[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.
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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
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703-321-3339), the Government Printing Office's electronic bulletin
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Rulemaking Advisory Committee Bulletin Board service (telephone: 800-
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Internet users may reach the FAA's web page at http://www.faa.gov/
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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