[Federal Register Volume 67, Number 251 (Tuesday, December 31, 2002)]
[Rules and Regulations]
[Pages 79833-79836]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-32929]



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  Federal Register / Vol. 67, No. 251 / Tuesday, December 31, 2002 / 
Rules and Regulations  

[[Page 79833]]



GENERAL ACCOUNTING OFFICE

4 CFR Part 21


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

AGENCY: General Accounting Office.

ACTION: Final rule.

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

SUMMARY: The General Accounting Office (GAO) is amending its Bid 
Protest Regulations after receiving and considering comments on the 
proposed rule published on October 1, 2002. The final rule, promulgated 
in accordance with the Competition in Contracting Act of 1984, conforms 
the current regulations to current practice, and otherwise improves the 
overall efficiency and effectiveness of the bid protest process at GAO. 
GAO has not revised Part 21 since 1996, and the amendment will clarify 
several aspects of the bid protest process that have evolved since that 
time.

EFFECTIVE DATE: January 1, 2003.

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

SUPPLEMENTARY INFORMATION:

Effective Dates

    Protests filed at GAO prior to the effective date of this final 
rule will be considered under the previous rule published at 61 FR 
39039 on July 26, 1996. That previous rule will also be applied in 
considering (1) protests filed on or after the effective date of this 
rule that supplement or amend a protest filed at GAO prior to the 
effective date of this rule and (2) claims and requests for 
reconsideration filed on or after the effective date of this rule that 
concern a protest considered under the previous rule.

Background

    On October 1, 2002, GAO published a proposed rule (67 FR 61542) in 
which it proposed to revise its Bid Protest Regulations. The 
supplementary information included with the proposed rule explained 
that the proposed revisions to GAO's regulations, promulgated in 
accordance with the Competition in Contracting Act of 1984, 31 U.S.C. 
Sec. Sec.  3551-3556, were prompted by GAO's recognition that there 
have been legal developments and changes in practice that have occurred 
since the last revision, in 1996. For example, the use of alternative 
dispute resolution (ADR) has grown in practice and electronic filing of 
protests has become technologically feasible. Of particular interest, 
the proposed revision reflected GAO's view that recent decisions by the 
Court of Appeals for the Federal Circuit and the Court of Federal 
Claims may warrant a change in our review of protests challenging 
affirmative responsibility determinations. GAO's final rule makes 
changes in these and other areas in order to improve the overall 
efficiency, effectiveness, and fairness of the bid protest process at 
GAO.

Summary of Comments

    Interested persons were invited to submit comments on GAO's 
proposed rule by November 12, 2002. We received written comments from 
three Federal agencies, two law firms, and one bar association. In 
adopting this final rule, we have carefully considered all comments 
received. The commenters were generally supportive of our efforts to 
improve the bid protest process and clarify GAO's procedures, and 
suggested further language changes consistent with these goals. Several 
of these suggested changes have been adopted, either in the final rule 
itself, or in the form of additional information in GAO's publication, 
``Bid Protests at GAO: A Descriptive Guide'' (Descriptive Guide), which 
will be updated to reflect the revised regulations.
    A discussion of the more significant comments concerning GAO's 
proposed rule, and our responses to these comments, are set forth 
below.

Section 21.0--Definitions

    One commenter suggested that GAO clarify which word processing 
applications/programs are acceptable for use by parties in filing 
electronic protests and other protest documents, in order to ensure 
that applications used by protesters, agencies, and GAO are compatible. 
In response, GAO will set forth the details regarding electronic filing 
on both its Web site (www.gao.gov) and in the Descriptive Guide, 
including such essential information as the e-mail address to which 
protests must be sent and the word processing application used by GAO. 
While GAO cannot warrant compatibility between various word processing 
applications, disclosing the application used by GAO is information 
that may assist protesters in deciding upon an appropriate word 
processing application, and thereby should minimize any risk that a 
protest may be received in garbled form, or not be received at all, due 
to word processing application incompatibilities. However, as is made 
clear in the revised section 21.0(g), protesters bear the risk that the 
filing method chosen, including electronic filing, will not result in 
timely receipt of a legible protest at GAO; this includes any risk of 
incompatibility between word processing applications and other 
potential transmission problems. As for compatibility between 
protesters' and agencies' word processing programs, to the extent that 
electronic submissions are authorized in a particular case, the 
cognizant GAO attorney, together with the parties, will determine the 
appropriate means for transmitting submissions. We note that the extent 
to which electronic filings are permitted after receipt of an 
electronically transmitted protest will be determined by the GAO 
attorney, taking into consideration, in particular, whether protected 
information will be involved and the extent to which it can be 
transmitted securely, to GAO's and the parties' satisfaction.
    Some commenters expressed the view that, in order for electronic 
filing of protests to be practicable, protesters must be able to 
confirm receipt of their protest transmission. GAO recognizes that the 
ability of protesters to confirm receipt of their protest is essential 
if electronic filing is to be a meaningful filing option. Toward this 
end, the system GAO has in place will provide an automatic return e-
mail that can be used to confirm receipt of an electronic protest at 
GAO. Also, GAO will list its

[[Page 79834]]

case status telephone number on its website and in the Descriptive 
Guide to provide protesters with an additional means of confirming 
receipt.

Section 21.3--Notice of Protest, Submission of Agency Report, and Time 
for Filing of Comments on Report

    One commenter expressed concern that the revised language under 
paragraph (i) of section 21.3 could lead to the dismissal of 
meritorious protest issues where the agency report inadequately 
responds to an issue and the protester does not comment further, having 
nothing new of substance to add. GAO notes that this hypothetical 
situation is only a theoretical possibility and does not reflect GAO's 
experience. The regulations to date have permitted protesters, in lieu 
of substantive comments, to merely ask that their protest be decided on 
the existing record, and it is GAO's experience that protesters 
choosing this option invariably have their protest denied. The purpose 
of the revision is to make protesters, particularly those proceeding on 
a pro se basis, aware of the need for them to respond substantively to 
the agency report on their protest in order to maximize the chance that 
their protest will be sustained; alternatively, it is intended to lead 
protesters to withdraw protests more promptly where they are unable to 
rebut the agency's substantive response. The revision is not intended 
to change the manner in which GAO handles comments on specific issues 
raised in a protest. Currently, where a protester fails to comment on 
an agency's substantive response to an issue that is consistent with 
the record and appears reasonable on its face, we typically will 
consider that aspect of the protest abandoned and dismiss it. On the 
other hand, where the agency report does not adequately address a 
protest issue, GAO does not automatically dismiss the issue; rather, 
GAO considers the record as a whole, and, if necessary, develops the 
record further, and decides whether the issue has merit. GAO will 
continue this practice under the revised regulations.
    One commenter suggested that GAO include in the regulations or the 
Descriptive Guide a warning to protesters that their comments should 
address all issues raised in the original protest. However, GAO 
believes such a warning would be inconsistent with one of the 
underlying purposes of the change--to lead protesters to withdraw 
protests where the protester is unable to respond to the agency's 
position substantively--since the suggested warning could encourage 
protesters to address issues superficially solely to avoid dismissal. 
However, GAO will highlight this change in the Descriptive Guide by 
making it clear that protests are seldom sustained where protesters do 
not submit substantive comments in response to an agency report.

Section 21.5--Protest Issues Not for Consideration

    Two commenters expressed the view that the change under paragraph 
(b)(2) of section 21.5--providing that GAO will consider protests of 
Small Business Administration (SBA) Certificate of Competency (COC) 
reviews where it is alleged that SBA failed to follow its own published 
regulations--is unwarranted. GAO recognizes that SBA's judgments in 
connection with a COC determination are matters within SBA's discretion 
and are not subject to GAO review. It is GAO's view, however, that 
there are some circumstances under which it may be appropriate to 
consider protest arguments that SBA has violated its own regulations in 
making a particular COC determination, and thereby has deprived a 
bidder or offeror of a contract award to which it otherwise was 
entitled under applicable laws and regulations. As explained in the 
proposed rule's supplementary information, this change is intended to 
make GAO's review in this 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 revised in this final rule). Further, 
as indicated in the revised language, GAO will interpret the exception 
narrowly and, as a result, anticipates that this review will occur 
infrequently.
    One agency commenter expressed concern that the revised language 
could lead to the inequitable result that a protest could be sustained 
against a contracting agency based on SBA's misconduct. However, in the 
event that GAO sustained a protest based solely on SBA's actions, the 
decision would clearly indicate that the violation was SBA's, not the 
contracting agency's.
    Several commenters questioned the change under section 21.5(c), 
providing for expanded GAO review of protests challenging affirmative 
determinations of responsibility. One agency commented that the change 
may lead to GAO's substituting its judgment for that of the contracting 
agency, while another commenter suggested that GAO provide some 
guidance as to what is meant by ``serious concerns.'' The language 
providing for expanded GAO review in this area was prompted by the 
desire for consistency between our standard and the Court of Appeals 
for the Federal Circuit's standard for reviewing affirmative 
responsibility determination protests. We believe the revised language 
serves this purpose. GAO believes it would not be practical or useful 
to provide detailed examples of protests that fall within or outside of 
the changed review standard, since small changes in the facts or 
evidence presented could result in a different conclusion. As a general 
matter, however, the language requiring the protester to ``identify 
evidence raising serious concerns'' is intended to encompass protests 
where, for example, the protest includes specific evidence that the 
contracting officer may have ignored information that, by its nature, 
would be expected to have a strong bearing on whether the awardee 
should be found responsible. At the other end of the spectrum, the 
revised language was intended to exclude from review general and 
``information and belief'' allegations not supported by evidence, and 
those that identify what appear to be minor, rather than significant, 
discrepancies related to the awardee's responsibility.
    Two commenters suggested that GAO review affirmative responsibility 
determination protests where it is alleged that the contracting officer 
unreasonably evaluated available information, in the same manner in 
which we review negative responsibility determinations. However, we 
believe this approach would accord too little weight to the contracting 
officer's discretion in the area of affirmative responsibility 
determinations and also place a substantial unwarranted additional 
burden on contracting agencies. In this regard, this change was 
prompted not by evidence of agency abuse in this area, but by our 
desire to preserve consistency between GAO and the courts. GAO's review 
therefore generally will involve a contracting officer's failure to 
consider ``available relevant information,'' rather than the 
reasonableness of the contracting officer's judgments based on that 
information, or his or her failure to obtain information through an 
exhaustive investigation. Whereas GAO's review of negative 
responsibility determinations for reasonableness is intended to ensure 
that firms found entitled to a contract award under the announced 
evaluation scheme are not then unreasonably denied the award, no 
similar ``nullification'' of the evaluation scheme comes into play with 
an affirmative determination of responsibility.
    One commenter suggested adding language to section 21.5 to make it

[[Page 79835]]

clear--as GAO recently held in Champion Bus. Servs., Inc., B-290556, 
June 25, 2002, 2002 CPD ]109--that protests challenging the inclusion 
of the protester's own proposal in the competitive range fall outside 
GAO's bid protest jurisdiction. GAO agrees that this change should be 
included in the regulations and, accordingly, has added appropriate 
language in new paragraph (j).

Section 21.10--Express Options, Flexible Alternative Procedures, 
Accelerated Schedules, Summary Decisions, and Status Conferences

    One commenter suggested that GAO clarify in paragraph (e) of 
section 21.10 that flexible alternative procedures may be invoked by 
GAO on its own initiative or at the request of the parties. GAO agrees 
that this point should be clarified and has amended the paragraph 
accordingly.

List of Subjects in 4 CFR Part 21

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

    For the reasons set out in the preamble, Title 4, Chapter I, 
Subchapter B, of the Code of Federal Regulations is amended to read 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 that 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. The filing party bears the risk that 
the delivery method chosen will not result in 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) introductory 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 comments 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, except where GAO has granted an extension or has established 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 its report that 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 adding new paragraphs (i) and (j), 
to read as follows:


Sec.  21.5  Protest issues not for consideration.

    A protest or specific protest allegations may be dismissed any time 
sufficient information is obtained by GAO warranting dismissal. Where 
an entire protest is dismissed, no agency report need be filed; where 
specific protest allegations are dismissed, an agency report shall be 
filed on the remaining allegations. Among the protest bases that shall 
be dismissed are the following:
* * * * *
    (b) * * *
* * * * *
    (2) Small Business Certificate of Competency Program. Referrals 
made to the Small Business Administration (SBA) 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 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.

[[Page 79836]]

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 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.
    (j) Competitive range. GAO will not consider protests asserting 
that the protester's proposal should not have been included or kept in 
the competitive range.

    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) If the contracting agency decides to take corrective action in 
response to a protest, GAO may recommend that the agency pay the 
protester the reasonable costs of filing and pursuing the protest, 
including attorneys' fees and consultant and expert witness fees. 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. The protester shall 
furnish a copy of its request to the contracting agency, which may file 
a response within 15 days after receipt of the request, with a copy 
furnished to the protester.
* * * * *

    9. Amend Sec.  21.10 by removing paragraph (d)(3), redesignating 
(d)(4) as (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 and other 
conferences.

* * * * *
    (e) GAO, on its own initiative or upon request by the parties, 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. 02-32929 Filed 12-30-02; 8:45 am]
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