[Federal Register Volume 67, Number 190 (Tuesday, October 1, 2002)]
[Proposed Rules]
[Pages 61542-61545]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-24803]


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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 67, No. 190 / Tuesday, October 1, 2002 / 
Proposed Rules  

[[Page 61542]]



GENERAL ACCOUNTING OFFICE

4 CFR Part 21


General Accounting Office, Administrative Practice and Procedure, 
Bid Protest Regulations, Government Contracts

AGENCY: General Accounting Office.

ACTION: Proposed rule.

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

SUMMARY: The General Accounting Office (GAO) is proposing to revise its 
Bid Protest Regulations, promulgated in accordance with the Competition 
in Contracting Act of 1984, to conform the current regulation to 
current practice, and otherwise to improve the overall efficiency and 
effectiveness of the bid protest process at GAO. GAO has not revised 
Part 21 since 1996, and the proposed changes will clarify several 
aspects of the bid protest process that have evolved since that time.

DATES: Comments must be submitted on or before November 12, 2002.

ADDRESSES: Comments should be addressed to: John M. Melody, Assistant 
General Counsel, General Accounting Office. Comments should be 
submitted by e-mail at [email protected], or by facsimile at 202-
512-9749.

FOR FURTHER INFORMATION CONTACT: John M. Melody (Assistant General 
Counsel) or David A. Ashen (Deputy Assistant General Counsel), 202-512-
9732.

SUPPLEMENTARY INFORMATION: On February 25, 2002, the General Accounting 
Office (GAO) published an Advance Notice of Proposed Rulemaking (67 FR 
8485) soliciting comments on several changes to its Bid Protest 
Regulations, promulgated in accordance with the Competition in 
Contracting Act of 1984, 31 U.S.C. 3551-3556. The advance notice was 
prompted by GAO's recognition that there have been legal developments 
and changes in practice that have occurred since the last revision, in 
1996. Of particular note, since the 1996 revision to GAO's regulation, 
alternative dispute resolution has grown in use, electronic filing has 
become a reality, and the Court of Appeals for the Federal Circuit and 
Court of Federal Claims have issued significant decisions regarding 
review of affirmative responsibility determinations. The advance notice 
requested comments on changes already under consideration in these and 
other areas, and also solicited suggestions for other changes to the 
regulation that may enhance the efficiency and overall effectiveness of 
the bid protest process at GAO.
    Interested persons were invited to submit comments on GAO's advance 
notice by April 1, 2002. We received written comments from four federal 
agencies, one industry association, one nonprofit institute, and two 
individual attorneys. In preparing this proposed rule, we have 
carefully considered all comments received.
    As a result of comments received, GAO proposes to leave unchanged 
the timeliness rule under paragraph (a)(2) of Sec. 21.2, one of the 
areas identified in the advance notice as being considered for change. 
As explained in the advance notice, the paragraph currently provides 
that, where a debriefing is requested and required, any protest basis 
that is known or should have been known, either before or as a result 
of the debriefing, shall not be filed prior to the debriefing date 
offered to the protester. This rule permits protesters to delay--until 
after a debriefing--protesting certain matters that may arise during 
the procurement. We considered revising this rule because delays in 
filing protests are inconsistent with GAO's general view that prompt 
resolution of protests is beneficial to the procurement system. As one 
commenter pointed out, however, because many alleged improprieties that 
may occur during a procurement ultimately may have no effect on the 
award decision, revising the rule to promote earlier protests could 
result in an increased number of unnecessary protests. We agree with 
the commenter, and since the delayed filing has arisen in only a very 
few cases, while the number of unnecessary protests could be much 
greater, we believe it is advisable to leave this provision unchanged.
    Explanations of significant proposed revisions to GAO's Bid Protest 
Regulations are set forth below.

Methods for Filing Documents

    GAO proposes to revise paragraph (g) of Sec. 21.0 to clarify that 
protests and other documents may be filed by facsimile, and to provide 
also that, subject to restrictions where a protective order has been 
issued, all filings, including protests, may be filed by other 
electronic means, such as electronic mail (e-mail). This proposed 
change reflects recent efforts by GAO to make e-mailed protests 
feasible; for example, GAO has established a means for determining the 
time that an e-mailed protest was filed. Further, GAO proposes to 
revise the paragraph to make it clear that, regardless of the delivery 
method chosen, the filing party bears the risk that the document will 
not be timely received at GAO. Other paragraphs have been similarly 
revised to reflect GAO's openess towards electronic communications 
generally. In this regard, GAO proposes to revise paragraph (b) of Sec. 
12.12 to make clear that decisions, when issued, may be transmitted to 
the parties by e-mail, and may be accessed by electronic means. 
Similarly, GAO proposes revising paragraph (c) of Sec. 21.7 to provide 
that GAO, in its discretion, may hold hearings by video or other 
electronic means.

Alternative Dispute Resolution (ADR)

    Consistent with the advance notice and the suggestions of several 
commenters, GAO's proposed revision adds, as new paragraph (h) under 
Sec. 21.0, a definition of ADR. This definition clarifies that ADR 
consists of techniques--such as outcome prediction and negotiation 
assistance--designed to resolve cases expeditiously, without a written 
decision. The definition is limited in detail, consistent with the view 
of GAO and several commenters that ADR should remain as flexible as 
possible in order to ensure that it can be tailored to fit the 
circumstances and the parties' interests in a particular case. GAO also 
proposes to revise paragraph (e) of Sec. 21.10 to specifically provide 
that ADR is among the flexible alternative procedures GAO may use to 
promptly and fairly resolve a protest.

Comments on Agency Report

    GAO proposes to revise paragraph (i) of Sec. 21.3 by eliminating 
certain language. Currently, the paragraph states that protesters may 
satisfy the

[[Page 61543]]

requirement that comments be filed within 10 days of receipt of the 
agency report by instead filing within 10 days a statement requesting 
that their protest be decided on the existing record, or requesting an 
extension of time. GAO believes this language may have led protesters 
to forgo filing substantive comments, believing them unnecessary for a 
successful protest. In fact, absent a substantive response to the 
agency's report, there often is no basis for GAO to question the 
agency's position. GAO therefore proposes to delete the reference to a 
request that the protest be decided on the existing record. Similarly, 
a protester's request for an extension of time for filing comments, 
where that request is not granted, does not provide a basis for the 
protester to delay its comments. GAO therefore proposes to add language 
to make it clear that comments may be delayed only where GAO grants an 
extension. Finally, since GAO also may establish a filing period 
shorter than 10 days where it adopts accelerated procedures (see Sec. 
21.10(e)), GAO proposes adding language requiring that comments be 
filed in fewer than 10 days where GAO has established such a shorter 
period.

GAO Review of Small Business Certificate of Competency Program

    GAO proposes to revise paragraph (b)(2) of Sec. 21.5. That 
paragraph currently provides that GAO generally will not consider 
protests challenging Certificate of Competency (COC) reviews unless 
there is a showing of possible bad faith by government officials, or a 
showing that vital responsibility information was not considered. GAO 
proposes to revise the paragraph, first, by adding SBA's alleged 
failure to follow its own regulations as an exception to the general 
rule that GAO will not review protests in this area. This change is 
intended to make the extent of GAO's review in the COC area consistent 
with that in the area of protests of procurements under section 8(a) of 
the Small Business Act (Sec. 21.5(b)(3)), and protests of affirmative 
determinations of responsibility (Sec. 21.5(c), as proposed herein to 
be revised). Second, the proposed revision makes it clear, consistent 
with GAO decisions, that GAO review of protests under another 
exception--where SBA allegedly failed to consider vital responsibility 
information--is limited to considering the manner in which the 
information was presented to or withheld from SBA by the contracting 
agency. Finally, the proposed revised language makes it clear that, in 
light of the deference accorded SBA in small business matters, GAO will 
interpret the exceptions to the general rule narrowly.

Affirmative Determinations of Responsibility

    GAO proposes to revise paragraph (c) of Sec. 21.5. That paragraph 
provides that GAO will review affirmative determinations of 
responsibility only under very limited circumstances, reflecting GAO's 
view that such determinations generally do not lend themselves to 
reasoned review. As noted in the advance notice, in January 2001, the 
Court of Appeals for the Federal Circuit held in Impresa Construzioni 
Geom. Domenico Garufi v. United States, 238 F.3d 1324 (Fed. Cir. 2001), 
that affirmative determinations of responsibility are subject to review 
by the Court of Federal Claims under the ``arbitrary and capricious'' 
standard applicable under the Administrative Procedure Act. In light of 
that decision, and notwithstanding the fact that GAO is not applying 
the Administrative Procedure Act in its bid protest process, GAO 
proposes to revise the paragraph to expand its review of affirmative 
determinations of responsibility to include protests where there is 
evidence raising serious concerns as to whether the contracting officer 
unreasonably failed to consider available relevant information, or 
otherwise violated statute or regulation. While GAO recognizes that the 
revision to its regulation may expand review in the area, the proposed 
language is intended to limit any expanded review, in recognition of 
the agency's discretion, to protests where the protester proffers 
evidence supporting the allegation--that is, where the protest is not 
based on mere information and belief or speculation--and where the 
allegation is substantial enough to bring into question whether the 
affirmative determination could have any rational underpinning. The 
proposed revised language is designed to achieve a balance between 
GAO's desire to promote consistency with the rationale underlying the 
Garufi decision, and the possibility--a concern expressed by several 
agency commenters--that expanded review by GAO might unduly interfere 
with the normal contracting process. Finally, as reflected in the 
proposed language, GAO anticipates that allegations most commonly will 
be based on the alleged failure of the contracting officer to consider 
publicly-available relevant information (as in the Garufi case).

Suspension and Debarment Review

    GAO proposes to add new paragraph 21.5(i) to set forth suspension 
and debarment actions as issue areas that GAO will not review. 
Currently, although GAO generally will not review protests of 
suspension and debarment actions, it will consider arguments that an 
offeror improperly has been suspended or debarred during the pendency 
of a procurement in which it was competing, in order to ensure that the 
agency did not act arbitrarily to avoid making award to an offeror 
otherwise entitled to award. GAO recently held in Shinwa Elec., B-
290603 et al., Sept. 3, 2002, 2002 CPD [para] --, that it no longer 
will review suspension and debarment actions even under this exception 
on the ground that the appropriate forum for such challenges is the 
agency taking the disputed action. This proposed new paragraph is 
intended to make the regulations consistent with this current case law.

Comments Where Hearing Is Held

    GAO proposes revising paragraph 21.7(g) to delete language 
providing that, if a hearing is to be held, no separate comments on the 
agency report should be filed. In practice, GAO rarely calls a hearing 
until after the protester and intervenor have commented on the agency 
report, since GAO has found that such comments typically are helpful in 
determining whether issues can be resolved on the written record and, 
thus, whether a hearing is necessary.

Filing of Claim for Costs Following Agency Corrective Action

    GAO proposes to revise paragraph (e) of Sec. 21.8 to clarify the 
time within which claims for costs must be filed with the procuring 
agency following corrective action by the agency on a GAO protest. The 
current regulation requires that such claims be filed within 15 days 
after the protester is ``advised that the contracting agency has 
decided to take corrective action.'' In a very few cases, following 
initial notice that an agency has decided to take corrective action, 
there has been a delay in the agency's finalizing the action to be 
taken, making it unclear when the 15 days begins to run. See DevTech 
Sys., Inc., B-284860.4, Aug. 23, 2002, 2002 CPD ----. The proposed 
revised language makes it clear that the 15-day period begins to run 
from the time the protester learned (or should have learned) that GAO 
has closed the protest in response to the proposed corrective action.

Cases Before Courts of Competent Jurisdiction

    GAO proposes to revise paragraph (b) of section 21.11 to clarify 
that any case--not only bid protests--will be

[[Page 61544]]

dismissed where the matter involved is the subject of litigation, or 
has been decided on the merits, by a court of competent jurisdiction. 
This revision is necessary to make it clear that the provision extends 
to requests for costs, reconsideration requests, and other matters, not 
only bid protests.

Comments

    Comments concerning the proposed rule may be submitted by e-mail at 
[email protected], or by facsimile at 202-512-9749.

List of Subjects in 4 CFR Part 21

    Administrative practice and procedure, Bid protest regulations, 
Government contracts.

    For the reasons set out in the preamble, Title 4, Chapter I, 
Subchapter B, of the Code of Federal Regulations is proposed to be 
amended as follows:

PART 21--BID PROTEST REGULATIONS

    1. The authority citation for Part 21 continues to read as follows:

    Authority: 31 U.S.C. 3551-3556.

    2. Amend Sec.  21.0 by revising paragraphs (f) and (g), and adding 
new paragraph (h) to read as follows:


Sec.  21.0  Definitions.

* * * * *
    (f) Adverse agency action is any action or inaction by a 
contracting agency which is prejudicial to the position taken in a 
protest filed with the agency, including a decision on the merits of a 
protest; the opening of bids or receipt of proposals, the award of a 
contract, or the rejection of a bid or proposal despite a pending 
protest; or contracting agency acquiescence in continued and 
substantial contract performance.
    (g) A document is filed on a particular day when it is received by 
GAO by 5:30 p.m., Eastern time, on that day. Protests and other 
documents may be filed by hand delivery, mail, commercial carrier, 
facsimile transmission, or other electronic means (but see Sec. 21.4(b) 
for restrictions on electronic filing where a protective order has been 
issued). Hand delivery and other means of delivery may not be 
practicable during certain periods due, for example, to security 
concerns or equipment failures. In all cases, the filing party is 
responsible for ensuring timely receipt at GAO.
    (h) Alternative dispute resolution encompasses various means of 
resolving cases expeditiously, without a written decision, including 
techniques such as outcome prediction and negotiation assistance.
* * * * *
    3. Amend Sec.  21.1 by revising paragraph (c) introductorry text 
and (c)(1) to read as follows:


Sec.  21.1  Filing a protest.

* * * * *
    (c) A protest filed with GAO shall:
    (1) Include the name, street address, electronic mail address, and 
telephone and facsimile numbers of the protester,
* * * * *
    4. Amend Sec.  21.3 by revising paragraphs (a) and (i) to read as 
follows:


Sec.  21.3  Notice of protest, submission of agency report, and time 
for filing of comment on report.

    (a) GAO shall notify the contracting agency by telephone within 1 
day after the filing of a protest, and, unless the protest is dismissed 
under this part, shall promptly send a written confirmation to the 
contracting agency and an acknowledgment to the protester. The 
contracting agency shall immediately give notice of the protest to the 
contractor if award has been made or, if no award has been made, to all 
bidders or offerors who appear to have a substantial prospect of 
receiving an award. The contracting agency shall furnish copies of the 
protest submissions to those parties, except where disclosure of the 
information is prohibited by law, with instructions to communicate 
further directly with GAO. All parties shall furnish copies of all 
protest communications to the contracting agency and to other 
participating parties. All protest communications shall be sent by 
means reasonably calculated to effect expeditious delivery.
* * * * *
    (i) Comments on the agency report shall be filed with GAO within 10 
days after receipt of the report, with a copy provided to the 
contracting agency and other participating parties. The protest shall 
be dismissed unless the protester files comments within the 10-day 
period, unless GAO grants an extension, or establishes a shorter period 
in accordance with Sec.  21.10(e). Extensions will be granted on a 
case-by-case basis. Unless otherwise advised by the protester, GAO will 
assume the protester received the agency report by the due date 
specified in the acknowledgment of protest furnished by GAO.
* * * * *
    5. Amend Sec.  21.4 by revising paragraph (b) to read as follows:


Sec.  21.4  Protective orders.

* * * * *
    (b) If no protective order has been issued, the agency may withhold 
from the parties those portions of the report which would ordinarily be 
subject to a protective order. GAO will review in camera all 
information not released to the parties. Where a protective order has 
been issued, documents may be filed by electronic means (other than 
facsimile transmission) only when specifically authorized by GAO.
* * * * *
    6. Amend Sec.  21.5 by revising the introductory text and 
paragraphs (b)(2), (c) and (d), and to add new paragraph (i), to read 
as follows:


Sec.  21.5  Protest issues not for consideration.

    If no protective order has been issued, the agency may withhold 
from the parties those portions of the report which would ordinarily be 
subject to a protective order. GAO will review in camera all 
information not released to the parties. Where a protective order has 
been issued, documents may be filed by electronic means (other than 
facsimile transmission) only when specifically authorized by GAO.
* * * * *
    (b) * * *
* * * * *
    (2) Small Business Certificate of Competency Program. Referrals 
made to the Small Business Administration pursuant to sec. 8(b)(7) of 
the Small Business Act, or the issuance of, or refusal to issue, a 
certificate of competency under that section will generally not be 
reviewed by GAO. The exceptions, which GAO will interpret narrowly out 
of deference to the role of the Small Business Administration (SBA) in 
this area, are protests that show possible bad faith on the part of 
government officials, or that present allegations that the SBA failed 
to follow its own published regulations or failed to consider vital 
information bearing on the firm's responsibility due to the manner in 
which the information was presented to or withheld from the SBA by the 
procuring agency. 15 U.S.C. 637(b)(7).
* * * * *
    (c) Affirmative determination of responsibility by the contracting 
officer. Because the determination that a bidder or offeror is capable 
of performing a contract is largely committed to the contracting 
officer's discretion, GAO will generally not consider a protest 
challenging such a determination. The exceptions are protests that 
allege that definitive responsibility criteria in the

[[Page 61545]]

solicitation were not met and those that identify evidence raising 
serious concerns that, in reaching a particular responsibility 
determination, the contracting officer unreasonably failed to consider 
available relevant information or otherwise violated statute or 
regulation.
    (d) Procurement integrity. For any Federal procurement, GAO will 
not review an alleged violation of subsections (a), (b), (c), or (d) of 
sec. 27 of the Office of Federal Procurement Policy Act, 41 U.S.C. 423, 
as amended by sec. 4304 of the National Defense Authorization Act for 
Fiscal Year 1996, Public Law 104-106, 110 Stat. 186, February 10, 1996, 
where the protester failed to report the information it believed 
constituted evidence of the offense to the Federal agency responsible 
for the procurement within 14 days after the protester first discovered 
the possible violation.
* * * * *
    (i) Suspensions and debarments. Challenges to the suspension or 
debarment of contractors will not be reviewed by GAO. Such matters are 
for review by the contracting agency in accordance with the applicable 
provisions of the Federal Acquisition Regulation.
    7. Amend Sec.  21.7 by revising paragraphs (c) and (g) to read as 
follows:


Sec.  21.7  Hearings.

* * * * *
    (c) Hearings generally will be conducted as soon as practicable 
after receipt by the parties of the agency report and relevant 
documents. Although hearings ordinarily will be conducted at GAO in 
Washington, DC, hearings may, at the discretion of GAO, be conducted at 
other locations, or by telephone or other electronic means.
* * * * *
    (g) If a hearing is held, each party shall file comments with GAO 
within 5 days after the hearing was held or as specified by GAO. If the 
protester has not filed comments by the due date, GAO shall dismiss the 
protest.
* * * * *
    8. Amend Sec.  21.8 by revising paragraph (e) to read as follows:


Sec.  21.8  Remedies.

* * * * *
    (e) The protester shall file any request that GAO recommend that 
costs be paid within 15 days of the date on which the protester learned 
(or should have learned, if that is earlier) that GAO had closed the 
protest based on the agency's decision to take corrective action.
* * * * *
    9. Amend Sec.  21.10 by removing paragraph (d)(3), and by revising 
paragraph (e) to read as follows:


Sec.  21.10  Express options, flexible alternative procedures, 
accelerated schedules, summary decisions, and status conferences.

* * * * *
    (e) GAO may use flexible alternative procedures to promptly and 
fairly resolve a protest, including alternative dispute resolution, 
establishing an accelerated schedule and/or issuing a summary decision.
* * * * *
    10. Amend Sec.  21.11 by revising paragraph (b) to read as follows:


Sec.  21.11  Effect of judicial proceedings.

* * * * *
    (b) GAO will dismiss any case where the matter involved is the 
subject of litigation before, or has been decided on the merits by, a 
court of competent jurisdiction. GAO may, at the request of a court, 
issue an advisory opinion on a bid protest issue that is before the 
court. In these cases, unless a different schedule is established, the 
times provided in this part for filing the agency report 
(Sec. 21.3(c)), filing comments on the report (Sec. 21.3(i)), holding a 
hearing and filing comments (Sec. 21.7), and issuing a decision 
(Sec. 21.9) shall apply.
    11. Amend Sec.  21.12 by revising paragraph (b) to read as follows:


Sec.  21.12  Distribution of decisions.

* * * * *
    (b) Decisions may be distributed to the parties, and are available 
from GAO, by electronic means.

Anthony H. Gamboa,
General Counsel.
[FR Doc. 02-24803 Filed 9-30-02; 8:45 am]
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