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Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH

DATE: October 1, 2002

SUBJECT: General Accounting Office (GAO); Review and Revision of Protest Regulations

SOURCE: Federal Register, October 1, 2002, Vol. 67, No. 190, page 61542

AGENCIES: General Accounting Office

ACTION: Proposed Rule

SYNOPSIS: GAO is proposing to revise its bid protest regulations, which has not been revised since 1996, to conform to current practice and to improve their overall efficiency and effectiveness.

EDITOR'S NOTE: GAO's protest regulations, which are in Title 4 of the Code of Federal Regulations (CFR), Part 21, govern offeror protests filed with the GAO against alleged improprieties in the government's conduct of acquisitions (GAO's protest regulations are available at http://www.gao.gov/special.pubs/og96024.htm). Federal Acquisition Regulation (FAR) 33.104, Protests to the GAO, provides an overview of the protest process and procedures. However, if there is a conflict between GAO's regulations and the FAR, GAO's regulations govern.

For more on the advance notice of proposed rulemaking (ANPR), see the February 25, 2002, FEDERAL CONTRACTS DISPATCH "General Accounting Office; Review and Revision of Protest Regulations."

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, by e-mail: BidProtestRegs@gao.gov, or by fax: 202-512-9749.

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

SUPPLEMENTAL INFORMATION: GAO last revised its protest regulations in 1996. Since then, there have been legal developments and changes in practice: alternative dispute resolution (ADR) has grown in use, electronic filing has become a reality, and the Court of Appeals for the Federal Circuit and the Court of Federal Claims have issued significant decisions regarding review of affirmative responsibility determinations. On February 25, 2002, GAO published an ANPR requesting comments on these topics and suggestions for changes to other areas of the regulations. GAO received comments from four federal agencies, one industry association, one nonprofit institute, and two individual attorneys, and all their comments were considered in the preparation of this proposed rule.

The following are the significant changes being proposed:

• Paragraph (g) of Section 21.0, Definitions, would be revised to clarify that protests and other documents may be filed by facsimile or by electronic means (such as e-mail, subject to restrictions when a protective order is in effect). Also, paragraph (g) would be revised to make it clear that "in all cases, the filing party is responsible for ensuring timely receipt at GAO."
  
  In related changes, paragraph (c) of Section 21.7, Hearings, would be revised to provide that "hearings may, at the discretion of GAO, be conducted at other locations, or by telephone or other electronic means"; and paragraph (b) of Section 12.12, Distribution of Decisions, would be revised to state that "decisions may be distributed to the parties, and are available from GAO, by electronic means."
  
  
• Added to Section 21.0 would be a new paragraph (h), consisting of the following definition for "alternative dispute resolution" (ADR): "Alternative dispute resolution encompasses various means of resolving cases expeditiously, without a written decision, including techniques such as outcome prediction and negotiation assistance." In addition, paragraph (e) of Section 21.10, Express Options, Flexible Alternative Procedures, Accelerated Schedules, Summary Decisions, and Status Conferences, would be revised to add "alternative dispute resolution" to the sentence "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."
  
  
• Paragraph (i) of Section 21.3, Notice of Protest, Submission of Agency Report, and Time for Filing of Comment on Report, would be revised to delete the statement that a protester may satisfy the requirement that comments be filed within 10 days of receipt of the agency report by instead filing "a written statement requesting that the case be decided on the existing record". GAO believes this language may have led protesters to forgo filing substantive comments, believing them unnecessary for a successful protest, which is an incorrect assumption. Instead, GAO proposes to add language that comments may be delayed only when GAO grants extension. Also, since Section 21.10(e) permits GAO to establish an "accelerated schedule" (including a comment period of fewer than 10 days), Section 21.3(i) would state that GAO may establish "a shorter period in accordance with Sec. 21.10(e)."
  
  
• Paragraph (b)(2) of Section 21.5, Protest Issues Not for Consideration, which addresses protests pertaining to the Small Business Administration's (SBA) Certificate of Competency program, would be revised to add that GAO will review protests "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."
  
  Section 21.5(c), which addresses protests regarding a contracting officer's affirmative determination of responsibility, would be revised to expand its review to include protests "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." This change would be in response to the Court of Appeals for the Federal Circuit decision in Impresa Construzioni Geom. Domenico Garufi v. United States (238 F.3d 1324), in which the court decided 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 (see the February 25, 2002, FEDERAL CONTRACTS DISPATCH on the ANPR)."
  
  Finally, a new paragraph (i) would be added to Section 21.5 to state, "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." This new paragraph would make the protest regulations consistent with GAO's decision in Shinwa Elec., B-290603 et al., September 3, 2002, in which GAO announced that it will no longer review suspension and debarment actions on the ground that the appropriate forum for such challenges is the agency taking the disputed action.
  
  
• Paragraph (g) of Section 21.7, Hearings, would be revised to delete the sentence, "If a hearing is held, no separate comments on the agency report should be submitted unless specifically requested by GAO." In practice, GAO rarely calls a hearing until after the protester and intervenor have commented on the agency report because GAO has found that such comments are helpful in determining whether issues can be resolved on the written record, thus making a hearing unnecessary.
  
  
• Paragraph (e) of Section 21.8, Remedies, would be revised to clarify that "the protestor 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 current paragraph states that the protestor must file such request "within 15 days after being advised that the contracting agency has decided to take corrective action." GAO states in the introductory material to the proposed rule that "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, August 23, 2002..."
  
  
• Paragraph (b) of Section 21.11, Effective of Judicial Proceedings, would be revised to clarify that "any case", not just "any protest", will be dismissed where the matter involved is the subject of litigation, or has been decided on the merits, by a court of competent jurisdiction. This change would cover requests for costs, reconsideration requests, and other matters, in addition to protests.

EDITOR'S NOTE: The ANPR stated that GAO was considering revising the timeliness rule under paragraph (a)(2) of Section 21.2, Time for Filing. Paragraph (a)(2) provides that, where a debriefing is requested and required, "any protest basis which 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..." GAO was considering changing this rule because the rule leads some protesters to delay, until after a debriefing, filing a protest involving a matter that arose during the procurement prior to award (for example, an alleged Procurement Integrity Act violation). "Delays in filing protests are inconsistent with GAO's general view that prompt resolution of protests is beneficial to the procurement system...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." Therefore, GAO has decided to leave Section 21.2(a)(2) unchanged.

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

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