FAA Issues New Procedures for Protests and Contracts Dispute
September 7, 2011
This action updates, simplifies, and streamlines the current regulations governing the procedures for bid protests brought against the FAA and contract disputes brought against or by the FAA. It also adds a voluntary dispute avoidance and early resolution process. This action ensures the regulations reflect the changes that have evolved since they were first implemented in 1999. The intended effect of this action is to further improve the protest and dispute process. Effective October 7, 2011. Federal Register Volume 76, Number 173 (Wednesday, September 7, 2011).
In 1995 Congress, through the Department of Transportation Appropriations Act, directed the FAA ''to develop and implement, not later 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.'' The Act instructed the FAA to design the system, notwithstanding provisions of Federal acquisition law, and to not use certain provisions of Federal acquisition law. In response, the FAA
developed the Acquisition Management System (AMS) for the management of FAA procurement. The AMS included a system of policy guidance that maximized the use of agency discretion in the interest of best business practices. As a 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. In a 1996 notice published in the Federal Register, the FAA announced the creation of the ODRA and stated the agency would promulgate rules of procedure governing the dispute resolution process.
In August 1998, the FAA issued a Notice of Proposed Rulemaking (NPRM) that proposed regulations under 14 CFR part 17 for the conduct of protests and contract disputes under the FAA AMS. The comment period for the NPRM closed on October 26, 1998. On June 18, 1999, the FAA published the final rule entitled, Procedures for Protests and Contract Disputes; Amendment of Equal Access to Justice Act Regulations, which codified (effective June 28, 1999) the procedures governing the dispute resolution process. On August 31, 1999, the FAA published a document that made certain corrections to the June 1999 final rule.
In addition to the rules of procedures, ODRA operates pursuant to delegations of authority from the Administrator. In a memorandum signed by the Administrator on July 29, 1998 (1998 Delegation), the Administrator generally authorized the ODRA through its Director to provide dispute resolution services including administrative adjudication of all bid protests and contract disputes under the AMS. The 1998 Delegation further provided that all final decisions must be executed by the Administrator. The 1998 Delegation was expanded by a Delegation dated March 27, 2000 (2000 Delegation), which provided additional authority to the ODRA Director ''to execute and issue, on behalf of the Administrator, Orders and Final Decisions for the Administrator in all matters within the ODRA's jurisdiction valued at not more than $1 Million.'' \7\ The 2000 Delegation was superseded by a Delegation of Authority from the Administrator, dated March 10, 2004 (2004 Delegation), which increased the dollar limit of the final decisional authority of the ODRA Director from $1 Million to $5 Million. The 2004 Delegation was superseded by another Delegation of Authority dated March 31, 2010 (2010 Delegation), which increased the dollar limit of the final decisional authority of the ODRA Director from $5 Million to $10 Million.
Congress provided further confirmation about the FAA's dispute resolution authority in the Vision 100-Century of Aviation Reauthorization Act of 2003 (2003 Reauthorization Act), see Public Law 108-176, Sec. 224(b), 117 Stat. 2490, 2528 (codified as amended at 49 U.S.C. 40110(d)(4)), which confirmed the ODRA's exclusive jurisdiction. Specifically, the 2003 Reauthorization Act expressly provided at Subsection (b)(2)(4) under the title ''Adjudication of Certain Bid Protests and Contract Disputes,'' that ''[a] bid protest or contract dispute that is not addressed or resolved through alternative dispute resolution shall be adjudicated by the Administrator, through Dispute Resolution Officers or Special Masters of the Federal Aviation Administration Office of Dispute Resolution for Acquisition, acting pursuant to Sections 46102, 46104, 46105, 46106 and 46107 and shall be subject to judicial review under Section 46110 and Section 504 of Title 5.'' The ODRA 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 contract disputes, pursuant to the Administrative Dispute Resolution Act of 1996 (''ADRA''), Public Law 104-320, 5 U.S.C. 570-579, and in consonance with Department of Transportation and FAA policies to maximize the use of ADR to the extent possible. Under these procedures, the ODRA actively encourages the parties to consider ADR techniques such as case evaluation, mediation, arbitration, or other types of ADR. In this regard, on October 15, 2001, the FAA published in the Federal Register
Final Guidance (66 FR 52475) for the use of binding arbitration for purposes of resolving bid protests and contract disputes relating to procurements and contracts under the FAA AMS after receiving the concurrence of the Attorney General in accordance with Section 575 of the ADRA. Additionally, the ODRA developed an informal pre-dispute process, which provides voluntary dispute avoidance services that are available to parties upon request.
On January 12, 2011, the FAA published the Procedures for Protests and Contracts Dispute NPRM,\10\ which proposed to update, simplify and streamline the procedures for bid protests against the FAA and contract disputes brought against or by the FAA. The NPRM had a 60-day comment period, which ended March 14, 2011.
Statement of the Problem
Since the issuance of the FAA's rules of procedure more than 10 years ago, the ODRA's statutory and regulatory authorities for conducting a dispute resolution process evolved, along with the body of case law interpreting those rules. The ODRA's implementation of these rules of procedure also resulted in the identification of procedural issues in need of clarification to provide uniform guidance. The ODRA further identified certain aspects of the rules that need revision to reflect evolving practices at the ODRA, as well as evolving dispute resolution practices in general. An example of such practices is the increased emphasis on early intervention and dispute avoidance efforts.
Overview of Final Rule
In order to address the changing environment with respect to the FAA's dispute resolution process, the agency adopts the rules proposed in the Procedures for Protests and Contracts Dispute NPRM it published on January 12, 2011. Today's final rule revises part 17 to incorporate the ODRA's evolving practices; reflect the availability of a pre-dispute process; reorganize and streamline the rules for ease of use; and harmonize the existing part 17 rules with current statutory and other authority.
The final rule reorganizes and consolidates for ease of use the current part 17 procedures for adjudicating protests and contract disputes. The procedures related to the adjudicative process for protests and for contract disputes that are currently in subpart E are now included in subpart B and subpart C, respectively. The finality and review provisions have been moved from subpart F to subpart E. Also, today's final rule includes streamlined procedures, as well as expanded coverage in areas where guidance was lacking or a process has evolved over time. Examples of expanded coverage include the addition of a section on the confidentiality of ADR (Sec. 17.39) and a section for filing requests for reconsideration (Sec. 17.47). In addition, new sections have been added to subpart F to address ''other matters'' like sanctions and professional conduct. Further, new subpart G has been added to address procedures for filing pre-disputes.
Summary of the NPRM
The NPRM proposed to update, simplify, and streamline the FAA's regulations governing the procedures for bid protests brought against the FAA and contract disputes brought against or by the FAA. It also proposed to add a voluntary dispute avoidance and early resolution process. The FAA published the NPRM in the Federal Register on January 12, 2011 with a 60-day comment period. The comment period ended on March 14, 2011. No comments were received to the rulemaking docket. You may refer to the NPRM for further details.
Discussion of Final Rule
A discussion, organized by subpart, and excluding minor editorial revisions and clarifications, of the adopted changes to 14 CFR part 17, follows. Additionally, even though we received no comments, the FAA has made non-substantive editorial and clarifying changes to the NPRM which are explicitly identified below.
Subpart A--General: Subpart A is revised as noted below.
Definitions (Sec. 17.3)
The following new definitions are added to this section: Adjudicative Process, Default Adjudicative Process, Counsel, Contractor, Legal Representative, and Pre-disputes. An additional
editorial change was made to correct the sentence structure of paragraph (s) by relocating the phrase ''of the parties.''
Filing and Computation of Time (Sec. 17.7)
Paragraph (c) is revised to clarify that ''other days on which Federal Government offices in Washington, DC are not open'' is an excluded timeframe in calculating time limits for filings. In addition, paragraph (d) is added to allow the use of electronic filing where permitted by the ODRA.
Protective Orders (Sec. 17.9)
Paragraph (d) is revised to explain the type of sanctions that could be imposed if a protective order is violated.
In subpart B, current Sec. 17.21 (Protest remedies) is renumbered as Sec. 17.23, and the Adjudicative process for protests section that is currently in subpart E is moved to Sec. 17.21.
Filing a Protest (Sec. 17.15)
Paragraph (d)(2) is revised to make clear the standard of review for a request for a suspension or delay of the procurement. Also, paragraph (d)(3) is added to explain the possible consequences of protesters'' failure to provide appropriate supporting documentation in their requests to suspend a procurement or contract performance. An additional editorial change was made to correct the sentence structure of paragraph (a)(1) by relocating the phrase ''SIR or solicitation,'' and to paragraph (d)(4) by substituting the word ''That'' for ''Whether.''
Initial Protest Procedures (Sec. 17.17)
In Sec. 17.17(a), the timeframes for responding to a request for a suspension or delay of the procurement are revised according to the established ODRA practice of granting an extension until the date of the initial status conference. In Sec. 17.17(b), the purpose of the initial status conference is clarified. In Sec. 17.17(c), the requirement that parties file a joint statement about whether they are pursuing ADR, and the adjudication timeframes that automatically begin when no ADR is contemplated are removed. An additional editorial change was made to correct the sentence structure by substituting the word ''If'' for ''Should'' in paragraphs (d) and (e).
Motions Practice and Dismissal or Summary Decision of Protests (Sec. 17.19)
Paragraph (a) is revised to clarify the use of appropriate motions for dismissal or summary decision of protests and the ODRA's standard of review for such motions. Paragraph (d) is revised to clarify when such a decision is construed as a final agency order. An additional editorial change was made to provide consistency with Sec. 17.31(a) which states the same standard in a more concise manner.
Adjudicative Process for Protests (Sec. 17.21)
In addition to moving the procedures for the Adjudicative Process for protests from current Sec. 17.37 of subpart E to proposed Sec. 17.21 of subpart B, this section is revised to more fully address the management of the discovery process and the type of discovery that is authorized. This section further is revised to delineate the ODRA's standard of review for protests, the development of the administrative record, and under what circumstances ex parte communications are permitted in protests. In addition, the revisions to this section address the procedures for preparing and issuing the ODRA's findings and recommendations and final FAA order. An additional editorial change was made for clarification by replacing the words ''to pursue'' with ''for.''
Protest Remedies (Sec. 17.23)
Paragraph (b) of this section is revised to identify the factors the ODRA considers in determining an appropriate remedy.
Subpart C--Contract Disputes
In subpart C, current Sec. Sec. 17.23, 17.25, 17.27, and 17.29 are renumbered as Sec. Sec. 17.25, 17.27, 17.29 and 17.31, respectively. Section 17.33 (Adjudicative process for contract disputes), which has been moved from current Sec. 17.39 of subpart E, is added to proposed subpart C. Also, the requirement in current Sec. 17.27 (Submission of
joint or separate statements) is deleted. An additional editorial change was made to correct the sentence structure in Sec. 17.21 (p) by substituting the words ''if'' for ''should'' and ''be'' for ''was.'' An additional editorial change was made to delete the redundant phrase ''or more.''
Filing a Contract Dispute (Sec. 17.25)
Paragraph (a) is revised to provide additional guidance on the information to be included in the contract dispute. Paragraph (e) is added to state the ODRA retains the discretion to modify any timeframe established by the regulations in connection to contract disputes.
Informal Resolution Period (Sec. 17.29)
This section is revised to conform to current practice regarding the informal resolution process. This includes clarifications related to scheduling and assigning a potential neutral for ADR.
Dismissal or Summary Decision of Contract Disputes (Sec. 17.31)
Section 17.31 is revised to clarify the standard for requesting a dismissal or summary decision, and the process for responding to and issuing a decision on a request for dismissal or summary decision. This section also is revised to clarify when such a decision is to be construed as a final agency order.
Adjudicative Process for Contract Disputes (Sec. 17.33)
In addition to moving this section from current Sec. 17.39 of subpart E, Sec. 17.33 is revised to clarify that the process for submitting the Dispute File applies to cases initiated by the
contractor or alternatively by the FAA. Also, it is revised to more fully explain what documents will be admitted into the administrative record and the timeframes for responding to written discovery. Further, the section is revised to streamline the requirements for final submissions. Additionally, the revisions state that the ODRA must conduct a de novo review using the preponderance of the evidence standard, unless a different standard is required. The revisions also identify the circumstances under which ex parte communications are permitted in contract disputes. An additional editorial change was made to Sec. 17.33 (g)(1) to delete the unnecessary phrase ''to resolve the dispute.''
Subpart D--Alternative Dispute Resolution
The current sections under subpart D are renumbered from Sec. Sec. 17.31 and 17.33 to Sec. Sec. 17.35 and 17.37, respectively. Also, a new Sec. 17.39 (Confidentiality of ADR) is added to provide for the applicability of the Administrative Dispute Resolution Act of 1996, 5 U.S.C. 571 et seq., and to clarify how ADR communications are treated. Further, current Sec. 17.35 (Selection of neutrals for the alternative dispute resolution process) is deleted. An additional editorial correction was made to Sec. 17.37 (e) to delete the word 'informal.''
An additional revision was made to Sec. 17.39 (c) to reflect current practice permitting the parties to agree to include ADR communications in the administrative record.
Subpart E--Finality and Review
As noted previously, Sec. Sec. 17.37 and 17.39 of current subpart E (Default Adjudicative Process) is moved to subparts B (Sec. 17.21) and C (Sec. 17.33), respectively. In today's final rule, the requirements in current subpart F (Finality and Review--Sec. Sec. 17.41, 17.43, and 17.45) are moved to subpart E. Also, Sec. 17.47 (Reconsideration) is added to subpart E to provide the timeframe for filing requests for reconsideration and to state the standard for reconsideration according to ODRA precedent.
Subpart F--Other Matters
Subpart F is revised to add sections covering sanctions, decorum and professional conduct, the use of orders and subpoenas for testimony and document production, and Standing Orders of the ODRA Director.
A new subpart (subpart G) is added. This subpart makes clear that the pre-dispute process applies to all potential disputes arising under contracts or solicitations with the FAA. Also, it sets forth the process for filing a pre-dispute. Further, it clarifies the non-binding voluntary nature of the pre-dispute process and that it is subject to the confidentiality requirements of Sec. 17.39.
Appendix A to Part 17--Alternative Dispute Resolution (ADR)
Appendix A is revised to eliminate the description of ''Minitrial'' and to add a provision that addresses and clarifies the use of binding arbitration.
For information on where to obtain copies of rulemaking documents and other information related to this final rule, see the How To Obtain Additional Information section of this document. Contact Marie A. Collins, Senior 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.