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

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.

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
Federal Register / Vol. 60, No. 56 / Thursday, March 23, 1995 / Proposed Rules 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
15452 Federal Register / Vol. 60, No. 56 / Thursday, March 23, 1995 / Proposed Rules

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