitions. The ABA comments are 
discussed in detail below. Some of the ABA comments seek within the 
rule further elaboration and guidance regarding the ODRA's practices. 
The FAA agrees that further guidance as to ODRA practices would foster 
predictability in the FAA's protest and contract dispute procedures. 
Additional guidance to the public on ODRA procedures will be published 
on the Internet or otherwise, and may be revised by the ODRA as it 
deems necessary, to conform to and more accurately describe current 
dispute resolution practices employed by the ODRA. The ODRA publishes a 
guide on its Website, which is accessible through the FAA Homepage 
(http://www.faa.gov).

Applicability of the Tucker Act and the Contract Disputes Act

    The ABA urges that the ODRA dispute resolution process is not 
exempt from either the Tucker Act (28 U.S.C. 1491) or the Contract 
Disputes Act (41 U.S.C. 601-613), and suggests that the rule limit its 
applicability to protests and disputes brought before the ODRA, without 
implying any jurisdictional exclusivity.
    FAA Response: The FAA disagrees. Section 348 of the FY 1996 
Department of Transportation Appropriation Act, Public Law 104-50, 109 
Stat. 436 (November 15, 1995) (the ``1996 Act'') did not merely list 
specific statutes that were not to apply to the FAA AMS. Rather, in 
calling for the establishment of the new AMS, Congress, in the 1996 
Act, called more generally for the Administrator of the FAA to 
``develop and implement'' the new AMS ``notwithstanding provisions of 
Federal acquisition law.'' Congress established the FAA Administrator 
as the final authority for all acquisition activity necessary to carry 
out the Agency's functions (49 U.S.C. 106(f)(2), 49 U.S.C. 46101, 
et.seq., and Pub. L. 104-50). For dispute resolution purposes, the 
Administrator's authority was expressly delegated to the ODRA on July 
29, 1998, with the exception of final decision-making authority, other 
than for dismissals arising from settlements or voluntary withdrawals; 
or final authority to stay awards or contract performance (63 FR 
49151).
    The FAA views the CDA as falling into the general category of 
``Federal acquisition law''. Indeed, like the Competition in 
Contracting Act (CICA), the CDA is widely regarded as one of the basic 
elements of the current system of ``Federal acquisition law.'' The 1996 
Act specifically requires that the Federal Acquisition Streamlining Act 
(FASA) not apply. Several sections of the CDA were amended under the 
FASA in 1994. For example, Section 605 of the CDA was amended by the 
FASA to include for the first time a six (6) year statute of limitation 
on the submission of contract claims under the CDA. The FASA also 
raised the CDA claim certification threshold from $50,000 to $100,000. 
In addition, it added to Section 605 of the CDA a provision regarding 
termination of ADR efforts to resolve CDA claims. Given the express 
inapplicability of the FASA to FAA procurements, the ABA position would 
require the FAA either to conform the AMS dispute resolution process 
the pre-1994 (pre-FASA) version of the CDA or to disregard the express 
direction of Congress regarding non-applicability of FASA.
    Furthermore, the Congress clearly intended the AMS to be free of 
more than just those statutes enumerated in section 348. Section 
348(a)(8) contains a ``catch all'' for any other unnamed acquisition 
related statutes, exempting the AMS from ``(t)he Federal Acquisition 
Regulation and any laws not listed (above in) this section providing 
authority to promulgate regulations in the Federal Acquisition 
Regulation.'' The CDA authorizes implementation through the 
promulgation of regulations in the Federal Acquisition Regulation 
(FAR), in that it authorizes guidelines to be promulgated by the Office 
of Federal Procurement Policy (OFPP). The OFPP promulgates such 
guidelines as part of the FAR under the authority of the OFPP Act. The 
OFPP Act also was expressly made inapplicable to the AMS by the 1996 
Act.
    As previously discussed, in 1996 Congress made the FAA 
Administrator the final authority for all matters related to ``the 
acquisition and maintenance of property and equipment of the 
Administration.'' 49 U.S.C. 106. Further, under 49 U.S.C. 46110, any 
person with a substantial interest in an order issued by the 
Administrator may appeal exclusively to the United States Court of 
Appeals for the District of Columbia Circuit or in the court of appeals 
for the circuit in which the person resides or has its principal place 
of business. The FAA believes, based on all of the above, that the only 
reasonable reading of the 1996 Act is that it rendered the CDA 
inapplicable to the FAA's new AMS.
    The same statutory provisions, 49 U.S.C. 106 and 46110, resolve the 
question of Tucker Act jurisdiction. For purposes of judicial review of 
final acquisition-related decisions of the FAA Administrator, the 
specific, exclusive jurisdictional authority granted to the United 
States Court of Appeal in 49 U.S.C. 46110 controls and takes precedence 
over the non-exclusive, general authority over a variety of disputes 
afforded the United States Court of Federal Claims and Federal District 
Courts under the Tucker Act. See 28 U.S.C. 1491. In order to clarify 
when judicial review may be had, Sec. 17.43 has been modified to 
expressly recognize the availability of such review, only after 
exhaustion of

[[Page 32928]]

administrative remedies through the FAA dispute resolution process.

Definition of ``Compensated Neutral''

    The ABA recommends that Sec. 17.3(f), the definition of 
``Compensated Neutral,'' provide for the possibility of alternative 
sharing formulas regarding the costs associated with engaging a 
Compensated Neutral. The proposed rule had called for equal sharing of 
such costs.
    FAA Response: The FAA agrees. Additional language has been 
incorporated in Sec. 17.3(f) of the final rule, to allow for the 
possibility that the costs associated with a Compensated Neutral be 
shared between the parties.

Definition of ``Discovery''

    The ABA recommends striking the definition or removing the 
permissive language ``may, when allowed'' in Sec. 17.3(i). It notes 
further that ``due process required sufficient discovery in each case 
to permit a party to prove its case and challenge the other party's 
evidence.''
    FAA Response: The FAA agrees in principle that discovery should be 
allowed in order to provide an adequate record for the finder of fact. 
However, in order to maintain the efficient resolution timeframes 
established by the rules, the management of discovery must be left to 
the discretion of the ODRA. To indicate that discovery is voluntary in 
the first instance and to clarify that an appropriate level of 
discovery is an integral component of the ODRA dispute resolution 
process, Sec. 17.3(i) has been revised to read ``may, either 
voluntarily or to the extent directed by the ODRA.''

Definition of ``Office of Dispute Resolution for Acquisition''

    The ABA recommends that the definition in Sec. 17.3(n) either be 
struck or, in the alternative, defined ``solely in terms of (the 
ODRA's) authority with respect to bid protests or disputes filed with 
it.'' The comment relates back to the ABA's stated position regarding 
the continued applicability of both the Tucker Act and the CDA.
    FAA Response: The FAA disagrees. As indicated above, the FAA 
believes that the ODRA has exclusive jurisdiction over all AMS protests 
and contract disputes.

Filing and Computation of Time

    The ABA notes that proposed Sec. 17.7(b) would be ``unworkable 
given the short time frames for resolving protest,'' by reason of its 
permitting submissions after initial filings to be made by regular 
mail.
    FAA Response: The FAA agrees that the use of regular mail after 
initial filings would not be consistent with a prompt, efficient bid 
protest process. Therefore, the final rule provides for delivery of 
such subsequent filings only by overnight delivery, hand delivery, or 
by facsimile.

Protective Orders

    The ABA suggests that the rule provide for the ODRA to develop and 
publish a standard protective order along the lines of the model order 
contained in the GAO Guide to GAO Protective Orders.
    FAA Response: The FAA disagrees that such a rule is necessary. The 
ODRA has already developed and published such a standard order as part 
of its Website. That order was based, in great measure, on the wording 
of the GAO's model order.

Simultaneous Pursuit of ADR

    The ABA observes that proposed Secs. 17.13, 17.27 and 17.31(c) 
contemplate a sequential process, whereby adjudication is done only 
after completion of ADR efforts. The ABA also notes that the current 
practice of the ODRA frequently includes the use of ADR techniques 
concurrently with an on-going adjudication, and that this practice has 
produced favorable results in many instances. Accordingly, the ABA 
suggests that the proposed rule be modified to conform to the current 
practice.
    FAA Response: The FAA agrees. Section 17.31(c) has been modified to 
add language which allows for informal ADR techniques (neutral 
evaluation and mediation efforts) to be undertaken simultaneously with 
adjudication under the Default Adjudicative Process. Section 17.13(d) 
has been revised to conform to this change. Likewise, a new 
Sec. 17.27(d) has been added to clarify that the submission of 
statements indicating that ADR will not be utilized will not in any way 
preclude the parties from engaging in informal ADR techniques during 
the course of adjudication.

Binding Arbitration

    The ABA takes issue with the language of Sec. 17.33(f), which 
permits the FAA Administrator a limited amount of time within which to 
``opt-out'' of an arbitrator's decision in binding arbitration, arguing 
that such a provision conflicts with the policies enunciated in the 
Administrative Dispute Resolution Act of 1996. Accordingly, the ABA 
recommends deletion of such language.
    FAA Response: The FAA disagrees. Under 5 U.S.C. 575(c), any binding 
arbitration undertaken by a Federal agency must be in accordance with 
guidance issued by the head of the agency in consultation with the 
Attorney General, i.e, the Department of Justice (DoJ). As of this 
time, DoJ has advised that federal agencies, including the FAA, may not 
engage in any form of binding arbitration without the kind of ``opt-
out'' provision described in proposed Sec. 17.33(f). The language with 
which the ABA takes issue does not mandate this form of binding 
arbitration, but merely makes it a permissible form. Since any form of 
ADR will require the concurrence of both parties, the FAA does not see 
any necessity for eliminating this alternative and has not done so in 
the final rule. The language of the first sentence of Sec. 17.33(f) 
would allow for binding arbitration without such an ``opt out'' 
provision, pursuant to 5 U.S.C. 575 (a), (b), and (c), so long as the 
arbitration process is consistent with current DoJ guidance and 
``applicable law.'' Thus, if DoJ modifies its guidance to the agencies 
so as to allow such binding arbitration, the FAA would not need to 
revise Sec. 17.33 in order to pursue such a dispute resolution option.

Proposed Appendix A to Part 17

    The ABA states that it endorses the proposed Appendix A to Part 17 
and suggests that it be enhanced with additional information concerning 
ADR experience at the ODRA.
    FAA Response: The FAA disagrees that additional information 
concerning ODRA's ADR experiences should be contained in the rule. The 
FAA believes information of this type should be published in the ODRA 
Website Guide, rather than as part of a procedural regulation.

Distribution of Decisions

    The ABA proposes that the rule contain language requiring the 
distribution of final decisions and suggests that language in 4 CFR 
21.12, pertaining to the distribution of GAO decisions, be used for 
that purpose.
    FAA Response: The FAA concurs with the ABA's comment, and has 
incorporated language concerning the public dissemination of ODRA 
findings and recommendations relating to both protests and contract 
disputes, as part of Secs. 17.37(l) and 17.39(l), respectively. 
Currently, ODRA findings and recommendations and final orders of the 
Administrator regarding protests and contract disputes are promptly 
published on the ODRA Website.

[[Page 32929]]

Retroactivity

    The ABA points out that the proposed rules are silent on the issue 
of retroactive applicability and recommends that the final rule 
identify the contracts to which the new regulations will apply.
    FAA Response: The FAA agrees. Section 17.1, Applicability, has been 
modified to indicate that the rule will apply to all protests and 
contract disputes on or after the effective date of these regulations, 
with the exception of contract disputes relating to pre-AMS contracts.

Definition of ``Interested Party''

    The ABA recommends that Sec. 17.3(k) incorporate the same 
definition of ``interested party'' as is contained in the GAO bid 
protest regulations.
    FAA Response: The FAA agrees. The definition of ``interested 
party'' in Sec. 17.3(k) has been modified to incorporate language based 
upon the definition of ``protester'' in Appendix C to the AMS. That 
language was patterned after the GAO's definition of ``interested 
party.''

Intervention

    The ABA suggests that the definition of ``intervenor'' in 
Sec. 17.3(l) should state that the awardee of a contract be given 
``intervenor'' status as a matter of right, that the definition include 
a deadline for requests for intervention, and that a five-day period be 
used.
    FAA Response: The FAA agrees that the awardee of a contract should 
be given ``intervenor'' status as a matter of right but disagrees that 
a five-day period be used as a deadline for requesting intervenor 
status. Section 17.3(l) has been modified to mandate that contract 
awardees be allowed intervention as a matter of right. The definition 
has also been clarified to state that for post-award protests, other 
than the awardees, no other interested parties will be allowed to 
participate as intervenors. This conforms to an ODRA interlocutory 
decision in the Protests of Camber Corp. and Information Systems of 
Networks Corp., 98-ODRA-00079 and 98-ODRA-00080 (Consolidated) and is 
consistent with GAO procedures regarding intervention in protests.
    Proposed Sec. 17.15(f) had already established a deadline of two 
business days for requests of intervenor status. The two day period has 
not been increased to five days, in light of the ODRA's policy of 
providing expedited adjudication and dispute resolution.

Parties

    The ABA notes that the definition of ``Parties'' under Sec. 17.3(o) 
uses the word ``protester'' in the singular, implying that only one 
protester may be involved in a protest before the ODRA. The ABA 
suggests the use of the plural.
    FAA Response: The FAA agrees with the ABA's comment and has 
modified the definition under Sec. 17.3(o) accordingly.

Screening Information Request

    The ABA finds the current definition of ``Screening Information 
Request'' in Sec. 17.3(q) to be vague, and suggests alternative 
language along the lines found in the AMS definition of that term.
    FAA Response: The FAA agrees and has incorporated AMS language into 
Sec. 17.3(q) similar to that offered by the ABA.

Matters Not Subject to Protest

    The ABA finds proposed Sec. 17.11, which identifies matters that 
are not subject to protest, to be overly broad. The ABA contends that 
this section prevents parties from protesting such matters in any other 
alternative forum.
    FAA Response: The FAA disagrees that this section is overly broad. 
The AMS does not contemplate such matters to be protestable in any 
forum.

Commencement of the Protest

    The ABA questions the use of the word ``cannot'' in Proposed 
Secs. 17.13(d) and 17.17(d) when those sections refer to the use of 
ADR, stating that it implies that the parties can only resort to the 
Default Adjudicative Process where ADR is not possible. The ABA 
suggests that the phrase ``will not'' be substituted for ``cannot'', so 
as to allow the parties more flexibility for the use of adjudication 
under the Default Adjudicative Process.
    FAA Response: The FAA agrees. It was not the FAA's intent to limit 
the Default Adjudicative Process to cases where ADR is not possible. 
ADR, in all instances, must be voluntary, in order to be successful. By 
the same token, the ODRA's procedures are structured so as to assure 
that ADR techniques are given adequate consideration. The FAA has 
modified the language of the two sections as recommended by the ABA.

Suspension of Procurement

    AMS Sec. 3.9.3.2.1.6 contains a presumption that procurement 
activities will not be suspended during the pendency of a protest, 
unless there is a compelling reasons to do so. The AMS authorizes the 
ODRA to recommend to the Administrator that all or part of such 
activities be suspended when a protest is filed. The proposed rule at 
Sec. 17.13(g) contains similar provisions. The ABA urges that the 
``regulatory presumption'' against suspension be dropped, arguing that 
permitting performance to proceed during the pendency of a protest 
precludes an effective remedy.
    In the alternative, the ABA suggests that protesters be allowed to 
respond to the agency's position regarding a requested suspension. It 
further recommends that the rule contain authority for the ODRA to 
``tailor the suspension to the specific exigencies of the protest by 
providing for consideration of limited or partial suspensions.'' 
Finally, the ABA questions the effectiveness of the authority for 
suspension being lodged at the Administrator's level and suggests that 
such authority be provided at the ODRA, so as to assure expeditious 
handling of suspension requests.
    FAA Response: The FAA agrees in part and disagrees in part. One of 
the major features of the Competition in Contracting Act (CICA) is its 
automatic procurement stay provision pertaining to bid protests filed 
with the General Accounting Office. Section 348 of Public Law 104-50 
mandated the creation of the AMS to provide for the ``unique needs'' of 
the FAA. By enacting this law, Congress sought in part to remedy 
unacceptable delays that had been encountered with FAA procurement. In 
Public Law 104-50, the Congress expressly exempts the FAA and its new 
AMS from the provision of statutes governing procurements at other 
Federal agencies, including notably with CICA. Thus, it was the intent 
of Congress that the CICA's automatic procurement should not be made 
part of the process for resolution of bid protests under the AMS. The 
presumption that contract performance be permitted to proceed, absent 
compelling reasons, gives effect to the intent of Congress that the FAA 
implement a system under which acquisitions are accomplished 
expeditiously. For this reason, the FAA will not adopt the ABA's 
suggestion that the presumption be dropped.
    However, the final rule does adopt other ABA suggestions regarding 
suspension. It permits a protester to provide a response to the agency 
position, prior to the ODRA deciding on whether or not it will 
recommend suspension to the Administrator. Also, the final rule makes 
clear that suspensions may be tailored such that they are limited or 
partial suspension. As to the suggestion that suspension authority be 
delegated by the Administrator to the ODRA, it should be noted that, by 
delegation of July 29, 1998, the Administrator delegated to the ODRA 
Director the authority to issue

[[Page 32930]]

temporary stays for up to ten (10) business days, pending any 
Administrator's decision on a more permanent stay. That delegation was 
published in the Federal Register on September 14, 1998 (Federal 
Register Vol. 63, No. 177, at pp. 49151-49152). A copy may be found on 
the ODRA Website. The FAA believes that this delegation is sufficient 
to provide expeditious treatment of suspension requests.

Product Team Response

    The ABA raises several issues regarding the Product Team Response 
required by Sec. 17.17(f) of the proposed rule. (It should be noted 
that the term ``Product Team'' has been substituted for the term 
``Program Office'' throughout the final rule, so as to be more 
consistent with terminology used in the FAA's AMS, and has been defined 
so as to conform to the AMS). First, the ABA objects to the language 
which requires the Response to include all documents which the Product 
Team ``deem(s) relevant,'' urging that an ``objective'' standard for 
relevance should be applied. Second, the ABA suggests that, to assure 
that all relevant documents are provided, the Product Team be required 
to furnish, in advance of the Response submission, a list of documents 
to be included with the Response. Third, the ABA points out that the 
proposed rule fails to require the submission of a Product Team 
Response in the event the matter proceeds to ADR and the ADR is 
unsuccessful.
    FAA Response: The FAA agrees that an objective standard of 
relevance is needed and that the rule needs to require the submission 
of a Product Team Response in the event ADR is unsuccessful. The 
language of Sec. 17.17(f) has been modified to require simply the 
provision of ``all relevant documents''--thus invoking an ``objective'' 
standard of relevance. As to the matter of requiring submission of a 
Product Team Response in the event ADR is unsuccessful, the new 
Sec. 17.17(h) satisfies this concern.
    As to the ABA suggestion regarding the furnishing of a list of 
documents in advance of the Product Team Response, the FAA does not 
concur with this suggestion. Such a requirement would mean one more 
written submission in a process that is to be focused on expediting 
dispute resolution and eliminating unnecessary paperwork.

Dismissal or Summary Decision of Protests--Opportunity to Respond

    The ABA suggests that a new section be inserted into the rule to 
permit parties against whom a dismissal or summary decision is to be 
entered the opportunity of submitting to the ODRA a response, before 
the ODRA acts to recommend dismissal or summary decision.
    FAA Response: The FAA agrees. A new Sec. 17.19(e) has been 
included, which contains the suggested language.

Default Adjudicative Process for Protests--Discovery

    The ABA finds absent from the proposed language of Sec. 17.37(f) 
guidance regarding the standard to be employed by the Dispute 
Resolution Officer (DRO) or Special Master when considering the 
necessity for and scope of discovery in conjunction with protests. The 
proposed rule is criticized for lack of ``predictability.'' The ABA 
suggests substitute language for Sec. 17.37(f).
    FAA Response: The FAA has adopted most, but no all of the suggested 
language for Sec. 17.37(f). Although ``predictability'' is certainly a 
laudable goal, to achieve the major FAA goal of expeditious dispute 
resolution, significant flexibility in the process must also be 
maintained. What may be an appropriate level of discovery in one case 
may be wholly unwarranted in another. Accordingly, the language of the 
final rule, while providing additional guidance as to the types of 
discovery that may be allowed, continues to authorize the DRO or 
Special Master to exercise broad discretion in terms of managing 
discovery in each case.

Comments on Product Team Response

    The ABA points out that the proposed rule omits any procedure for 
allowing comments by protesters and intervenors on the Product Team 
Response.
    FAA Response: The FAA agrees. This omission was inadvertent and 
contrary to current ODRA practice. Section 17.37(c) of the final rule 
requires the submission of such comments within five (5) business days 
of the filing of the Product Team Response.

Hearings

    The ABA notes that proposed Sec. 17.37(g) speaks of ``oral 
presentation'' and does not distinguish between hearings and oral 
argument. The ABA suggests language that would provide additional 
guidance on when hearings would be conducted. Such language, the ABA 
urges, is needed to establish ``predictability'' regarding the ODRA 
process.
    FAA Response: The FAA agrees. The final rule has been modified 
regarding ODRA hearings. More specifically, the final rule states that 
they are to be held ``where the DRO or Special Master determines that 
there are complex factual issues in dispute that cannot adequately or 
efficiently be developed solely by means of written presentations and/
or that resolution of the controversy will be dependent on an 
assessment of the credibility of statements provided by individuals 
with first-hand knowledge of the facts.'' In addition, the final rule 
permits any party to a protest to request the ODRA to conduct a hearing 
and, in connection with any such request, provides that the ODRA shall 
conduct a hearing whenever one is requested, unless it finds that one 
is not necessary and that neither party will be prejudiced by limiting 
the record in the adjudication to the parties' written submissions. The 
final rule makes clear that all witnesses at such hearings will be 
subject to cross-examination by the opposing party and to questioning 
by the DRO or Special Master.

Commencement of Default Adjudicative Process

    The ABA takes issue with the provisions of proposed Sec. 17.37(a) 
calling for the Default Adjudicative Process to commence on the later 
of (1) the filing of the Product Team Response, or (2) the submission 
to the ODRA of a joint notification that the ADR process has not 
resolved all outstanding issues, or that the 20 business day ADR period 
has or will expire with no reasonable probability of the parties 
achieving a resolution. The ABA states that this formulation creates a 
``significant disincentive for any protester to elect to proceed with 
the ADR process,'' since, once ADR is elected, the Default Adjudicative 
Process cannot start for at least 20 business days. The ABA urges that 
either party be permitted to ``trigger'' the Default Adjudicative 
Process at any time during ADR and recommends that the commencement of 
the Default Adjudicative Process be measured from the filing of a 
Product Team Response in all instances.
    FAA Response: The FAA concurs that ADR is not intended to be and 
should not be an obstacle to efficient case resolution. Therefore, 
under new Sec. 17.17(g), any party will be able to ``trigger'' the 
Default Adjudicative Process by notifying the ODRA that the parties 
have failed to achieve a complete resolution of the protest via ADR. 
Joint notification is no longer being required. Under Sec. 17.37(a) of 
the final rule, the commencement of the Default Adjudicative Process is 
marked in all cases by the filing of the Product Team Response. The 
language regarding expiration of the 20 business day period has been 
deleted entirely.

[[Page 32931]]

Use and Definition of the Term ``Contract Dispute''

    The ABA suggests that the term ``contract dispute'' be changed to 
``contract claim'' in various sections of the proposed rule and that 
separate definitions be provided for both ``contract claim'' and 
``contract dispute.''
    FAA Response: The FAA agrees. The definition of ``contract 
dispute'' has been clarified in the final rule. The term ``claim'' has 
now been incorporated within that definition. Additional language has 
been inserted into the definition of ``contract dispute'' in order to 
clarify that the term includes situations where (1) parties to 
contracts pre-dating the AMS elect generally to make such contracts 
``subject to the AMS,'' including the ODRA dispute resolution process; 
and (2) parties to such contracts, even where they do not make such a 
general election, agree to permit the ODRA to employ ADR techniques to 
resolve disputes under those contracts.

``Accrual'' of a Contract Dispute

    The ABA believes that the definition of ``accrual of a contract 
dispute'' is ambiguous and recommends that the FAA adopt a definition 
used by the Court of Federal Claims under the Tucker Act, or 
alternatively, adopt the definition of accrual that is incorporated 
into FAR Sec. 33.201.
    FAA Response: The FAA agrees. The FAA has adopted the Court of 
Federal Claims definition of ``accrual of a contract claim'' and has 
included it in Sec. 17.3(b) of the final rule. Minor changes have been 
made to the ABA's proposed language so as to clarify that the 
determination as to whether there has been ``active concealment or 
fraud'' or facts ``inherently unknowable'' will rest with the ODRA 
(and, ultimately, with the Administrator).

Informal Resolution

    The ABA finds confusing the provision in Sec. 17.23(d) regarding an 
extension of the time under Sec. 17.27 for the filing of a joint 
statements, in particular, whether the parties are entitled to only one 
extension.
    FAA Response: The FAA agrees that the provision is confusing. The 
FAA has clarified the provision in proposed Sec. 17.23(d) making plain 
that extensions for up to twenty (20) business days will be allowed by 
the ODRA, if informal resolution of the contract disputes appears 
probable.

Continued Performance

    The ABA and AGC seek clarification as to the provision of proposed 
Sec. 17.23(f) regarding the requirement for continued performance, 
pending resolution of a contract dispute. They also suggest that the 
FAA consider providing financing for such continued performance.
    FAA Response: The FAA has decided to eliminate the provision in 
question from the final rule, since it relates to a matter of contract 
administration, rather than to procedures before the ODRA. The issues 
involved will be governed by the express terms of the pertinent FAA 
contract.

Filing Contract Disputes

    The ABA suggests that FAA-initiated contract disputes not be 
considered as having been ``filed'' until they are received by the 
contractor from the contracting officer. The ABA perceives 
Sec. 17.25(a) and (b) as pertaining only to contractor initiated 
disputes.
    FAA Response: The FAA disagrees. The sections, as drafted, were 
intended to cover both contractor-initiated and FAA-initiated disputes. 
In order for the ODRA to manage the dispute resolution process 
properly, the time for commencement in either case must be measured by 
the ODRA's receipt of the contract dispute. Just as there need not be 
an initial submittal of a claim to an FAA contracting officer (CO) and 
the issuance of a CO final decision as prerequisites to the contractor 
filing a contract dispute with the ODRA, the same must be true for 
claims against contractors by FAA product teams. Any concern regarding 
the contractor having adequate notice of the FAA's claim is satisfied 
by the provision of Sec. 17.25(d), which requires service if a copy of 
the contract dispute by means reasonably calculated to be received on 
the same day as the contract dispute is filed with the ODRA.

Six Months' Time Limit

    The ABA questions the six month time limitation specified by 
Sec. 17.25(c) for the filing of contract disputes and suggests that the 
limitation be extended to six years, so as to conform to that 
established by the Federal Acquisition Streamlining Act of 1994, Public 
Law 103-355, 108 Stat. 3243 (1994)(``FASA'') for claims under the CDA. 
The ABA further suggests that the time limitation be identical for both 
contractor and FAA claims. Proposed Sec. 17.25(c) concerns the 
possibility of different time limitations established by contract 
provision, and the requirement that such provisions govern over the 
limitation period set forth in the rule. The ABA proposes that, if the 
contract specified period is less than six years, it will only be 
enforced on the contractor if agreed to, and if the failure to agree 
does not constitute grounds for denying contract award. The ABA 
suggests language for Sec. 17.25(c) to address this modification. 
Finally, with regard to the exception of the time limitation for FAA-
initiated claims relating to warranty, fraud, or latent defects, the 
ABA suggests that that exception be conditioned on there being a 
limitation imposed on the FAA for filing of such claims. Specifically, 
the ABA would bar any such claims if filed more than six years after 
the FAA knows or should have known of the ``warranty issues, fraud or 
latent defects.''
    FAA Response: The FAA agrees that the limitation period should be 
identical for both contractor and government claims. However, the FAA 
does not accept the suggestion that that period should be six years. 
The FASA, which amended the CDA to implement a six year time 
limitation, is a statute which is expressly excluded from applicability 
to the AMS. The FAA believes that the two (2) year limitation period 
incorporated in the final rule (subject only to different periods 
specified in contracts entered into prior to the effective date of this 
rule) would be less disruptive to the operations of the FAA's product 
teams. Such a time limitation would allow adequate opportunity for 
resolution of contract claims at the contracting officer level and 
would not necessitate the filing of protective litigation.
    The FAA does agrees that there should be some limitation on 
contract disputes before the ODRA relating to FAA claims against 
contractors for gross defects amounting to fraud and/or latent defects. 
Accordingly, the final rule provides for the same two (2) year time 
limitation to apply to such contract disputes, the two (2) year period 
to begin from the point when the FAA knew or should have known of the 
fraud or latent defects. Regarding warranty claims, the time limitation 
for asserting such claims would be that specified in any contract 
warranty provision. As for any potential variations in time limitations 
established by contract provision, the final rule allows such variances 
only in terms of longer time limitations. The two (2) year period thus 
is established as a minimum.

Right to an Adjudicative Hearing

    The ABA urges that a hearing be provided as a matter of right in 
all contract disputes under the Default Adjudicative Process and opines 
that such a hearing would be essential to ensure due process of law.
    FAA Response: The FAA disagrees that a hearing must be provided

[[Page 32932]]

automatically as a matter of right in every case. Even so, the FAA is 
committed to providing fair and complete consideration of all relevant 
evidence pertaining to the contract disputes before the ODRA. 
Accordingly, the final rule, while emphasizing that the ODRA DRO or 
Special Master will have discretion as to whether a hearing will be 
conducted in any given case, provides guidance as to when hearings will 
be conducted. More specifically, Sec. 17.39(h) now calls for hearings 
``where the DRO or Special Master determines that there are complex 
factual issues in dispute that cannot adequately or efficiently be 
developed solely by means of written presentations and/or that 
resolution of the controversy will be dependent on his/her assessment 
of the credibility of statements provided by individuals with first-
hand knowledge of the facts.'' The final rule also permits any party to 
a contract dispute to request the ODRA to conduct a hearing and calls 
for the ODRA to conduct a hearing and calls for the ODRA to conduct 
hearings whenever requested, unless it finds specifically that the lack 
of a hearing will not result in prejudice to either party. The final 
rule makes clear that all witnesses at such hearings will be subject to 
cross-examination by the opposing party and to questioning by the DRO 
or Special Master.

Discovery

    The ABA suggests that the Default Adjudicative Process for contract 
disputes fails to afford participants the opportunity for ``full 
discovery'' and takes issue with the language of proposed 
Sec. 17.39(e)(1), which calls for DRO or Special Master to determine 
the ``minimum amount of discovery required to resolve the dispute.'' 
Further, the ABA asserts that the matter of discovery should be left to 
the control of each party, ``subject only to the long-established rules 
of reasonableness and relevance.''
    FAA Response: The FAA agrees. The final rule at Sec. 17.39(e)(1) 
was revised to speak of the ``appropriate amount of discovery required 
to resolve the dispute.'' This language addresses the ABA's concern 
regarding the sue of the term ``minimum.'' As to the matter of who 
controls the discovery process, the definition of discovery in the 
final rule, Sec. 17.34(i), in addition to contemplating ODRA management 
and direction as to discovery, was revised to provide for voluntary 
discovery by the parties.

Interest

    The ABA and AGC take issue with the proposed Sec. 17.34(m), which 
deals with the recovery of interest on contractor claims, and suggests 
that the FAA would be subject to the payment of interest under the CDA. 
They recommend, ``at a minimum, the FAA provide, by regulation, 
entitlement to interest.''
    FAA Response: The FAA disagrees that the CDA has applicability to 
contract claims under the AMS. In any event, because the payment of 
interest would be a matter of contract administration, rather than ODRA 
procedure, the provision in question has been eliminated from the final 
rule. The issue of interest is to be governed by the terms of FAA 
contract documents.

Procedural Predictability and Efficiency

    The ABA generally raised concerns regarding the rule's ``clarity 
and predictability'', claiming that the rule should strive to minimize 
litigation over procedural issues. The ABA asserts that the rules must 
afford ``adequate administrative and judicial processes and remedies 
that provide for the independent, impartial, efficient and just 
resolution of controversies.''
    FAA Response: The FAA agrees. To promote the goal of minimizing 
litigation over procedural issues, and to provide clarity and 
predictability, several sections of the rule were revised. Section 
17.13(d) now calls for status conference for protests to be mandatory 
(using the work ``shall'' rather than ``may''), in order to satisfy 
process predictability concerns. Likewise, Sec. 17.5(b) has been 
clarified so as to indicate that the ODRA has authority, within its 
delegation from the Administrator, to ``impose sanctions or [take] 
other disciplinary actions'' in furtherance of the ``efficient 
resolution of disputes.''
    For the sake of clarity, Sec. 17.13(c) was revised to include 
additional language, making clear that the ODRA may extend for good 
cause specified time limitations other than for the initial protest 
filing. Proposed Sec. 17.13(e), which seemed to allow the ODRA to waive 
the limitation regarding initial protest filings, has been deleted to 
eliminate an apparent ambiguity regarding such waiver.
    A new Sec. 17.13(e) has been inserted to state what had initially 
been contained in proposed Sec. 17.17(a), that the ODRA Director will 
designate either Dispute Resolution Officers (DROs) or Special Masters 
for protests. Inclusion of this new section is consistent with the 
ABA's goal of process predictability. The additional reference to 
``Special Masters'' in Sec. 17.17 (e) and (f) was to clarify that DROs 
are not used in every case.
    New Sec. 17.17(a) (former Sec. 17.17(b)) includes the words ``as 
part of protest'' to clarify that the request for a suspension is to be 
part of the protest document itself. Section 17.17(b)(50 of the final 
rule (formerly Sec. 17.17(c)(5)) adds the clarifying language ``or 
arrange for';' to the word ``conduct'' to cover situations where an 
outside neutral has been agreed upon to handle ADR proceedings, 
including the provision of early neutral evaluation. This section 
likewise has been revised by inserting for that purpose the words ``or 
other Neutral or Compensated Neutral, at the discretion of the ODRA, 
and/or based upon the agreement of the parties or request of any 
party(ies) seeking such evaluation.'' This clarifying language foster 
process predictability.
    Section 17.17(c)(1) has been clarified to call for a joint 
statement where the parties have decided to ``pursue ADR proceedings in 
lieu of adjudication in order to resolve the protest'' (instead of 
merely referring to their decision to ``pursue ADR to resolve the 
protest''). The phrase ``A joint written explanation'' in 
Sec. 17.17(c)(2) has been clarified to read ``Joint or separate written 
explanations,'' to recognize the possibility that the parties may not 
agree to a joint submission. The balance of that paragraph has been 
revised to eliminate reference to the term ``parties,'' since 
intervenors (included within the definition of ``parties'') do not 
participate in the decision to pursue ADR. Sections 17.17 (d) and (e) 
of the final rule use the phrases ``Product Team and protester'' and 
``Product Team or protester'' for this same reason.
    Section 17.17(d) has been clarified to explicitly state that 
``Agreement of any intervenor(s) to the use of ADR or the resolution of 
a dispute through ADR shall not be required.'' Section 17.17(e) has 
also been clarified to state that the ODRA may alter the schedule for 
filing of the Product Team response, in order to accommodate 
requirements of a particular protest. These clarifying revision support 
the goal of minimizing litigation over procedural issues.
    Section 17.17(f) clarifies the time for circulating to other 
parties copies of the Product Team Response and requires a more 
specific format for the information to be provided as part of the 
Product Team Response. The timing for provision of copies of the 
Product Team response to the protester and intervenor has been 
clarified to require that such copies be furnished on the same date as 
it is filed with the ODRA, if practicable, but in any event no later 
than one (1) business day after such filing. Similarly, Sec. 17.25(a) 
specifies more explicitly the format to be used for contract dispute 
filings for those reasons. Section 17.19(a)(2) clarifies the basis for

[[Page 32933]]

possible dismissal or summary dismissal of a protest to state that such 
dismissal may be done if the protest is ``frivolous, without basis in 
factor law, or (fails) to state a claim upon which relief may be had.`'
    Two potential protest remedies previously grouped (recompetition 
and termination for convenience) are stated separately in Sec. 17.21(a) 
of the final rule, to clarify an ambiguity as to whether the ODRA may 
recommend one or both of these remedies in any given case. Section 
17.23(a) of the final rule has been clarified to include the phrase 
``subject to the AMS, ``rather than ``entered into pursuant to the 
AMS,'' in order to cover situations where parties to a pre-AMS contract 
opt to subject the contract to the AMS and its ODRA dispute resolution 
process. Again, these changes foster process predictability.
    A substitute Sec. 17.23(f) has been inserted (in lieu of the 
deleted Sec. 17.23(f), which had dealt with the obligation to continue 
performance pending resolution of a dispute). The substitute section 
provides a remedies section for contract disputes. This section 
parallels the remedies section for bid protests and serves to make the 
provisions of the rule consistent.
    Section 17.27(a) is revised to allow the parties twenty (20) 
business days to submit a joint statement in order to promote 
expeditious resolution. It also uses the phrases ``joint or separate 
statements'' and ``written explanation(s,)'' in recognition of the 
possibility that parties may not be willing to agree to a joint 
submission section information 17.27(d) has been revised by deleting 
the word ``joint'' for the same reason. However, when speaking of a 
request for ADR, Sec. 17.27(b)(1) specifies that such request must be 
``joint.'' This is in recognition that ADR is a voluntary process that 
must be mutually entered into by the parties.
    To foster predictability of the process, Sec. 17.31(b) was revised 
to insert language clarifying that in all cases the parties will be 
expected to explore ADR. Additional clarifying language was included in 
that section to address the assignment by the ODRA of a DRO to explore 
ADR options with the parties and to arrange for early neutral 
evaluation of the merits of a case, at a party's request. The final 
rule has been revised to delete Sec. 17.359c), which had provided for 
the automatic appointment of a DRO for small dollar value matters or 
matters involving simplified acquisitions, so long as such appointment 
was not objected to by the parties. Specifying the automatic use of ADR 
in this context was inconsistent with the balance of the ADR section of 
the rule and was considered contrary to the basis concept that ADR is 
to be a completely voluntary process.
    Section 17.37(b) clarifies that it is the Director of the ODRA who 
selects the DRO or Special Master to conduct fact findings; thus 
serving the interest of process predictability. Section 17.37(j) has 
been clarified to state only that, in arriving at findings and 
recommendations relating to protests, DROs and Special Masters are to 
``consider'' whether or not the Product Team actions in question had a 
rational basis, and whether or not the Product Team decision under 
question was arbitrary, capricious or an abuse of discretion.
    Finally, a new Sec. 17.45 has been added to address concerns 
regarding predictability in the relationship of this rule to changes in 
future FAA policy. This section requires all amendments to the AMS, 
standard contract forms and clauses,and any guidance to FAA contracting 
officials, to conform with the provisions of the final rule.

Additional Clarifying Changes in the Final Rule

    In addition to the revisions of the proposed rule made in response 
to comments received, the FAA has made a number of revisions in order 
to clarify the language of the rule and to correct awkward language 
without substantive changes. More specifically, 14 CFR Part 14, 
Sec. 14.05(b) was modified to add the language ``or such rate as 
prescribed by 5 U.S.C. 504,''in order to include any subsequent rate 
adjustments that might be permitted for attorneys' fees and other costs 
under revisions to the EAJA. Section 14.05(e) was modified to provide 
EAJA recovery for attorneys' fees and costs incurred in the Default 
Adjudicative Process under 14 CFR part 17 and the AMS.
    Section 17.7(d) was deleted and its language combined with similar 
language in Sec. 17.43. Section 17.11, which had previously made non-
protestable ``FAA purchased from or through federal * * * governments'' 
now reads ``FAA purchases from or through other federal agencies.'' 
Section 17.13(c) was revised to add the word ``protest'' in describing 
filing time limitations, for the sake of clarity. Section 17.13(c) was 
revised to correct a mistaken reference to Sec. 17.17 (now referring to 
Sec. 17.15). Section 17.13(d) has been modified to eliminate redundancy 
with other sections and now merely makes cross-reference to those 
sections.
    The words ``for adjudication'' were included in Sec. 17.17(f) for 
the sake of clarity. Section 17.15(a)(3) has been revised to clarify 
ambiguities in the language regarding protest filing timeliness. The 
wording of Sec. 17.15(f) has been rearranged and the language ``if 
known'' added to the requirement for notifying other interested parties 
of the existence of a protest, so as to clarify the obligation of the 
FAA Contracting Officer. Former Sec. 17.17(a) has been eliminated, 
since its content had been inserted as new Sec. 17.13(e).
    The word ``part'' in Sec. 17.23(a) has been revised to read 
``subpart,'' to clarify that the covered contract disputes are to be 
resolved under subpart C of the rule, entitled ``Contract Disputes.'' 
Rather than have a redundant provision for the ODRA's granting of time 
extensions, Sec. 17.27(a) of the final rule merely contains a cross-
reference to Sec. 17.23(d). In Sec. 17.29(d) of the final rule, the 
words ``or the Administrator's delegee'' have been added to conform to 
other references to Administrator's orders within the rule. To avoid 
confusion, the words ``Associate Chief Counsel and'' were deleted from 
both Secs. 17.37(l) and 17.39(l).
    Former Sec. 17.37(m) was eliminated as redundant to Subpart F 
regarding final orders. In its stead, the final rule contains a 
clarifying provision with respect to ODRA time extensions. This same 
substitution was made for former Sec. 17.39(m) as well. Besides 
eliminating redundancies in the rule, these substitutions also satisfy 
the ABA's concern for predictability of the process. A new 
Sec. 17.39(k) was inserted to allow the ODRA Director to confer with 
the DRO or Special Master during the pendency of adjudication of 
contract disputes. This insertion was to make the process for contract 
disputes consistent with that specified for protests. The new 
Sec. 17.39(k) is virtually identical to the language regarding 
adjudication of protests and the role of the ODRA Director contained in 
Sec. 17.37(h). Finally, in Sec. 17.43, the words ``FAA Chief Counsel'' 
were substituted for ``Product Team attorney'' so as to provide 
consistency with other FAA regulations.

Paperwork Reduction Act

    Information collection requirements in the amendment of 14 part 14 
and the addition of part 17 to the Code of Federal Regulations (14 CFR 
parts 14 and 17) have previously been approved by the Office of 
Management and Budget (OMB) under the provisions of the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3507(d)), and have been assigned OMB 
Control Number 2120-0632.

[[Page 32934]]

International Compatibility

    The FAA has determined that a review of the Convention on 
International Civil Aviation Standards and Recommended Practices is not 
warranted because there is not a comparable rule under ICAO standards.

Federalism Implications

    The regulations herein will not have substantial direct effects on 
the states, on the relationship between the national government and the 
states, or on the distribution of power and responsibilities among the 
various levels of government. Therefore, in accordance with Executive 
Order 12612, it is determined that this rule will not have sufficient 
federalism implications to warrant the preparation of a Federalism 
Assessment.

Regulatory Evaluation Summary

    Four principal requirements pertain to the economic impacts of 
changes to the Federal Regulations. First, Executive Order 12866 
directs Federal agencies to promulgate new regulations or modify an 
existing regulation after consideration of the expected benefits to 
society and the expected costs. The order also requires Federal 
agencies to assess whether a final rule is considered a ``significant 
regulatory action.'' Second, the Regulatory Flexibility Act of 1980 
requires agencies to analyze the economic impact of regulatory changes 
on small entities. Third, the Office of Management and Budget directs 
agencies to assess the effect of regulatory changes on international 
trade. Finally, Public Law 104-4, Department of Transportation 
Appropriations Act (November 15, 1995), requires Federal agencies to 
assess the impact of any Federal mandates on State, Local, Tribal 
governments, and the private sector.
    In conducting these analyses, the FAA has determined that this rule 
will generate cost-savings that will exceed any costs, and is not 
``significant'' as defined under section 3(f) of Executive Order 12866 
and Department of Transportation's (DOT) policies and procedures (44 FR 
11034, February 26, 1979). In addition, under the Regulatory 
Flexibility Determination, the FAA certifies that this proposal will 
not have a significant impact on a substantial number of small 
entities. Furthermore, this proposal will not impose restraints on 
international trade. Finally, the FAA has determined that the proposal 
will not impose a Federal mandate on state, local, or tribal 
governments, or the private sector of $100 million per year. These 
analyses, available in the docket, are summarized below.

Executive Order 12866 and DOT's Policies and Procedures

    Under Executive Order 12866, each Federal agency shall assess both 
the costs and the benefits of final regulations while recognizing that 
some costs and benefits are difficult to quantify. A final rule is 
promulgated only upon a reasoned determination that the benefits of the 
final rule justify its costs.
    In this final rule, the establishment of procedures for protests 
and contract disputes by the Office of Dispute Resolution for 
Acquisition (ODRA), under the FAA's new Acquisition Management System, 
will provide a cost savings to the private sector (protesters and 
contractors). To resolve protests and contract disputes with the FAA, 
offerors and contractors will realize a cost savings of $1,000 to $1 
million per case, and the FAA will realize an average cost savings of 
$2,300 per protest case and $4,400 per contract dispute. Costs for this 
final rule are estimated to be about $500 or less per case for the 
private sector to abide by the procedures of the ODRA, and no 
additional costs will be attributed to the FAA for implementing such 
procedures. Therefore, the FAA concludes that not only do the benefits 
justify the costs, but that benefits actually exceed the costs.
    The final rule will also not be considered a significant regulatory 
action because (1) it does not have an annual effect of $100 million or 
more or adversely affect in a material way the economy or a sector of 
the economy, productivity, competition, jobs, the environment, public 
health or safety, or State, Local or Tribal governments or communities; 
(2) it does not create a serious inconsistency or otherwise interfere 
with an action taken or planned by another agency; (3) it does not 
materially alter the budgetary impact of entitlements, grants, user 
fees, or loan programs or the rights and obligations of recipients; and 
(4) it does not raise novel legal or policy issues arising out of legal 
mandates, the President's priorities or principles set forth in the 
Executive Order. Because the final rule is not considered significant 
under these criteria, it was not reviewed by the Office of Management 
and Budget (OMB) for consistency with applicable law, the President's 
priorities, and the principles set forth in this Executive Order nor 
was OMB involved in deconflicting this final rule with ones from other 
agencies.

Final Regulatory Flexibility Determination

    The Regulatory Flexibility Act of 1980 (the Act) establishes ``as 
principle of regulatory issuance that agencies shall endeavor, 
consistent with the objective of the rule and of applicable statutes, 
to fit regulatory and informational requirements to the scale of the 
business, organizations, and governmental jurisdictions subject to 
regulation.'' To achieve that and to explain the rationale for their 
actions, the Act covers a wide-range of small entities, including small 
businesses, not-for-profit organizations and small governmental 
jurisdictions.
    Agencies must perform a review to determine whether a final rule 
will have a significant economic impact on a substantial number of 
small entities. If the determination is that it will, the agency must 
prepare a Regulatory Flexibility Analysis (RFA) as described in the 
Act.
    However, if an agency determines that a final rule is not expected 
to have a significant economic impact on a substantial number of 
entities, section 605(b) of the 1980 Act provides that the head of the 
agency may so certify and an RFA is not required. The certification 
must include a statement providing the factual basis for this 
determination, and the reasoning should be clear.
    The FAA conducted the required review of this final rule and 
determined that it will not have a significant economic impact on a 
substantial number of small entities (protesters and contractors). 
Accordingly, pursuant to the Regulatory Flexibility Act, 5 U.S.C. 
605(b), the FAA certifies that this rule will not have a significant 
economic impact on a substantial number of small entities for the 
following reason: the final rule will provide an estimated cost savings 
of $1,000 to $1 million per case in resolving protests and disputes 
with the FAA, while requiring about 4500 or less per case per entity to 
resolve the issue. For small entities, the FAA estimates that cost 
savings per case will be closer to $1,000 than $1 million and concludes 
there will be no significant economic impact on small entities. The FAA 
solicited comments from affected entities with respect to this finding 
and determination in the Notice of Proposed Rulemaking, and no comments 
were received.

Final International Trade Impact Assessment

    The FAA has determined that the final rule will neither affect the 
sale of aviation products and services in the United States nor the 
sale of U.S.

[[Page 32935]]

products and services in foreign countries.

Final Unfunded Mandates Reform Assessment

    Title II of the Unfunded Mandates Reform Act of 1995 (the Reform 
Act) enacted as Public Law 104-4 on March 22, 1995, requires each 
Federal agency, to the extent permitted by law, to prepare a written 
assessment of the effects of any Federal mandate in a final agency rule 
that may result in the expenditure by State, Local, and Tribal 
governments, in the aggregate, or by the private sector, of $100 
million or more (adjusted annually for inflation) in any one year.
    Section 204(a) of the Reform Act, 2 U.S.C. 1534(a), requires the 
Federal agency to develop an effective process to permit timely input 
by elected officers (or their designees) of State, Local, and Tribal 
governments on a final ``significant intergovernmental mandate.'' A 
``significant intergovernmental mandate'' under the Reform Act is any 
provision in a Federal agency regulation that will impose an 
enforceable duty upon State, Local, and Tribal governments, in the 
aggregate, of $100 million (adjusted annually for inflation) in any one 
year.
    Section 203 of the Reform Act, 2 U.S.C. 1533, which supplements 
section 204(a), provides that before establishing any regulatory 
requirements that might significantly or uniquely affect small 
governments, the agency shall have developed a plan that, among other 
things, provides for notice to potentially affected small governments, 
if any, and for a meaningful and timely opportunity to provide input in 
the development of regulatory proposals.
    This rule does not contain a Federal intergovernmental or private 
sector mandate that exceeds $100 million a year, therefore the 
requirements of the Reform Act do not apply.

List of Subjects

14 CFR Part 14

    Claims, Equal access to justice, Lawyers, Reporting and 
recordkeeping requirements.

14 CFR Part 17

    Administrative practice and procedure, Alternative Dispute 
Resolution (ADR), Protests, Authority delegations (Government 
agencies), Government contracts, Government procurement.

The Amendment

    In consideration of the foregoing, the Federal Aviation 
Administration amends part 14 and adds part 17 of Title 14, Chapter I, 
Code of Federal Regulations as follows:

PART 14--RULES IMPLEMENTING THE EQUAL ACCESS TO JUSTICE ACT OF 1980

    1. The authority citation for part 14 is revised to read as 
follows:

    Authority: 5 U.S.C. 504; 49 U.S.C. 106(f), 40113, 46104 and 
47122.

    2. Amend Sec. 14.02 by revising paragraph (a) as follows:


Sec. 14.02  Proceedings covered.

    (a) The Act applies to certain adversary adjudications conducted by 
the FAA under 49 CFR part 17 and the Acquisition Management System 
(AMS). These are adjudications under 5 U.S.C. 554, in which the 
position of the FAA is represented by an attorney or other 
representative who enters an appearance and participates in the 
proceeding. This subpart applies to proceedings under 49 U.S.C. 46301, 
46302, and 46303 and to the Default Adjudicative Process under part 17 
of this chapter and the AMS.
 * * * * *
    3. Amend Sec. 14.03 by revising paragraph (a) and (f) to read as 
follows:


Sec. 14.03  Eligibility of applicants.

    (a) To be eligible for an award of attorney fees and other expenses 
under the Act, the applicant must be a party to the adversary 
adjudication for which it seeks an award. The term ``party'' is defined 
in 5 U.S.C. 504(b)(1)(B) and 5 U.S.C. 551(3). The applicant must show 
that it meets all conditions or eligibility set out in this subpart.
* * * * *
    (f) The net worth and number of employees of the applicant and all 
of its affiliates shall be aggregated to determine eligibility. Any 
individual, corporation, or other entity that directly or indirectly 
controls or owns a majority of the voting shares or other interest of 
the applicant, or any corporation or other entity of which the 
applicant directly or indirectly owns or controls a majority of the 
voting shares or other interest, will be considered an affiliate for 
purposes of this part, unless the ALJ or adjudicative officer 
determines that such treatment would be unjust and contrary to the 
purposes of the Act in light of the actual relationship between the 
affiliated entities. In addition, the ALJ or adjudicative officer may 
determine that financial relationships of the applicant, other than 
those described in this paragraph, constitute special circumstances 
that would make an award unjust.
* * * * *
    4. Amend Sec. 14.05 by revising paragraphs (b), (c), and (e) to 
read as follows:


Sec. 14.05  Allowance of fees and expenses.

* * * * *
    (b) No award for the fee of an attorney or agent under this part 
may exceed $125 per hour, or such rate as prescribed by 5 U.S.C. 504. 
No award to compensate an expert witness may exceed the highest rate at 
which the agency pays expert witnesses. However, an award may also 
include the reasonable expenses of the attorney, agent, or witness as a 
separate item, if the attorney, agent, or witness ordinarily charges 
clients separately for such expenses.
    (c) In determining the reasonableness of the fee sought for an 
attorney, agent, or expert witness, the ALJ or adjudicative officer 
shall consider the following:
    (1) If the attorney, agent, or witness is in private practice, his 
or her customary fee for similar services, or if an employee of the 
applicant, the fully allocated cost of the services;
    (2) The prevailing rate for similar services in the community in 
which the attorney, agent, or witness ordinarily performs services;
    (3) The time actually spent in the representation of the applicant;
    (4) The time reasonably spent in light of the difficulty or 
complexity of the issues in the proceeding; and
    (5) Such other factors as may bear on the value of the services 
provided.
* * * * *
    (e) Fees may be awarded only for work performed after the issuance 
of a complaint, or in the Default Adjudicative Process for a protest or 
contract dispute under part 17 of this chapter and the AMS.
    5. Amend Sec. 14.11 by revising paragraph (c) to read as follows:


Sec. 14.11  Net worth exhibit.

* * * * *
    (c) Ordinarily, the net worth exhibit will be included in the 
public record of the proceeding. However, an applicant that objects to 
public disclosure of the net worth exhibit, or any part of it, may 
submit that portion of the exhibit directly to the ALJ or adjudicative 
officer in a sealed envelope labeled ``Confidential Financial 
Information,'' accompanied by a motion to withhold the information.
    (1) The motion shall describe the information sought to be withheld 
and explain, in detail, why it should be exempt under applicable law or 
regulation, why public disclosure would adversely affect the applicant, 
and why

[[Page 32936]]

disclosure is not required in the public interest.
    (2) The net worth exhibit shall be served on the FAA counsel, but 
need not be served on any other party to the proceeding.
    (3) If the ALJ or adjudicative officer finds that the net worth 
exhibit, or any part of it, should not be withheld from disclosure, it 
shall be placed in the public record of the proceeding. Otherwise, any 
request to inspect or copy the exhibit shall be disposed of in 
accordance with the FAA's established procedures.
    6. Amend Sec. 14.20 by revising paragraphs (a) and (c) to read as 
follows:


Sec. 14.20  When an application may be filed.

    (a) An application may be filed whenever the applicant has 
prevailed in the proceeding, but in no case later than 30 days after 
the FAA Decisionmaker's final disposition of the proceeding, or service 
of the order of the Administrator in a proceeding under the AMS.
* * * * *
    (c) For purposes of this part, final disposition means the later 
of:
    (1) Under part 17 of this chapter and the AMS, the date on which 
the order of the Administrator is served;
    (2) The date on which an unappealed initial decision becomes 
administratively final;
    (3) Issuance of an order disposing of any petitions for 
reconsideration of the FAA Decisionmaker's final order in the 
proceeding;
    (4) If no petition for reconsideration is filed, the last date on 
which such a petition could have been filed; or
    (5) Issuance of a final order or any other final resolution of a 
proceeding, such as a settlement or voluntary dismissal, which is not 
subject to a petition for reconsideration.
    7. Revise Sec. 14.21 to read as follows:


Sec. 14.21  Filing and service of documents.

    Any application for an award or other pleading or document related 
to an application shall be filed and served on all parties to the 
proceeding in the same manner as other pleadings in the proceeding, 
except as provided in Sec. 14.11(b) for confidential financial 
information. Where the proceeding was held under part 17 of this 
chapter and the AMS, the application shall be filed with the FAA's 
attorney and with the Office of Dispute Resolution for Acquisition.
    8. Amend Sec. 14.22 by revising paragraph (b) to read as follows:


Sec. 14.22 Answer to application.

* * * * *
    (b) If the FAA's counsel and the applicant believe that the issues 
in the fee application can be settled, they may jointly file a 
statement of their intent to negotiate a settlement. The filing of this 
statement shall extend the time for filing an answer for an additional 
30 days, and further extensions may be granted by the ALJ or 
adjudicative officer upon request by the FAA's counsel and the 
applicant.
* * * * *
    9. Revise Sec. 14.24 to read as follows:


Sec. 14.24  Comments by other parties.

    Any party to a proceeding other than the applicant and the FAA's 
counsel may file comments on an application within 30 days after it is 
served, or on an answer within 15 days after it is served. A commenting 
party may not participate further in proceedings on the application 
unless the ALJ or adjudicative officer determines that the public 
interest requires such participation in order to permit full 
exploration of matters raised in the comments.
    10. Amend Sec. 14.26 by revising paragraph (a) to read as follows:


Sec. 14.26  Further proceedings.

    (a) Ordinarily the determination of an award will be made on the 
basis of the written record; however, on request of either the 
applicant or agency counsel, or on his or her own initiative, the ALJ 
or adjudicative officer assigned to the matter may order further 
proceedings, such as an informal conference, oral argument, additional 
written submissions, or an evidentiary hearing. Such further 
proceedings shall be held only when necessary for full and fair 
resolution of the issues arising from the application and shall be 
conducted as promptly as possible.
* * * * *
    11. Revise Sec. 14.27 to read as follows:


Sec. 14.27  Decision.

    (a) The ALJ shall issue an initial decision on the application 
within 60 days after completion of proceedings on the application.
    (b) An adjudicative officer in a proceeding under part 17 of this 
chapter and the AMS shall prepare a findings and recommendations for 
the Office of Dispute Resolution for Acquisition.
    (c) A decision under paragraph (a) or (b) of this section shall 
include written findings and conclusions on the applicant's eligibility 
and status as prevailing party and an explanation of the reasons for 
any difference between the amount requested and the amount awarded. The 
decision shall also include, if at issue, findings on whether the FAA's 
position was substantially justified, or whether special circumstances 
make an award unjust.
    12. Revise Sec. 14.28 to read as follows:


Sec. 14.28  Review by FAA decisionmaker.

    (a) In proceedings other than those under part 17 of this chapter 
and the AMS, either the applicant or the FAA counsel may seek review of 
the initial decision on the fee application. Additionally, the FAA 
Decisionmaker may decide to review the decision on his/her own 
initiative. If neither the applicant nor the FAA's counsel seeks review 
within 30 days after the decision is issued, it shall become final. 
Whether to review a decision is a matter within the discretion of the 
FAA Decisionmaker. If review is taken, the FAA Decisionmaker will issue 
a final decision on the application or remand the application to the 
ALJ who issue the initial fee award determination for further 
proceedings.
    (b) In proceedings under part 17 of this chapter and the AMS, the 
adjudicative officer shall prepare findings and recommendations for the 
Office of Dispute Resolution for Acquisition with recommendations as to 
whether or not an award should be made, the amount of the award, and 
the reasons therefor. The Office of Dispute Resolution for Acquisition 
shall submit a recommended order to the Administrator after the 
completion of all submissions related to the EAJA application. Upon the 
Administrator's action, the order shall become final, and may be 
reviewed under 49 U.S.C. 46110.
    13. Add new part 17 to 14 CFR Chapter I, Subchapter B, to read as 
follows:

PART 17--PROCEDURES FOR PROTESTS AND CONTRACTS DISPUTES

Subpart A--General

Sec.

17.1  Applicability.
17.3  Definitions.
17.5  Delegation of authority.
17.7  Filing and computation of time.
17.9  Protective orders.

Subpart B--Protests

17.11  Matters not subject to protest.
17.13  Dispute resolution process for protests.
17.15  Filing a protest.
17.17  Initial protest procedures.
17.19  Dismissal or summary decision of protest.
17.21  Protest remedies.

Subpart C--Contract Disputes

17.23  Dispute resolution process for contract disputes.
17.25  Filing a contract dispute.
17.27  Submission of joint or separate statements.

[[Page 32937]]

17.29  Dismissal or summary decision of contract disputes.

Subpart D--Alternative Dispute Resolution

17.31  Use of alternative dispute resolution.
17.33  Election of alternative dispute resolution process.
17.35  Selection of neutrals for the alternative dispute resolution 
process.

Subpart E--Default Adjudicative Process

17.37  Default adjudicative process for protests.
17.39  Default adjudicative process for contract disputes.

Subpart F--Finality and Review

17.41  Final orders.
17.43  Judicial review.
17.45  Conforming amendments.

Appendix A to Part 17--Alternative Dispute Resolution (ADR)

    Authority: 5 U.S.C. 570-581, 49 U.S.C. 106(f)(2), 40110, 40111, 
40112, 46102, 46014, 46105, 46109, and 46110.

Subpart A--General


Sec. 17.1  Applicability.

    This part applies to all protests or contract disputes against the 
FAA that are brought on or after June 28, 1999, with the exception of 
those contract disputes arising under or related to FAA contracts 
entered into prior to April 1, 1996.


Sec. 17.3  Definitions.

    (a) Accrual mean to come into existence as a legally enforceable 
claim.
    (b) Accrual of a contract claim means that all events relating to a 
claim have occurred which fix liability of either the government or the 
contractor and permit assertion of the claim, regardless of when the 
claimant actually discovered those events. For liability to be fixed, 
some injury must have occurred. Monetary damages need not have been 
incurred, but if the claim is for money, such damages must be capable 
of reasonable estimation. The accrual of a claim or the running of the 
limitations period may be tolled on such equitable grounds as where the 
office of Dispute Resolution for Acquisition determines that there has 
been active concealment or fraud or where it finds that the facts were 
inherently unknowable.
    (c) Acquisition Management System (AMS) establishes the policies, 
guiding principles, and internal procedures for the FAA's acquisition 
system.
    (d) Administrator means the Administrator of the Federal Aviation 
Administration.
    (e) Alternative Dispute Resolution (ADR) is the primary means of 
dispute resolution that would be employed by the FAA's Office of 
Dispute Resolution for Acquisition. See Appendix A of this part.
    (f) Compensated Neutral refers to an impartial third party chosen 
by the parties to act as a facilitator, mediator, or arbitrator 
functioning to resolve the protest or contract dispute under the 
auspices of the Office of Dispute Resolution for Acquisition. The 
parties pay equally for the services of a Compensated Neutral, unless 
otherwise agreed to by the parties. A Dispute Resolution Officer (DRO) 
or Neutral cannot be a Compensated Neutral.
    (g) Contract Dispute, as used in this part, means a written request 
to the Office of Dispute Resolution for Acquisition seeking resolution, 
under an existing FAA contract subject to the AMS, of a claim for the 
payment of money in a sum certain, the adjustment or interpretation of 
contract terms, or for other relief arising under, relating to or 
involving an alleged breach of that contract. A contract dispute does 
not require, as a prerequisite, the issuance of a Contracting Officer 
final decision. Contract disputes for purposes of ADR only may also 
involve contracts not subject to the AMS.
    (h) Default Adjudicative Process is an adjudicative process used to 
resolve protests or contract disputes where the parties cannot achieve 
resolution through informal communication or the use of ADR. The 
Default Adjudicative Process is conducted by a DRO or Special Master 
selected by the Office of Dispute Resolution for Acquisition to serve 
as ``adjudicative officers,'' as that term is used in part 14 of this 
chapter.
    (i) Discovery is the procedure where opposing parties in a protest 
or contract dispute may, either voluntarily or to the extent directed 
by the Office of Dispute Resolution for Acquisition, obtain testimony 
from, or documents and information held by, other parties or non-
parties.
    (j) Dispute Resolution Officer (DRO) is a licensed attorney 
reporting to the Office of Dispute Resolution for Acquisition. The term 
DRO can include the Director of the Office of Dispute Resolution for 
Acquisition, Office of Dispute Resolution for Acquisition staff 
attorneys or other FAA attorneys assigned to the Office of Dispute 
Resolution for Acquisition.
    (k) An interested party, in the context of a bid protest, is one 
whose direct economic interest has been or would be affected by the 
award or failure to award an FAA contract. Proposed subcontractors are 
not ``interested parties'' within this definition and are not eligible 
to submit protests to the Office of Dispute Resolution for Acquisition.
    (l) An intervenor is an interested party other than the protester 
whose participation in a protest is allowed by the Office of Dispute 
Resolution for Acquisition. For a post-award protest, the awardee of 
the contract that is the subject of the protest shall be allowed, upon 
request, to participate as an intervenor in the protest. In such a 
protest, no other interested parties shall be allowed to participate as 
intervenors.
    (m) Neutral refers to an impartial third party in the ADR process 
chosen by the Office of Dispute Resolution for Acquisition to act as a 
facilitator, mediator, arbitrator, or otherwise to resolve a protest or 
contract dispute. A Neutral can be a DRO or a person not an employee of 
the FAA who serves on behalf of the Office of Dispute Resolution for 
Acquisition.
    (n) The Office of Dispute Resolution for Acquisition (ODRA), under 
the direction of the Director, acts on behalf of the Administrator to 
manage the FAA Dispute Resolution Process, and to recommend action to 
be the Administrator on matters concerning protests or contract 
disputes.
    (o) Parties include the protester(s) or (in the case of a contract 
dispute) the contractor, the FAA, and any intervenor(s).
    (p) Product Team, as used in these rules, refers to the FAA 
organization(s) responsible for the procurement activity, without 
regard to funding source, and includes the Contracting Officer (CO) and 
assigned FAA legal counsel, when the FAA organization(s) represent(s) 
the FAA as a party to a protest or contract dispute before the Office 
of Dispute Resolution for Acquisition. The CO is responsible for all 
Product Team communications with and submissions to the Office of 
Dispute Resolution for Acquisition through assigned FAA counsel.
    (q) Screening Information Request (SIR) means a request by the FAA 
for documentation, information, presentations, proposals, or binding 
offers concerning an approach to meeting potential acquisition 
requirements established by the FAA. The purpose of a SIR is for the 
FAA to obtain information needed for it to proceed with a source 
selection decision and contract award.
    (r) A Special Master is an attorney, usually with extensive 
adjudicative experience, who has been assigned by the Office of Dispute 
Resolution for Acquisition to act as its finder of fact, and to make 
findings and recommendations based upon AMS policy and applicable law 
and authorities in the Default Adjudicative Process.

[[Page 32938]]

Sec. 17.5   Delegation of authority.

    (a) The authority of the Administrator to conduct dispute 
resolution proceedings concerning acquisition matters, is delegated to 
the Director of the Office of Dispute Resolution for Acquisition.
    (b) The Director of the Office of Dispute Resolution for 
Acquisition may redelegate to Special Masters and DROs such delegated 
authority in paragraph (a) of this section as is deemed necessary by 
the Director for efficient resolution of an assigned protest or 
contract dispute, including the imposition of sanctions or other 
disciplinary actions.


Sec. 17.7   Filing and computation of time.

    (a) Filing of a protest or contract dispute may be accomplished by 
mail, overnight delivery, hand delivery, or by facsimile. A protest or 
contract dispute is considered to be filed on the date it is received 
by the Office of Dispute Resolution for Acquisition during normal 
business hours. The Office of Dispute Resolution for Acquisition's 
normal business hours are from 8:30 a.m. to 5 p.m. est or edt, 
whichever is in use. A protest or contract dispute received via mail, 
after the time period prescribed for filing, shall not be considered 
timely filed even though it may be postmarked within the time period 
prescribed for filing.
    (b) Submissions to the Office of Dispute Resolution for Acquisition 
after the initial filing of a contract dispute may be accomplished by 
any means available in paragraph (a) of this section. Submissions to 
the Office of Dispute Resolution for Acquisition after the initial 
filing of a protest may only be accomplished by overnight delivery, 
hand delivery or facsimile.
    (c) The time limits stated in this part are calculated in business 
days, which exclude weekends and Federal holidays. In computing time, 
the day of the event beginning a period of time shall not be included. 
If the last day of a period falls on a weekend or a Federal holiday, 
the first business day following the weekend or holiday shall be 
considered the last day of the period.


Sec. 17.9   Protective orders.

    (a) The Office of Dispute Resolution for Acquisition may issue 
protective orders addressing the treatment of protected information, 
either at the request of a party or upon its own initiative. Such 
information may include proprietary, confidential, or source-selection-
sensitive material, or other information the release of which could 
result in a competitive advantage to one or more firms.
    (b) The terms of the Office of Dispute Resolution for Acquisition's 
standard protective order may be altered to suit particular 
circumstances, by negotiation of the parties, subject to the approval 
of the Office of Dispute Resolution for Acquisition. The protective 
order establishes procedures for application for access to protected 
information, identification and safeguarding of that information, and 
submission of redacted copies of documents omitting protected 
information.
    (c) After a protective order has been issued, counsel or 
consultants retained by counsel appearing on behalf of a party may 
apply for access to the material under the order by submitting an 
application to the Office of Dispute Resolution for Acquisition, with 
copies furnished simultaneously to all parties. The application shall 
establish that the applicant is not involved in competitive 
decisionmaking for any firm that could gain a competitive advantage 
from access to the protected information and that the applicant will 
diligently protect any protected information received from inadvertent 
disclosure. Objections to an applicant's admission shall be raised 
within two (2) days of the application, although the Office of Dispute 
Resolution for Acquisition may consider objections raised after that 
time for good cause.
    (d) Any violation of the terms of a protective order may result in 
the imposition of sanctions or the taking of the actions as the Office 
of Dispute Resolution for Acquisition deems appropriate.
    (e) The parties are permitted to agree upon what material is to be 
covered by a protective order, subject to approval by the Office of 
Dispute Resolution for Acquisition.

Subpart B--Protests


Sec. 17.11  Matters not subject to protest.

    The following matters may not be protested before the Office of 
Dispute Resolution for Acquisition:
    (a) FAA purchases from or through, state, local, and tribal 
governments and public authorities;
    (b) FAA purchases from or through other federal agencies;
    (c) Grants;
    (d) Cooperative agreements;
    (e) Other transactions which do not fall into the category of 
procurement contracts subject to the AMS.


Sec. 17.13  Dispute resolution process for protests.

    (a) Protests concerning FAA SIRs or contract awards shall be 
resolved pursuant to this part.
    (b) The offeror initially should attempt to resolve any issues 
concerning potential protests with the CO. The CO, in coordination with 
FAA legal counsel, will make reasonable efforts to answer questions 
promptly and completely, and, where possible, to resolve concerns or 
controversies.
    (c) Offerors or prospective offerors shall file a protest with the 
Office of Dispute Resolution for Acquisition in accordance with 
Sec. 17.15. The protest time limitations set forth in Sec. 17.15 will 
not be extended by attempts to resolve a potential protest with the CO. 
Other than the time limitations specified in Sec. 17.15 for the filing 
of protests, the Office of Dispute Resolution for Acquisition retains 
the discretion to modify any time constraints imposed in connection 
with protests.
    (d) In accordance with Sec. 17.17, the Office of Dispute Resolution 
for Acquisition shall convene a status conference for the protest. 
Under the procedures set forth in that section, the parties generally 
will either decide to utilize Alternative Dispute Resolution (ADR) 
techniques to resolve the protest, pursuant to subpart D of this part, 
or they will proceed under the Default Adjudicative Process set forth 
in subpart E of this part. However, as provided in Sec. 17.31(c), 
informal ADR techniques may be utilized simultaneously with ongoing 
adjudication.
    (e) The Office of Dispute Resolution for Acquisition Director shall 
designate Dispute Resolution Officers (DROs) or Special Masters for 
protests.
    (f) Multiple protests concerning the same SIR, solicitation, or 
contract award may be consolidated at the discretion of the Office of 
Dispute Resolution for Acquisition, and assigned to a single DRO or 
Special Master for adjudication.
    (g) Procurement activities, and, where applicable, contractor 
performance pending resolution of a protest shall continue during the 
pendency of a protest, unless there is a compelling reason to suspend 
or delay all or part of the procurement activities. Pursuant to 
Secs. 17.15(d) and 17.17(b), the Office of Dispute Resolution for 
Acquisition may recommend suspension of award or delay of contract 
performance, in whole or in part, for a compelling reason. A decision 
to suspend or delay procurement activities or contractor performance 
would be made in writing by the FAA Administrator or the 
Administrator's delegee.


Sec. 17.15  Filing a protest.

    (a) Only an interested party may file a protest, and shall initiate 
a protest by filing a written protest with the Office of Dispute 
Resolution for Acquisition

[[Page 32939]]

within the times set forth below, or the protest shall be dismissed as 
untimely:
    (1) Protests based upon alleged improprieties in a solicitation or 
a SIR that are apparent prior to bid opening or the time set for 
receipt of initial proposals shall be filed prior to bid opening or the 
time set for the receipt of initial proposals.
    (2) In procurements where proposals are requested, alleged 
improprieties that do not exist in the initial solicitation, but which 
are subsequently incorporated into the solicitation, must be protested 
not later than the next closing time for receipt of proposals following 
the incorporation;
    (3) For protests other than those related to alleged solicitation 
improprieties, the protest must be filed on the later of the following 
two dates:
    (i) Not later than seven (7) business days after the date the 
protester knew or should have known of the grounds for the protest; or
    (ii) If the protester has requested a post-award debriefing from 
the FAA Product Team, not later than five (5) business days after the 
date on which the Product Team holds that debriefing.
    (b) Protest shall be filed at:

(1) Office of Dispute Resolution for Acquisition, AGC-70, Federal 
Aviation Administration, 400 7th Street, SW, Room 8332, Washington, DC 
20590, Telephone: (202) 366-6400, Facsimile: (202) 366-7400;
or

(2) Other address as shall be published from time to time in the 
Federal Register.

    (c) A Protest shall be in writing, and set forth:
    (1) The protester's name, address, telephone number, and facsimile 
(FAX) number;
    (2) The name, address, telephone number, and FAX number of a person 
designated by the protester (Protester Designee), and who shall be duly 
authorized to represent the protester, to be the point of contact;
    (3) The SIR number or, if available, the contract number and the 
name of the CO;
    (4) The basis for the protester's status as an interested party;
    (5) The facts supporting the timeliness of the protest;
    (6) Whether the protester requests a protective order, the material 
to be protected, and attach a redacted copy of that material;
    (7) A detailed statement of both the legal and factual grounds of 
the protest, and attach one (1) copy of each relevant document;
    (8) The remedy or remedies sought by the protester, as set forth in 
Sec. 17.21;
    (9) The signature of the Protester Designee, or another person duly 
authorized to represent the protester.
    (d) If the protester wishes to request a suspension or delay of the 
procurement, in whole or in part, and believes there are compelling 
reasons that, if known to the FAA, would cause the FAA to suspend or 
delay the procurement because of the protested action, the protester 
shall:
    (1) Set forth each such compelling reason, supply all facts 
supporting the protester's position, identify each person with 
knowledge of the facts supporting each compelling reason, and identify 
all documents that support each compelling reason.
    (2) Clearly identify any adverse consequences to the protester, the 
FAA, or any interested party, should the FAA not suspend or delay the 
procurement.
    (e) At the same time as filing the protest with the Office of 
Dispute Resolution for Acquisition, the protester shall serve a copy of 
the protest on the CO and any other official designated in the SIR for 
receipt of protests by means reasonably calculated to be received by 
the CO on the same day as it is to be received by the Office of Dispute 
Resolution for Acquisition. The protest shall include a signed 
statement from the protester, certifying to the Office of Dispute 
Resolution for Acquisition the manner of service, date, and time when a 
copy of the protest was served on the CO and other designated 
official(s).
    (f) Upon receipt of the protest, the CO shall inform the Office of 
Dispute Resolution for Acquisition of the names, addresses, and 
telephone and facsimile numbers of the awardee and/or other interested 
parties, if known, and shall, in such notice, designate a person as the 
point of contact for the Office of Dispute Resolution for Acquisition 
by facsimile. The CO shall also notify the awardee and/or interested 
parties in writing of the existence of the protest the same day as the 
CO provides the foregoing information to the Office of Dispute 
Resolution for Acquisition.
    (g) The Office of Dispute Resolution for Acquisition has discretion 
to designate the parties who shall participate in the protest as 
intervenors. For awarded contracts, only the awardee may participate as 
an intervenor.


Sec. 17.17  Initial protest procedures.

    (a) If, as part of a protest, the protester requests a suspension 
or delay of procurement, in whole or in part, pursuant to 
Sec. 17.15(d), the Product Team shall submit a response to the request 
to the Office of Dispute Resolution for Acquisition within two (2) 
business days of receipt of the protest. Copies of the response shall 
be furnished to the protester and any intervenor(s) so as to be 
received within the same two (2) business days. The protester and any 
intervenor(s) shall have the opportunity of providing additional 
comments on the response within an additional period of two (2) 
business days. Based on its review of such submissions, the Office of 
Dispute Resolution for Acquisition, in its discretion, may recommend 
such suspension or delay to the Administrator or the Administrator's 
designee.
    (b) Within five (5) business days of the filing of a protest, or as 
soon thereafter as practicable, the Office of Dispute Resolution for 
Acquisition shall convene a status conference to--
    (1) Review procedures;
    (2) Identify and develop issues related to summary dismissal and 
suspension recommendations;
    (3) Handle issues related to protected information and the issuance 
of any needed protective order;
    (4) Encourage the parties to use ADR;
    (5) Conduct or arrange for early neutral evaluation of the protest 
by a DRO or Neutral or Compensated Neutral, at the discretion of the 
Office of Dispute Resolution for Acquisition and/or based upon the 
agreement or request of any party(ies) seeking such evaluation; and
    (6) For any other reason deemed appropriate by the DRO or by the 
Office of Dispute Resolution for Acquisition.
    (c) On the fifth business day following the status conference, the 
Product Team and protester will file with the Office of Dispute 
Resolution for Acquisition--
    (1) A joint statement that they have decided to pursue ADR 
proceedings in lieu of adjudication in order to resolve the protest; or
    (2) Joint or separate written explanations as to why ADR 
proceedings will not be used and why the Default Adjudicative Process 
will be needed..
    (d) Should the Product Team and protester elect to utilize ADR 
proceedings to resolve the protest, they will agree upon the neutral to 
conduct the ADR proceedings (either an Office of Dispute Resolution for 
Acquisition-designated Neutral or a Compensated Neutral of their own 
choosing) pursuant to Sec. 17.33(c), and shall execute and file with 
the Office of Dispute Resolution for Acquisition a written ADR 
agreement within five (5) business days after the status conference. 
Agreement of any intervenor(s) to the use of ADR or the resolution of a 
dispute through ADR shall not be required.

[[Page 32940]]

    (e) Should the Product Team or protester indicate at the status 
conference that ADR proceedings will not be used, then within ten (10) 
business days following the status conference, the Product Team will 
file with the Office of Dispute Resolution for Acquisition a Product 
Team Response to the protest. The Office of Dispute Resolution for 
Acquisition may alter the schedule for filing of the Product Team 
Response to accommodate the requirements of a particular protest.
    (f) The Product Team Response shall consist of a written 
chronological statement of pertinent facts, and a written presentation 
of applicable legal or other defenses. The Product Team Response shall 
cite to and be accompanied by all relevant documents, which shall be 
chronologically indexed and tabbed. A copy of the response shall be 
furnished so as to be received by the protester and any intervenor(s) 
on the same date it is filed with the Office of Dispute Resolution for 
Acquisition, if practicable, but in any event no later than one (1) 
business day after the date if it is filed with the Office of Dispute 
Resolution for Acquisition. In all cases, the Product Team shall 
indicate the method of service used.
    (g) Should the parties pursue ADR proceedings under subpart D of 
this part and fail to achieve a complete resolution of the protest via 
ADR, the Office of Dispute Resolution for Acquisition, upon 
notification of that fact by any of the parties, shall designate a DRO 
or Special Master for purposes of adjudication under subpart E of this 
part, and the DRO or Special Master shall convene a status conference, 
wherein he/she shall establish a schedule for the filing of the Product 
Team Response and further submissions.
    (h) Upon submission of the Product Team Response, the protest will 
proceed under the Default Adjudicative Process pursuant to Sec. 17.37.
    (i) The time limitations of this section maybe extended by the 
Office of Dispute Resolution for Acquisition for good cause.


Sec. 17.19   Dismissal or summary decision of protests.

    (a) At any time during the protest, any party may request, by 
motion to the Office of Dispute Resolution for Acquisition, that--
    (1) The protest, or any count or portion of a protest, be dismissed 
for lack of jurisdiction, if the protester fails to establish that the 
protest is timely, or that the protester has no standing to pursue the 
protest;
    (2) The protest, or any count or portion of a protest, be 
dismissed, if frivolous or without basis in fact or law, or for failure 
to state a claim upon which relief may be had;
    (3) A summary decision be issued with respect to the protest, or 
any count or portion of a protest, if:
    (i) The undisputed material facts demonstrate a rational basis for 
the Product Team action or inaction in question, and there are no other 
material facts in dispute that would overcome a finding of such a 
rational basis; or
    (ii) The undisputed material facts demonstrate, that no rational 
basis exists for the Product Team action or inaction in question, and 
there are no material facts in dispute that would overcome a finding of 
the lack of such a rational basis.
    (b) In connection with any request for dismissal or summary 
decision, the Office of Dispute Resolution for Acquisition shall 
consider any material facts in dispute, in a light most favorable to 
the party against whom the request is made.
    (c) Either upon motion by a party or on its own initiative, the 
Office of Dispute Resolution for Acquisition may, at any time, exercise 
its discretion to:
    (1) Recommend to the Administrator dismissal or the issuance of a 
summary decision with respect to the entire protest;
    (2) Dismiss the entire protest or issue a summary decision with 
respect to the entire protest, if delegated that authority by the 
Administrator; or
    (3) Dismiss or issue a summary decision with respect to any count 
or portion of a protest.
    (d) A dismissal or summary decision regarding the entire protest by 
either the Administrator, or the Office of Dispute Resolution for 
Acquisition by delegation, shall be construed as a final agency order. 
A dismissal or summary decision that does not resolve all counts or 
portions of a protest shall not constitute a final agency order, unless 
and until such dismissal or decision is incorporated or otherwise 
adopted in a decision by the Administrator (or the Office of Dispute 
Resolution for Acquisition, by delegation) regarding the entire 
protest.
    (e) Prior to recommending or entering either a dismissal or a 
summary decision, either in whole or in part, the Office of Dispute 
Resolution for Acquisition shall afford all parties against whom the 
dismissal or summary decision is to be entered the opportunity to 
respond to the proposed dismissal or summary decision.


Sec. 17.21  Protest remedies.

    (a) The Office of Dispute Resolution for Acquisition has broad 
discretion to recommend remedies for a successful protest that are 
consistent with the AMS and applicable statutes. Such remedies may 
include, but are not limited to one or more, or a combination of, the 
following--
    (1) Amend the SIR;
    (2) Refrain from exercising options under the contract;
    (3) Issue a new SIR;
    (4) Require recompetition;
    (5) Terminate an existing contract for the FAA's convenience;
    (6) Direct an award to the protester;
    (7) Award bid and proposal costs; or
    (8) Any combination of the above remedies, or any other action 
consistent with the AMS that is appropriate under the circumstances.
    (b) In determining the appropriate recommendation, the Office of 
Dispute Resolution for Acquisition should consider the circumstances 
surrounding the procurement or proposed procurement including, but not 
limited to: the nature of the procurement deficiency; the degree of 
prejudice to other parties or to the integrity of the acquisition 
system; the good faith of the parties; the extent of performance 
completed; the cost of any proposed remedy to the FAA; the urgency of 
the procurement; and the impact of the recommendation on the FAA.
    (c) Attorney's fees of a prevailing protester are allowable to the 
extent permitted by the Equal Access to Justice Act, 5 U.S.C. 
504(a)(1)(EAJA).

Subpart C--Contract Disputes


Sec. 17.23  Dispute resolution process for contract disputes.

    (a) All contract disputes arising under contracts subject to the 
AMS shall be resolved under this subpart.
    (b) Contractors shall file contract disputes with the Office of 
Dispute Resolution for Acquisition and the CO pursuant to Sec. 17.25.
    (c) After filing the contract dispute, the contractor should seek 
informal resolution with the CO:
    (1) The CO, with the advice of FAA legal counsel, has full 
discretion to settle contract disputes, except where the matter 
involves fraud;
    (2) The parties shall have up to twenty (20) business days within 
which to resolve the dispute informally, and may contact the Office of 
Dispute Resolution for Acquisition for assistance in facilitating such 
a resolution; and
    (3) If no informal resolution is achieved during the twenty (20)

[[Page 32941]]

business day period, the parties shall file joint or separate 
statements with the Office of Dispute Resolution for Acquisition 
pursuant to Sec. 17.27.
    (d) If informal resolution of the contract dispute appears 
probable, the Office of Dispute Resolution for Acquisition shall extend 
the time for the filing of the joint statement under Sec. 17.27 for up 
to an additional twenty (20) business days, upon joint request of the 
CO and contractor.
    (e) The Office of Dispute Resolution for Acquisition shall hold a 
status conference with the parties within ten (10) business days after 
receipt of the joint statement required by Sec. 17.27, or as soon 
thereafter as is practicable, in order to establish the procedures to 
be utilized to resolve the contract dispute.
    (f) The Office of Dispute Resolution for Acquisition has broad 
discretion to recommend remedies for a successful contract dispute, 
that are consistent with the AMS and applicable law.


Sec. 17.25  Filing a contract dispute.

    (a) Contract disputes are to be in writing and shall contain:
    (1) The contractor's name, address, telephone and fax numbers and 
the name, address, telephone and fax numbers of the contractor's legal 
representative(s) (if any) for the contract dispute;
    (2) The contract number and the name of the Contracting Officer;
    (3) A detailed chronological statement of the facts and of the 
legal grounds for the contractor's positions regarding each element or 
count of the contract dispute (i.e., broken down by individual claim 
item), citing to relevant contract provisions and documents and 
attaching copies of those provisions and documents;
    (4) All information establishing that the contract dispute was 
timely filed;
    (5) A request for a specific remedy, and if a monetary remedy is 
requested, a sum certain must be specified and pertinent cost 
information and documentation (e.g., invoices and cancelled checks) 
attached, broken down by individual claim item and summarized; and
    (6) The signature of a duly authorized representative of the 
initiating party.
    (b) Contract disputes shall be filed by mail, in person, by 
overnight delivery or by facsimile at the following address:

(1) Office of Dispute Resolution for Acquisition, AGC-70, Federal 
Aviation Administration, 400 7th Street, SW, Room 8332, Washington, DC 
20590, Telephone: (202) 366-6400, Facsimile: (202) 366-7400;
    or
(2) Other address as shall be published from time to time in the 
Federal Register.

    (c) A contract dispute against the FAA shall be filed with the 
Office of Dispute Resolution for Acquisition within two (2) years of 
the accrual of the contract claim involved. A contract dispute by the 
FAA against a contractor (excluding contract disputes alleging warranty 
issues, fraud or latent defects) likewise shall be filed within two (2) 
years after the accrual of the contract claim. If an underlying 
contract entered into prior to the effective date of this part provides 
for time limitations for filing of contract disputes with The Office of 
Dispute Resolution for Acquisition which differ from the aforesaid two 
(2) year period, the limitation periods in the contract shall control 
over the limitation period of this section. In no event will either 
party be permitted to file with the Office of Dispute Resolution for 
Acquisition a contract dispute seeking an equitable adjustment or other 
damages after the contractor has accepted final contract payment, with 
the exception of FAA claims related to warranty issues, gross mistakes 
amounting to fraud or latent defects. FAA claims against the contractor 
based on warranty issues must be filed within the time specified under 
applicable contract warranty provisions. Any FAA claims against the 
contractor based on gross mistakes amounting to fraud or latent defects 
shall be filed with the Office of Dispute Resolution for Acquisition 
within two (2) years of the date on which the FAA knew or should have 
known of the presence of the fraud or latent defect.
    (d) A party shall serve a copy of the contract dispute upon the 
other party, by means reasonably calculated to be received on the same 
day as the filing is to be received by the Office of Dispute Resolution 
for Acquisition.


Sec. 17.27  Submission of joint or separate statements.

    (a) If the matter has not been resolved informally, the parties 
shall file joint or separate statements with the Office of Dispute 
Resolution for Acquisition no later than twenty (20) business days 
after the filing of the contract dispute. The Office of Dispute 
Resolution for Acquisition may extend this time, pursuant to 
Sec. 17.23(d).
    (b) The statement(s) shall include either--
    (1) A joint request for ADR, and an executed ADR agreement, 
pursuant to Sec. 17.33(d), specifying which ADR techniques will be 
employed; or
    (2) Written explanation(s) as to why ADR proceedings will not be 
used and why the Default Adjudicative Process will be needed.
    (c) Such statements shall be directed to the following address:

(1) Office of Dispute Resolution for Acquisition, AGC-70, Federal 
Aviation Administration, 400 7th Street, SW., Room 8332, Washington, DC 
20590, Telephone: (202) 366-6400, Facsimile: (202) 366-7400;
    or
(2) Other address as shall be published from time to time in the 
Federal Register.

    (d) The submission of a statement which indicates that ADR will not 
be utilized will not in any way preclude the parties from engaging in 
informal ADR techniques with the Office of Dispute Resolution for 
Acquisition (neutral evaluation and/or informal mediation) concurrently 
with ongoing adjudication under the Default Adjudicative Process, 
pursuant to Sec. 17.31(c).


Sec. 17.29  Dismissal or summary decision of contract disputes.

    (a) Any party may request, by motion to the Office of Dispute 
Resolution for Acquisition, that a contract dispute be dismissed, or 
that a count or portion of a contract dispute be stricken, if:
    (1) It was not timely filed with the Office of Dispute Resolution 
for Acquisition;
    (2) It was filed by a subcontractor;
    (3) It fails to state a matter upon which relief may be had; or
    (4) It involves a matter not subject to the jurisdiction of the 
Office of Dispute Resolution for Acquisition.
    (b) In connection with any request for dismissal of a contract 
dispute, or to strike a count or portion thereof, the Office of Dispute 
Resolution for Acquisition should consider any material facts in 
dispute in a light most favorable to the party against whom the request 
for dismissal is made.
    (c) At any time, whether pursuant to a motion or request or on its 
own initiative and at its discretion, the Office of Dispute Resolution 
for Acquisition may--
    (1) Dismiss or strike a count or portion of a contract dispute;
    (2) Recommend to the Administrator that the entire contract dispute 
be dismissed; or
    (3) With delegation from the Administrator, dismiss the entire 
contract dispute.
    (d) An order of dismissal of the entire contract dispute, issued 
either by the Administrator or by the Office of Dispute Resolution for 
Acquisition where delegation exists, on the grounds set forth in this 
section, shall constitute

[[Page 32942]]

a final agency order. An Office of Dispute Resolution for Acquisition 
order dismissing or striking a count or portion of a contract dispute 
shall not constitute a final agency order, unless and until such Office 
of Dispute Resolution for Acquisition order is incorporated or 
otherwise adopted in a decision of the Administrator or the 
Administrator's delegee.
    (e) Prior to recommending or entering either a dismissal or a 
summary decision, either in whole or in part, the Office of Dispute 
Resolution for Acquisition shall afford all parties against whom the 
dismissal or summary decision is to be entered the opportunity to 
respond to a proposed dismissal or summary decision.

Subpart D--Alternative Dispute Resolution


Sec. 17.31  Use of alternative dispute resolution.

    (a) The Office of Dispute Resolution for Acquisition shall 
encourage the parties to utilize ADR as their primary means to resolve 
protests and contract disputes.
    (b) The parties shall make a good faith effort to explore ADR 
possibilities in all cases and to employ ADR in every appropriate case. 
The Office of Dispute Resolution for Acquisition will encourage use of 
ADR techniques such as mediation, neutral evaluation, or minitrials, or 
variations of these techniques as agreed by the parties and approved by 
the Office of Dispute Resolution for Acquisition. The Office of Dispute 
Resolution for Acquisition shall assign a DRO to explore ADR options 
with the parties and to arrange for an early neutral evaluation of the 
merits of a case, if requested by any party.
    (c) The Default Adjudicative Process will be used where the parties 
cannot achieve agreement on the use of ADR; or where ADR has been 
employed but has not resolved all pending issues in dispute; or where 
the Office of Dispute Resolution for Acquisition concludes that ADR 
will not provide an expeditious means of resolving a particular 
dispute. Even where the Default Adjudicative Process is to be used, the 
Office of Dispute Resolution for Acquisition, with the parties consent, 
may employ informal ADR techniques concurrently with and in parallel to 
adjudication.


Sec. 17.33  Election of alternative dispute resolution process.

    (a) The Office of Dispute Resolution for Acquisition will make its 
personnel available to serve as Neutrals in ADR proceedings and, upon 
request by the parties, will attempt to make qualified non-FAA 
personnel available to serve as Neutrals through neutral-sharing 
programs and other similar arrangements. The parties may elect to 
employ a mutually Compensated Neutral, if the parties agree as to how 
the costs of any such Compensated Neutral are to be shared.
    (b) The parties using an ADR process to resolve a protest shall 
submit an executed ADR agreement containing the information outlined in 
paragraph (d) of this section to the Office of Dispute Resolution for 
Acquisition within five (5) business days after the Office of Dispute 
Resolution for Acquisition conducts a status conference pursuant to 
Sec. 17.17(c). The Office of Dispute Resolution for Acquisition may 
extend this time for good cause.
    (c) The parties using an ADR process to resolve a contract dispute 
shall submit an executed ADR agreement containing the information 
outlined in paragraph (d) of this section to the Office of Dispute 
Resolution for Acquisition as part of the joint statement specified 
under Sec. 17.27.
    (d) The parties to a protest or contract dispute who elect to use 
ADR must submit to the Office of Dispute Resolution for Acquisition an 
ADR agreement setting forth:
    (1) The type of ADR technique(s) to be used;
    (2) The agreed-upon manner of using the ADR process; and
    (3) Whether the parties agree to use a Neutral through The Office 
of Dispute Resolution for Acquisition or to use a Compensated Neutral 
of their choosing, and, if a Compensated Neutral is to be used, how the 
cost of the Compensated Neutral's services will be shared.
    (e) Non-binding ADR techniques are not mutually exclusive, and may 
be used in combination if the parties agree that a combination is most 
appropriate to the dispute. The techniques to be employed must be 
determined in advance by the parties and shall be expressly described 
in their ADR agreement. The agreement may provide for the use of any 
fair and reasonable ADR technique that is designed to achieve a prompt 
resolution of the matter. An ADR agreement for non-binding ADR shall 
provide for a termination of ADR proceedings and the commencement of 
adjudication under the Default Adjudicative Process, upon the election 
of any party. Notwithstanding such termination, the parties may still 
engage with the Office of Dispute Resolution for Acquisition in 
informal ADR techniques (neutral evaluation and/or informal mediation) 
concurrently with adjudication, pursuant to Sec. 17.31(c).
    (f) Binding arbitration may be permitted by the Office of Dispute 
Resolution for Acquisition on a case-by-case basis; and shall be 
subject to the provisions of 5 U.S.C. 575(a), (b), and (c), and any 
other applicable law. Arbitration that is binding on the parties, 
subject to the Administrator's right to approve or disapprove the 
arbitrator's decision, may also be permitted.
    (g) For protests, the ADR process shall be completed within twenty 
(20) business days from the filing of an executed ADR agreement with 
the Office of Dispute Resolution for Acquisition unless the parties 
request, and are granted an extension of time from the Office of 
Dispute Resolution for Acquisition.
    (h) For contract disputes, the ADR process shall be completed 
within forty (40) business days from the filing of an executed ADR 
agreement with the Office of Dispute Resolution for Acquisition, unless 
the parties request, and are granted an extension of time from the 
Office of Dispute Resolution for Acquisition.
    (i) The parties shall submit to the Office of Dispute Resolution 
for Acquisition an agreed-upon protective order, if necessary, in 
accordance with the requirements of Sec. 17.9.


Sec. 17.35  Selection of neutrals for the alternative dispute 
resolution process.

    (a) In connection with the ADR process, the parties may select a 
Compensated Neutral acceptable to both, or may request the Office of 
Dispute Resolution for Acquisition to provide the services of a DRO or 
other Neutral.
    (b) In cases where the parties select a Compensated Neutral who is 
not familiar with Office of Dispute Resolution for Acquisition 
procedural matters, the parties or Compensated Neutral may request the 
Office of Dispute Resolution for Acquisition for the services of a DRO 
to advise on such matters.

Subpart E--Default Adjudicative Process


Sec. 17.37  Default adjudicative process for protests.

    (a) Other than for the resolution of preliminary or dispositive 
matters, the Default Adjudicative Process for protests will commence 
upon the submission of the Product Team Response to the Office of 
Dispute Resolution for Acquisition, pursuant to Sec. 17.17.

[[Page 32943]]

    (b) The Director of the Office of Dispute Resolution for 
Acquisition shall select a DRO or a Special Master to conduct fact-
finding proceedings and to provide findings and recommendations 
concerning some or all of the matters in controversy.
    (c) The DRO or Special Master may prepare procedural orders for the 
proceedings as deemed appropriate; and may require additional 
submissions from the parties. As a minimum, the protester and any 
intervenor(s) must submit to the Office of Dispute Resolution for 
Acquisition written comments with respect to the Product Team Response 
within five (5) business days of the Response having been filed with 
the Office of Dispute Resolution for Acquisition or within five (5) 
business days of their receipt of the Response, whichever is later. 
Copies of such comments shall be provided to the other participating 
parties by the same means and on the same date as they are furnished to 
the Office of Dispute Resolution for Acquisition.
    (d) The DRO or Special Master may convene the parties and/or their 
representatives, as needed, to pursue the Default Adjudicative Process.
    (e) If, in the sole judgment of the DRO or Special Master, the 
parties have presented written material sufficient to allow the protest 
to be decided on the record presented, the DRO or Special Master shall 
have the discretion to decide the protest on that basis.
    (f) The parties may engage in voluntary discovery with one another 
and, if justified, with non-parties, so as to obtain information 
relevant to the allegations of the protest. The DRO or Special Master 
may also direct the parties to exchange, in an expedited manner, 
relevant, non-privileged documents. Where justified, the DRO or Special 
Master may direct the taking of deposition testimony, however, the FAA 
dispute resolution process does not contemplate extensive discovery. 
The DRO or Special Master shall manage the discovery process, including 
limiting its length and availability, and shall establish schedules and 
deadlines for discovery, which are consistent with time frames 
established in this part and with the FAA policy of providing fair and 
expeditious dispute resolution.
    (g) The DRO or Special Master may conduct hearings, and may limit 
the hearings to the testimony of specific witnesses and/or 
presentations regarding specific issues. The DRO or Special Master 
shall control the nature and conduct of all hearings, including the 
sequence and extent of any testimony. Hearings will be conducted:
    (1) Where the DRO or Special Master determines that there are 
complex factual issues in dispute that cannot adequately or efficiently 
be developed solely by means of written presentations and/or that 
resolution of the controversy will be dependent on his/her assessment 
of the credibility of statements provided by individuals with first-
hand knowledge of the facts; or
    (2) Upon request of any party to the protest, unless the DRO or 
Special Master finds specifically that a hearing is unnecessary and 
that no party will be prejudiced by limiting the record in the 
adjudication to the parties' written submissions. All witnesses at any 
such hearing shall be subject to cross-examination by the opposing 
party and to questioning by the DRO or Special Master.
    (h) The Director of the Office of Dispute Resolution for 
Acquisition may review the status of any protest in the Default 
Adjudicative Process with the DRO or Special Master during the pendency 
of the process.
    (i) Within thirty (30) business days of the commencement of the 
Default Adjudicative Process, or at the discretion of the Office of 
Dispute Resolution for Acquisition, the DRO or Special Master will 
submit findings and recommendations to the Office of Dispute Resolution 
for Acquisition that shall contain the following:
    (1) Findings of fact;
    (2) Application of the principles of the AMS, and any applicable 
law or authority to the findings of fact;
    (3) A recommendation for a final FAA order; and
    (4) If appropriate, suggestions for future FAA action.
    (j) In arriving at findings and recommendations relating to 
protests, the DRO or Special Master shall consider whether or not the 
Product Team actions in question had a rational basis, and whether or 
not the Product Team decision under question was arbitrary, capricious 
or an abuse of discretion. Findings of fact underlying the 
recommendations must be supported by substantial evidence.
    (k) The DRO or Special Master has broad discretion to recommend a 
remedy that is consistent with Sec. 17.21.
    (l) A DRO or Special Master shall submit findings and 
recommendations only to the Director of the Office of Dispute 
Resolution for Acquisition. The findings and recommendations will be 
released to the parties and to the public, only upon issuance of the 
final FAA order in the case. Should an Office of Dispute Resolution for 
Acquisition protective order be issued in connection with the protest, 
a redacted version of the findings and recommendations, omitting any 
protected information, shall be prepared wherever possible and released 
to the public along with a copy of the final FAA order. Only persons 
admitted by the Office of Dispute Resolution for Acquisition under the 
protective order and Government personnel shall be provided copies of 
the unredacted findings and recommendations.
    (m) The time limitations set forth in this section may be extended 
by the Office of Dispute Resolution for Acquisition for good cause.


Sec. 17.39  Default adjudicative process for contract disputes.

    (a) The Default Adjudicative Process for contract disputes will 
commence on the latter of:
    (1) The parties' submission to the Office of Dispute Resolution for 
Acquisition of a joint statement pursuant to Sec. 17.27 which indicates 
that ADR will not be utilized; or
    (2) The parties' submission to the Office of Dispute Resolution for 
Acquisition of notification by any party that the parties have not 
settled some or all of the dispute issues via ADR, and it is unlikely 
that they can do so within the time period allotted and/or any 
reasonable extension.
    (b) Within twenty (2) business days of the commencement of the 
Default Adjudicative Process, the Product Team shall prepare and submit 
to the Office of Dispute Resolution for Acquisition, with a copy to the 
contractor, a chronologically arranged and indexed Dispute File, 
containing all documents which are relevant to the facts and issues in 
dispute. The contractor will be entitled to supplement such a Dispute 
File with additional documents.
    (c) The Director of the Office of Dispute Resolution for 
Acquisition shall assign a DRO or a Special Master to conduct fact-
finding proceedings and provide findings and recommendations concerning 
the issues in dispute.
    (d) The Director of the Office of Dispute Resolution for 
Acquisition may delegate authority to the DRO or Special Master to 
conduct a Status Conference within ten (10) business days of the 
commencement of the Default Adjudicative Process, and, may further 
delegate to the DRO or Special Master the authority to issue such 
orders or decisions to promote the efficient resolution of the contract 
dispute.
    (e) At any such Status Conference, or as necessary during the 
Default Adjudicative Process, the DRO or Special Master will:

[[Page 32944]]

    (1) Determine the appropriate amount of discovery required to 
resolve the dispute;
    (2) Review the need for a protective order, and if one is needed, 
prepare a protective order pursuant to Sec. 17.9;
    (3) Determine whether any issue can be stricken; and
    (4) Prepare necessary procedural orders for the proceedings.
    (f) At a time or at times determined by the DRO or Special Master, 
and in advance of the decision of the case, the parties shall make 
final submissions to the Office of Dispute Resolution for Acquisition 
and to the DRO or Special Master, which submissions shall include the 
following:
    (1) A joint statement of the issues;
    (2) A joint statement of undisputed facts related to each issue;
    (3) Separate statements of disputed facts related to each issue, 
with appropriate citations to documents in the Dispute File, to pages 
of transcripts of any hearing or deposition, or to any affidavit or 
exhibit which a party may wish to submit with its statement;
    (4) Separate legal analyses in support of the parties' respective 
positions on disputed issues.
    (g) Each party shall serve a copy of its final submission on the 
other party by means reasonable calculated so that the other party 
receives such submissions on the same day it is received by the Office 
of Dispute Resolution for Acquisition.
    (h) The DRO or Special Master may decide the contract dispute on 
the basis of the record and the submissions referenced in this section, 
or may, in the DRO or Special Master's discretion, allow the parties to 
make additional presentations in writing. The DRO or Special Master may 
conduct hearings, and may limit the hearings to the testimony of 
specific witnesses and/or presentations regarding specific issues. The 
DRO or Special Master shall control the nature and conduct of all 
hearings, including the sequence and extent of any testimony. Hearings 
on the record shall be conducted by the ODRA:
    (1) Where the DRO or Special Master determines that there are 
complex factual issues in dispute that cannot adequately or efficiently 
be developed solely by means of written presentations and/or that 
resolution of the controversy will be dependent on his/her assessment 
of the credibility of statements provided by individuals with first-
hand knowledge of the facts; or
    (2) Upon request of any party to the contract dispute, unless the 
DRO or Special Master finds specifically that a hearing is unnecessary 
and that no party will be prejudiced by limiting the record in the 
adjudication to the parties written submissions. All witnesses at any 
such hearing shall be subject to cross-examination by the opposing 
party and to questioning by the DRO or Special Master.
    (i) The DRO or Special Master shall prepare findings and 
recommendations within thirty (30) business days from receipt of the 
final submissions of the parties, unless that time is extended by the 
Officer of Dispute Resolution for Acquisition for good cause. The 
findings and recommendations shall contain findings of fact, 
application of the principles of the AMS and other law or authority 
applicable to the findings of fact, a recommendation for a final FAA 
order, and, if appropriate, suggestions for future FAA action.
    (j) As a party of the findings and recommendations, the DRO or 
Special Master shall review the disputed issue or issues in the context 
of the contract, any applicable law and the AMS. Any finding of fact 
set forth in the fundings and recommendation must be supported by 
substantial evidence.
    (k) The Director of the Office of Dispute Resolution for 
Acquisition may review the status of any contract dispute in the 
Default Adjudicative Process with the DRO or Special Master during the 
pendency of the process.
    (l) A DRO or Special Master shall submit findings and 
recommendations only to the Director of the Office of Dispute 
Resolution for Acquisition. The findings and recommendations will be 
released to the parties and to the public, upon issuance of the final 
FAA order in the case. Should an Office of Dispute Resolution for 
Acquisition protective order be issued in connection with the contract 
dispute, a redacted version of the findings and recommendations 
omitting any protected information, shall be prepared wherever possible 
and released to the public along with a copy of the final FAA order. 
Only persons admitted by the Office of Dispute Resolution for 
Acquisition under the protective order and Government personal shall be 
provided copies of the unredacted findings and recommendation.
    (m) The time limitations set forth in this section may be extended 
by the Office of Dispute Resolution for Acquisition for good cause.

Subpart F--Finality and Review

Sec. 17.41  Final orders.

    All final FAA orders regarding protests or connect disputes under 
this part are to be issued by the FAA Administrator or by a delegee of 
the Administrator.


Sec. 17.43  Judicial review.

    (a) A protestor or contractor may seek of a final FAA order, 
pursuant to 49 U.S.C. 46110, only after the administrative remedies of 
this part have been exhausted.
    (b) A copy of the petition for review shall be filed with the 
Office of Dispute Resolution for Acquisition and the FAA Chief Counsel 
on the date that the petition for review is filed with the appropriate 
circuit court of appeals.


Sec. 17.45  Conforming amendments.

    The FAA shall amend pertinent provisions of the AMS, standard 
contract forms and clauses, and any guidance to contracting officials, 
so as to conform to the provisions of this part.

Appendix A to Part 17--Alternative Dispute Resolution (ADR)

    A. The FAA dispute resolution procedures encourage the parties 
to protests and contract disputes to use ADR as the primary means to 
resolve protests and contract disputes, pursuant to the 
Administrative Dispute Resolution Act of 1996, Pub. L. 104-320, 5 
U.S.C. 570-579, and Department of Transportation and FAA policies to 
utilize ADR to the maximum extent practicable. Under the procedures 
presented in this part, the Office of Dispute Resolution for 
Acquisition would encourage parties to consider ADR techniques such 
as case evaluation, mediation, or arbitration.
    B. ADR encompasses a number of processes and techniques for 
resolving protests or contract disputes. The most commonly used 
types include:
    (1) Mediation. The Neutral or Compensated Neutral ascertains the 
needs and interests of both parties and facilitates discussions 
between or among the parties and an amicable resolution of their 
differences, seeking approaches to bridge the gaps between the 
parties' respective positions. The Neutral or Compensated Neutral 
can meet with the parties separately, conduct joint meetings with 
the parties' representatives, or employ both methods in appropriate 
cases.
    (2) Neutral Evaluation. At any stage during the ADR process, as 
the parties may agree, the Neutral or Compensated Neutral will 
provide a candid assessment and opinion of the strengths and 
weaknesses of the parties' positions as to the facts and law, so as 
to facilitate further discussion and resolution.
    (3) Minitrial. The minitrial resembles adjudication, but is less 
formal. It is used to provide an efficient process for airing and 
resolving more complex, fact-intensive disputes. The parties select 
principal representatives who should be senior officials of their 
respective organizations, having authority to negotiate a complete 
settlement. It is preferable that the principals be individuals who 
were not directly involved in the events leading to the dispute and 
who, thus, may be able to maintain a degree of impartiality during 
the proceeding. In order to maintain such impartiality, the 
principals typically serve as ``judges'' over the mini-trial 
proceeding together with the

[[Page 32945]]

Neutral or Compensated Neutral. The proceeding is aimed at informing 
the principal representatives and the Neutral or Compensated Neutral 
of the underlying bases of the parties' positions. Each party is 
given the opportunity and responsibility to present its position. 
The presentations may be made through the parties' counsel and/or 
through some limited testimony of fact witnesses or experts, which 
may be subject to cross-examination or rebuttal. Normally, witnesses 
are not sworn in and transcripts are not made of the proceedings. 
Similarly, rules of evidence are not directly applicable, though it 
is recommended that the Neutral or Compensated Neutral be provided 
authority by the parties' ADR agreement to exclude evidence which is 
not relevant to the issues in dispute, for the sake of an efficient 
proceeding. Frequently, minitrials are followed either by direct 
one-on-one negotiations by the parties' principals or by meetings 
between the Neutral/Compensated Neutral and the parties' principals, 
at which the Neutral/Compensated Neutral may offer his or her views 
on the parties' positions (i.e., Neutral Evaluation) and/or 
facilitate negotiations and ultimate resolution via Mediation.

    Issued in Washington, DC, on June 10, 1999.
Jane F. Garvey,
Administrator.
[FR Doc. 99-15217 Filed 6-17-99; 8:45 am]
BILLING CODE 4910-13-M