[Federal Register Volume 60, Number 56 (Thursday, March 23, 1995)]
[Proposed Rules]
[Pages 15450-15452]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-7097]



      

[[Page 15449]]

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Part IX

Department of Defense

General Services Administration

National Aeronautics and Space Administration
_______________________________________________________________________



48 CFR Parts 1, 32, 33 and 52



Federal Acquisition Regulation (FAR); Ratification and Protest Costs: 
Proposed Rule

Federal Register / Vol. 60, No. 56 / Thursday, March 23, 1995 / 
Proposed Rules 
[[Page 15450]] 

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1, 32, 33, and 52

[FAR Case 94-731]
RIN 9000-AG52


Federal Acquisition Regulation; Ratification and Protest Costs

AGENCIES: Department of Defense (DOD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Proposed rule.

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SUMMARY: This proposed rule is issued pursuant to the Federal 
Acquisition Streamlining Act of 1994 (Pub. L. 103-355) dated October 
13, 1994, to implement the requirements for protests and disputes in 
Government procurement. The rule reflects the Federal Register 
publication at 60 FR 2630, January 10, 1995, concerning amendments made 
under FAR case 94-731, Ratification of Protest Costs, and should be 
read in conjunction with that case. This regulatory action was subject 
to Office of Management and Budget review under Executive Order 12866, 
dated September 30, 1993.

DATES: Comments should be submitted on or before May 22, 1995 to be 
considered in the formulation of a final rule.

ADDRESSES: Interested parties should submit written comments to: 
General Services Administration, FAR Secretariat (VRS), 18th & F 
Streets NW., Room 4037, Washington, DC 20405.
    Please cite FAR Case 94-731 in all correspondence related to this 
case.

FOR FURTHER INFORMATION CONTACT:
 Mr. Craig Hodge, Protests/Disputes Team Leader at (703) 274-8940 in 
reference to this FAR case. For general information, contact the FAR 
Secretariat, Room 4037, GS Building, Washington, DC 20405, (202) 501-
4755. Please cite FAR Case 94-731, Ratification of Protest Costs.

SUPPLEMENTARY INFORMATION:

A. Background

    The Federal Acquisition Streamlining Act of 1994 (the Act), Pub. L. 
103-355, provides authorities that streamline the acquisition process 
and minimize burdensome Government-unique requirements. Major changes 
that can be expected in the acquisition process as a result of 
implementing the Act include the areas of protests, disputes, and 
appeals.
    This case presents proposed FAR amendments developed under FAR Case 
94-731, Ratification of Protest Costs. Sections 1016, 1403, and 1435 of 
the Act provide that agencies may be required to pay protest and offer 
preparation costs to protesters under certain circumstances. Often as 
the result of discovery during a protest, misrepresentations may be 
detected that could not have been reasonably known to the agency's 
evaluators. A protest may be sustained where the award has been induced 
by a material misrepresentation by the awardee. Such situations often 
involve proposed ``key personnel.''
    The agency is without effective remedy in such cases. 
Theoretically, the agency could ask the Department of Justice to file a 
lawsuit against the offeror making the misrepresentations. However, due 
to the heavy workload of the Justice attorneys, this is not a practical 
alternative. The proposed FAR change will not adversely affect any 
substantive right of an offeror. Under the proposed language, the 
Government remedy is to offset such costs on the same or an unrelated 
contract. If the offeror believes that the offset is not justified, it 
may appeal the action to the agency, or under the Contract Disputes Act 
to either a Board of Contract Appeals or the Court of Federal Claims.
    In view of expected benefits to Government and industry from the 
Act, FAR implementation was formulated under an expedited process. The 
FAR Council is interested in an exchange of ideas and opinions with 
respect to the regulatory implementation of the Act. For that reason, 
the FAR Council is conducting a series of public meetings. However, the 
FAR Council has not scheduled a public meeting on this rule (FAR Case 
94-731) because of the clarity and non-controversial nature of the 
rule. If the public believes such a meeting is needed with respect to 
this rule, a letter requesting a public meeting and outlining the 
nature of the requested meeting shall be submitted to and received by 
the FAR Secretariat (see ADDRESSES caption) on or before April 24, 
1995.
    The FAR Council will consider such requests in determining whether 
a public meeting on this rule should be scheduled.

B. Regulatory Flexibility Act

    This proposed rule is not expected to have a significant economic 
impact on a substantial number of small entities within the meaning of 
the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., because the vast 
number of contracts do not involve protests where misrepresentation is 
detected through discovery. An Initial Regulatory Flexibility Analysis 
has, therefore, not been performed. Comments from small entities 
concerning the affected FAR subpart will be considered in accordance 
with 5 U.S.C. 610 of the Act. Such comments must be submitted 
separately and should cite 5 U.S.C. 601 et seq. (FAR Case 94-731), in 
correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the proposed 
changes to the FAR do not impose recordkeeping or information 
collection requirements, or collections of information from offerors, 
contractors, or members of the public which require the approval of the 
Office of Management and Budget under 44 U.S.C. 3501 et seq.

List of Subjects in 48 CFR Parts 1, 32, 33, and 52

    Government procurement.

    Dated: March 16, 1995.
Edward C. Loeb,
Deputy Project Manager for the Implementation of the Federal 
Acquisition Streamlining Act of 1994.

    Therefore, it is proposed that 48 CFR Parts 1, 32, 33 and 52 be 
amended as set forth below:
    1. The authority citation for 48 CFR Parts 1, 32, 33 and 52 
continues to read as follows:

    Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

PART 1--FEDERAL ACQUISITION REGULATION SYSTEM

     2. Section 1.602-3 is amended by revising paragraph (c)(2) to read 
as follows:


1.602-3  Ratification of unauthorized commitments.

* * * * *
     (c) * * *
    (2) The ratifying official has the authority to enter into a 
contractual commitment.
* * * * *

PART 32--CONTRACT FINANCING

     3. Section 32.602 is amended by adding paragraph (h) to read as 
follows:


32.602  General.

* * * * *
     (h) Reimbursement of costs, as provided in 48 CFR (FAR) 33.102(b), 
33.104(h)(1), and 33.105(g)(1), paid by the Government where a 
postaward [[Page 15451]] protest is sustained as a result of an 
awardee's misstatement, misrepresentation, or miscertification.
    4. Section 32.603 is revised to read as follows:


32.603  Applicability.

    Except as otherwise specified, this subpart applies to all debts to 
the Government arising in connection with contracts and subcontracts 
for the acquisition of supplies or services and debts arising from the 
Governments payment of costs, as provided in 48 CFR (FAR) 33.102(b), 
33.104(h)(1), and 33.105(g)(1), where a postaward protest is sustained 
as a result of an awardee's misstatement, misrepresentation, or 
miscertification.

PART 33--PROTESTS, DISPUTES, AND APPEALS

    5. Section 33.102 is amended by redesignating paragraphs (b) and 
(c) as (c) and (e), respectively, and adding new paragraphs (b) and 
(d); and revising newly designated paragraphs (e)(2) and (e)(3) to read 
as follows:


33.102  General.

* * * * *
    (b) If in connection with a protest, the head of an agency 
determines that a solicitation, proposed award, or award does not 
comply with the requirements of law or regulation, the head of the 
agency may--
    (1) Take any action that may have been taken by the Comptroller 
General in the event of a GAO protest; and
    (2) Pay appropriate costs as stated in Section 33.104(h).
    (3) Require the awardee to reimburse the Government's costs, as 
provided in this paragraph, where a postaward protest is sustained as 
the result of an awardees intentional or negligent misstatement, 
misrepresentation, or miscertification. In addition to any other remedy 
available, and pursuant to the requirements of 48 CFR (FAR) part 32, 
subpart 32.6, the Government may collect this debt by offsetting the 
amount against any payment due the awardee under any contract between 
the awardee and the Government.
* * * * *
    (d) Protest likely after award. The contracting officer may stay 
performance of a contract within the time period contained in 
33.104(c)(1) if the contracting officer makes a written determination 
that--
    (1) A protest is likely to be filed; and
    (2) Delay of performance is, under the circumstances, in the best 
interests of the United States.
    (e) * * *
    (2) May protest to the GAO in accordance with GAO regulations (4 
CFR part 21). An interested party who has filed a protest regarding an 
ADP procurement with the GAO may not file a protest with the GSBCA with 
respect to that procurement.
    (3) May protest to the GSBCA regarding an award of an ADP contract 
in accordance with GSBCA Rules of Procedure (48 CFR chapter 61). An 
interested party who has filed a protest regarding an ADP procurement 
with GSBCA (40 U.S.C. 759(f)) may not file a protest with the GAO with 
respect to that procurement.
    6. Section 33.104 is amended by revising paragraph (h) to read as 
follows:


33.104  Protests to GAO.

* * * * *
    (h) Award of costs. (1) If the GAO determines that a solicitation 
for a contract or a proposed award or an award of a contract does not 
comply with a statute or regulation, the GAO may recommend that the 
agency conducting the procurement pay to an appropriate interested 
party the direct cost, exclusive of profit, of filing and pursuing the 
protest, including reasonable attorney's fees and consultant and expert 
witness fees, and bid and proposal preparation costs.
    (2) If the GAO recommends the award of costs to an interested 
party, the agency, in accordance with agency procedures, shall attempt 
to reach an agreement on the amount of the cost to be paid. If the 
agency and the interested party are unable to agree on the amount to be 
paid, GAO may, upon request of the interested party, recommend to the 
agency the amount of cost that the agency should pay.
    (3) No agency shall pay a party, other than a small business 
concern within the meaning of section 3(a) of the Small Business Act 
(see 48 CFR (FAR) 19.001 definition, ``Small business concern''), costs 
under paragraph (h)(2) of this section--
    (i) For consultant and expert witness fees that exceed the highest 
rate of compensation for expert witnesses paid by the Government; or
    (ii) For attorneys' fees that exceed $150 per hour unless the 
agency determines, based on the recommendation of the Comptroller 
General on a case by case basis, that an increase in the cost of living 
or a special factor, such as the limited availability of qualified 
attorneys for the proceedings involved, justifies a higher fee. The cap 
placed on attorneys' fees for businesses, other than small businesses, 
constitutes a benchmark as to what constitutes a ``reasonable'' level 
for attorneys' fees for small businesses.
    (4) A recommended award of costs may be paid by the agency out of 
funds available to or for the use of the agency for the acquisition of 
supplies or services. Before paying a recommended award of costs, 
agency personnel should consult legal counsel. Section 33.104(h) 
applies to all recommended awards of costs which have not yet been 
paid.
    (5) If the GAO recommends the agency pay costs (as defined under 
paragraph (h)(1) of this section) and the agency does not promptly pay 
the costs, the agency shall promptly report to GAO the reasons for the 
failure to follow the GAO recommendation.
    (6) Any costs the contractor receives under this section shall be 
excluded from all proposals, billings, or claims against the Government 
and such exclusions should be reflected in the cost agreement.
    (7) If the Government pays costs, as provided in paragraph (h)(1) 
of this section, where a post award protest is sustained as the result 
of an awardees intentional or negligent misstatement, 
misrepresentation, or miscertification, the Government may require the 
awardee to reimburse the Government the amount of such costs. In 
addition to any other remedy available, and pursuant to the 
requirements of 48 CFR (FAR) part 32, subpart 32.6, the Government may 
collect this debt by offsetting the amount against any payment due the 
awardee under any contract between the awardee and the Government.
    7. Section 33.105 is amended by--
    (a) Redesignating paragraphs (f) and (g) as (g) and (h) and adding 
a new paragraph (f);
    (b) By adding paragraphs (g)(3), (4), and (5); and
    (c) By revising the new paragraph (h).
    The revised text reads as follows:


33.105  Protests to GSBCA.

* * * * *
    (f) Any agreement that provides for the dismissal of a protest and 
involves a direct or indirect expenditure of appropriated funds shall 
be made part of the public record (subject to any protective order 
considered appropriate by the Board) before dismissal of the protest. 
If an agency is party to a settlement agreement, the submission of the 
agreement to the Board shall include a memorandum, signed by the 
contracting officer concerned, that describes in detail the 
procurement, the grounds for protest, the Government's position 
regarding the grounds for protest, the terms of the settlement, and the 
agency's position regarding the [[Page 15452]] propriety of the award 
or proposed award of the contract at issue in the protest.
    (g) * * *
     (3) No agency shall pay a party, other than a small business 
concern within the meaning of section 3(a) of the Small Business Act 
(see 48 CFR (FAR) 19.001 definition, ``Small business concern''), costs 
under paragraph (g)(1) of this section--
    (i) For consultant and expert witness fees that exceed the highest 
rate of compensation for expert witnesses paid by the Government; or
    (ii) For attorneys' fees that exceed $150 per hour unless the Board 
determines, on a case by case basis, that an increase in the cost of 
living or a special factor, such as the limited availability of 
qualified attorneys for the proceedings involved, justifies a higher 
fee. The cap placed on attorneys' fees for businesses, other than small 
businesses, constitutes a benchmark as to what constitutes a 
``reasonable'' level for attorneys' fees for small businesses.
    (4) Within 30 days after receipt by the agency of an application 
for cost, the agency may file an answer.
    (5) If the Government pays costs, as provided in paragraph (g)(1) 
of this section, where a post award protest is sustained as the result 
of an awardee's intentional or negligent misstatement, 
misrepresentation, or miscertification, the Government may require the 
awardee to reimburse the Government the amount of such costs. In 
addition to any other remedy available, and pursuant to the 
requirements of 48 CFR (FAR) part 32, subpart 32.6, the Government may 
collect this debt by offsetting the amount against any payment due the 
awardee under any contract between the awardee and the Government.
    (h) The GSBCA's final decision may be appealed by the agency or by 
any interested party, including any intervening interested parties, as 
set forth in the Contract Disputes Act.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    8. Section 52.233-3 is amended by revising the date of the clause; 
and by adding paragraph (f) to read as follows:


52.233-3  Protest after award.

* * * * *

Protest After Award (Date)

* * * * *
    (f) If as the result of the awardee's intentional or negligent 
misstatement, misrepresentation, or miscertification, a protest 
related to this solicitation is sustained, and the Government pays 
costs, as provided in 48 CFR (FAR) 33.102(b)(2), 33.104(h)(1), or 
33.105(g)(1), the Government may require the awardee to reimburse 
the Government the amount of such costs. In addition to any other 
remedy available, and pursuant to the requirements of 48 CFR (FAR) 
part 32, subpart 32.6, the Government may collect this debt by 
offsetting the amount against any payment due the awardee under any 
contract between the awardee and the Government.

(End of clause)

[FR Doc. 95-7097 Filed 3-22-95; 8:45 am]
BILLING CODE 6820-34-D