Texas Department of Transportation Page 1 of...

Texas Department of Transportation Page 1 of 12 Contract and Grant Management

OGC: 10/12/2012 11:43 AM Exhibit A

Adoption Preamble 1

The Texas Department of Transportation (department) adopts 2

amendments to §9.1 and new §9.7, concerning contract claims and 3

protests. These rules are adopted concurrently with new 4

§§1.101-1.108 of this title, concerning alternative dispute 5

resolution. The amendments to §9.1 and new §9.7 are adopted 6

with changes to the proposed text as published in the August 10, 7

2012, issue of the Texas Register (37 TexReg 6000). 8

9

EXPLANATION OF ADOPTED AMENDMENTS AND NEW SECTION 10

Title 43, Texas Administrative Code (TAC), §9.2, Contract Claim 11

Procedure, applies to contract claims described by the statutory 12

provisions listed in Transportation Code, §201.112 (generally, 13

aviation contracts, logo signs contracts, highway improvement 14

contracts, and professional or consulting services contracts). 15

Section 9.1, currently titled Claims for Purchase Contracts, 16

applies to contract claims that are subject to Government Code, 17

Chapter 2260; however, the wording of the section may be subject 18

to a more restrictive reading. Section 9.1 is amended to 19

clarify the application of that section, namely that the section 20

applies to the processing of all contract claims except those 21

processed under §9.2. 22

23

The procedure for protests of purchases by the department under 24

the State Purchasing and General Services Act (Government Code, 25


OGC: 10/12/2012 11:43 AM Exhibit A

Chapters 2151-2177) is provided by 43 TAC §9.3. Additionally, 1

43 TAC §9.154 provides the exclusive procedures for protests 2

related to the procurement of design-build contracts, and 43 TAC 3

§27.6 provides the exclusive procedure for protests related to 4

procurement of comprehensive development agreements. However, 5

protest procedures for other types of contracts (for example, 6

highway improvement contracts, and engineering services 7

contracts) are not currently provided for by rule. New §9.7 8

provides a general protest process. 9

10

Amendments to §9.1 change the section heading to indicate that 11

the section applies to contracts that are subject to Government 12

Code, Chapter 2260. To clarify the types of contracts to which 13

the section applies, the amendments substitute "contract" for 14

the references to "purchase contract" throughout the section and 15

provide a definition of "contract." "Contract" means a written 16

contract for goods or services, but does not include a contract 17

to which §9.2 applies. The rule is changed on adoption to 18

reflect in the definition of "director of contract services" the 19

organizational change of the Contract Services Section in the 20

department's General Services Division to the department's 21

Contract Services Office; the Contract Services Office was 22

created effective September 1, 2012. In the definition of 23

"executive director," the limitation that a person designated to 24

perform the duties assigned to the executive director under the 25


OGC: 10/12/2012 11:43 AM Exhibit A

section may not be below the level of office director is 1

removed. This change allows the executive director more 2

flexibility in designating a department employee who has 3

expertise in contract claims negotiations. The definition of 4

"purchase" is removed because the term is not used in the 5

amended section. 6

7

New §9.7, Protest of Contract Practices or Procedures, provides 8

a general protest process that is applicable to the award of a 9

contract for which the rules of the commission do not provide a 10

protest process. The provisions to which this section applies 11

include Chapter 9, Subchapter B, Highway Improvement Contracts, 12

Subchapter C, Contracting for Architectural, Engineering, and 13

Surveying Services, and Subchapter F, Contracts for Scientific, 14

Real Estate Appraisal, Right of Way Acquisition, and Landscape 15

Architectural Services. 16

17

New §9.7(b) provides that, for a protest to be valid, it must be 18

received by the executive director no later than six days after 19

the aggrieved person knows, or should have known, of the action 20

for which the protest is filed. 21

22

New §9.7(c) provides the items that must be included in the 23

protest. 24

25


OGC: 10/12/2012 11:43 AM Exhibit A

New §9.7(d) expressly authorizes the executive director to refer 1

the protest for alternative dispute resolution under Title 43, 2

Chapter 1, Subchapter G, Alternative Dispute Resolution; that 3

subchapter is adopted concurrently with the addition of this 4

provision. If the resolution is successful, a written agreement 5

will be produced and any suspension of the award of the contract 6

will be lifted. 7

8

New §9.7(e) provides the solicitation or the award of a contract 9

will continue after a protest has been filed unless the 10

executive director or, if the commission is to decide the 11

protest, the commission, determines that the delay will not 12

substantially harm the interests of the department. 13

14

Under New §9.7(f) if the protest is not resolved by agreement, 15

the executive director will deliver to the commission a written 16

recommendation for a decision that includes the reasons for the 17

recommendation if the commission is to decide the protest or, if 18

the department decides the protest, the executive director will 19

issue a written decision on the protest that includes reasons 20

for the decision. The recommendation or decision will be that a 21

violation did not occur or that a violation has occurred, but 22

remedial action is unnecessary or remedial action is necessary. 23

Remedial action may include voiding the contract, reversing the 24

contract award, or re-advertising the contract using revised 25


OGC: 10/12/2012 11:43 AM Exhibit A

specifications. The executive director will deliver a copy of 1

the recommendation or decision, as appropriate, to the 2

protesting party and interested parties identified in the 3

protest. 4

5

New §9.7(g) applies only if the commission decides the protest. 6

The commission may consider, in addition to the executive 7

director's recommendation, oral presentations and written 8

documents presented by the department, protesting party, or 9

interested parties identified in the protest. The commission 10

will adopt its decision by minute order. 11

12

New §9.7(h) clarifies that for this section the commission 13

decides a protest if commission rules provide that the 14

commission awards the contract that is the subject of the 15

protest. For example, under current adopted rules the 16

commission awards highway improvement contracts, and so the 17

commission would make the decision on any protest concerning 18

such contracts. The executive director decides the protests on 19

other contracts. Finally, a decision of the commission or 20

executive director is final and the protest may not be the 21

subject of a contested case. 22

23

COMMENTS 24

Comments concerning §9.7 were received from Gardere Wynne 25


OGC: 10/12/2012 11:43 AM Exhibit A

Sewell, LLP (Gardere) in the form of a newsletter. 1

2

Comment: Gardere commented that the description of a person who 3

may file a protest, a "person who is aggrieved," is not defined. 4

The commenter also noted that for similar federal rules 5

concerning the filing of a protest concerning a solicitation by 6

a federal agency, there is considerable litigation over who has 7

standing to file a protest. See, 4 C.F.R. Part 21. 8

9

Response: The purpose of the rule is to establish very basic 10

procedural requirements on how the department will process a 11

protest concerning a procurement for the types of contracts for 12

which the department does not already have a protest procedure. 13

Previously, the department has processed such a protest without 14

rules that are specifically tailored to guide the process for 15

that type of protest. Historically, the only persons who have 16

filed protests are bidders. The department does not anticipate 17

that questions will arise concerning whether a filing party is 18

an aggrieved party and a rule change in response to this comment 19

is not made. 20

21

Comment: Gardere commented that the rule has no procedure for 22

"intervention" in the process, for example, by the bidder who 23

was awarded the contract. 24

25


OGC: 10/12/2012 11:43 AM Exhibit A

Response: While the department acknowledges that the rule only 1

establishes very basic procedural requirements, the department 2

disagrees that the rule has no provisions for how other 3

interested persons may participate in the evaluation of the 4

protest. Under §9.7(c) the protester must submit a statement 5

that it has given copies of the protest to other identifiable 6

interested parties. Subsection (f) of that section requires the 7

executive director to deliver a copy of the executive director's 8

report evaluating the protest to the identifiable interested 9

parties. Subsection (g) of that section provides that if the 10

commission will make the decision on the protest, the commission 11

may consider oral presentations by the department, the 12

protesting party, or interested parties. The department has not 13

made a change to the rule in response to this comment. 14

15

Comment: Relating to §9.7(b), Gardere commented that the 16

deadline of six days to submit a protest is terribly short. For 17

purposes of comparison, Gardere pointed out that under federal 18

rules the deadline is ten days. 19

20

Response: The department believes the deadline of six days to 21

submit a protest is necessary. For example, the department 22

opens the bids for highway construction and maintenance 23

contracts, which are contracts that are subject to this section, 24

each month at a regularly scheduled bid opening date, and then 25


OGC: 10/12/2012 11:43 AM Exhibit A

in the same month asks the commission at its regularly scheduled 1

public meeting to award the contracts. If the commission is to 2

consider any protests concerning such a procurement before it 3

awards the contract, the deadline for submitting protests must 4

be after the opening of the bids, but before the commission may 5

award the contract. At some times during the year this process 6

requires that the deadline be as short as six days. 7

8

Comment: Also relating to §9.7(b), Gardere commented that the 9

deadline of six days does not specify whether it is six calendar 10

days or six business days. 11

12

Response: The department intends that the deadline is six 13

calendar days, and believes the rule is sufficiently clear 14

without making any changes to the rule. Under the rules of 15

statutory construction, which are also generally applicable to 16

the interpretation of agency rules, "day" means calendar day 17

unless the statute or rule provides a different meaning. 18

19

Comment: Gardere suggested that the rule should allow for 20

submitting a protest at any time before bid opening or the time 21

set for receipt of initial proposals. 22

23

Response: Subsection (b) of §9.7 allows a person who is 24

aggrieved to submit a protest concerning the solicitation, 25


OGC: 10/12/2012 11:43 AM Exhibit A

evaluation, or award of a contract. The department believes the 1

rule allows a person who is aggrieved to file a protest as soon 2

as the person desires to do so. The proposed rule set a period 3

for filing a protest as "within" six days after the aggrieved 4

person knows, or should have known, of the action. The 5

department agrees that the description of the deadline may be 6

made more clear, and so has restated the deadline as "not later 7

than the sixth day after the first day that the aggrieved person 8

knows, or should have known, of the action." 9

10

Comment: Gardere pointed out that the provisions on how to file 11

a protest with the executive director were not clear. 12

13

Response: The department agrees the rule should be made clear 14

and has therefore added a new paragraph that provides that the 15

person who files a protest must follow the instructions in the 16

solicitation for the contract. If the instructions do not 17

specify how to file a protest, the protest must be filed with 18

the executive director. 19

20

Comment: Gardere questioned the provisions in §9.7(e) 21

concerning the solicitation or award of a contract proceeding 22

during the processing of the protest unless the executive 23

director or commission find that delay will not substantially 24

harm the interests of the department. Gardere asserted that a 25


OGC: 10/12/2012 11:43 AM Exhibit A

more relevant test is whether the integrity of the purchasing 1

system is at stake. Gardere stated, for example, that is the 2

test by which it is determined whether a federal procurement or 3

award of the resulting contract should continue. See, 31 U.S.C. 4

§3553(c). 5

6

Response: The department of course agrees that the integrity of 7

the purchasing system is important, but does not believe that 8

any changes to the rule are needed. The department again states 9

that the purpose of the rule is to establish very basic 10

procedural requirements on how the department will process a 11

protest. Under the rule, the department believes that the 12

contract will not be entered into during the processing of most 13

if not all of the protests. But, if entering into the contract 14

promptly is in fact necessary to carrying out the department's 15

responsibilities, the rule should not prevent that from 16

occurring. This is especially relevant, for example, for 17

highway construction and maintenance contracts because the 18

commission will make the decisions for such a contract under the 19

rule. The commission usually meets only once per month. A rule 20

setting forth very basic procedure should not have the effect of 21

automatically putting on hold the processing of a procurement or 22

contract award until the next commission meeting. The 23

department would note that the cited federal statute sets a very 24

different procedure whereby the Comptroller General reviews the 25


OGC: 10/12/2012 11:43 AM Exhibit A

actions of an individual federal agency. In contrast, the 1

department rule provides that one entity, either the executive 2

director or the commission, depending on the type of contract, 3

will make the decisions on the procurement, award of contract, 4

and decision on protest. Therefore, intricate standards of 5

review in the department rule are unnecessary. Finally, under 6

the federal statute, a federal agency may proceed with the award 7

of a contract if it finds that urgent and compelling 8

circumstances that significantly affect the interests of the 9

United States will not permit waiting for the resolution of the 10

protest. The department rule similarly focuses on whether delay 11

will cause harm to the interests of the procuring entity. 12

13

Comment: Gardere objected to the provisions in §9.7(d) which 14

allow for the referral of the protest for alternative dispute 15

resolution. Gardere believes that a referral for dispute 16

resolution will unduly delay the resolution of the protest. 17

18

Response: To further the legislative mandate under 19

Transportation Code, §201.118 requiring the commission to 20

develop and implement a policy to encourage the use of 21

appropriate alternative dispute resolution procedures to assist 22

in the resolution of internal and external disputes under the 23

department's jurisdiction, subsection (d) authorizes but does 24

not require the executive director to refer a protest for 25


OGC: 10/12/2012 11:43 AM Exhibit A

alternative dispute resolution. The department has made no 1

changes in response to this comment because the department 2

intends to ensure that the use of dispute resolution procedures 3

will not unduly delay the resolution of a protest. 4

5

STATUTORY AUTHORITY 6

The amendments and new section are adopted under Transportation 7

Code, §201.101, which provides the Texas Transportation 8

Commission with the authority to establish rules for the conduct 9

of the work of the department. 10

11

CROSS REFERENCE TO STATUTE 12

Government Code, Title 10, Subtitle D; Chapter 2254, Subchapter 13

A; and Chapter 2260. Transportation Code, Chapter 223, 14

Subchapters A-D. 15


NOTE: Additions underlined Exhibit B Deletions in [ ] OGC: 10/12/2012 7:51 AM

SUBCHAPTER A. GENERAL 1

§9.1. Contract Claims under Government Code, Chapter 2260 [for 2

Purchase Contracts]. 3

(a) Purpose. Government Code, Chapter 2260, provides a 4

resolution process for certain contract claims against the 5

state. [Chapter 2260 applies to purchase contracts of the Texas 6

Department of Transportation entered into under the State 7

Purchasing and General Services Act.] This section governs the 8

filing, negotiation, and mediation of such a claim. 9

(b) Definitions. The following words and terms, when used 10

in this section, shall have the following meanings, unless the 11

context clearly indicates otherwise. 12

(1) Claim--A claim for breach of a [purchase] contract 13

between a vendor and the department. 14

(2) Contract--A written contract, other than a contract 15

specified in §9.2(a)(1) of this subchapter (relating to Contract 16

Claim Procedure), between the department and a vendor for goods 17

or services. 18

(3) [(2)] Department--The Texas Department of 19

Transportation. 20

(4) [(3)] Director of contract services--The director of 21

the department's Contract Services Office [Contract Services 22

Section of the department's General Services Division ][Office 23



of General Counsel]. 1

(5) [(4)] Executive director--The executive director of 2

the department or the director's designee [not below the level 3

of office director]. 4

[(5) Purchase --A procurement action under Government 5

Code, Title 10, Subtitle D, for commodities or non professional 6

services.] 7

(6) Vendor--An individual, partnership, corporation, or 8

other [business] entity that is a party to a [written] contract 9

[for a purchase] with the department. 10

(c) Filing of claim. A vendor may file a notice of claim 11

with the director of contract services within 180 days after the 12

date of the event giving rise to the claim. The claim must 13

contain the: 14

(1) nature of the alleged breach; 15

(2) amount the vendor seeks as damages; and 16

(3) legal theory of recovery. 17

(d) Negotiation. 18

(1) The executive director will begin negotiations with 19

the vendor to resolve the claim. The negotiations will begin no 20

later than the 120th day after the date the claim is received. 21

(2) The negotiation may be written or oral. The 22

executive director may afford the vendor an opportunity for a 23



meeting to informally discuss the disputed matters and provide 1

the vendor an opportunity to present relevant information. 2

(e) Mediation. 3

(1) The department and the vendor may agree to nonbinding 4

mediation. The department will agree to mediation if the 5

executive director determines that the mediation may speed 6

resolution of the claim or otherwise benefit the department. 7

(2) The executive director will appoint a department 8

employee as mediator. The employee must not have had any 9

previous involvement or participation in the administration of 10

the contract or the resolution of the claim. 11

(3) If the vendor objects to the appointment of a 12

department employee as mediator, the department will select and 13

hire a private mediator from outside the department. The costs 14

for the services of a private mediator will be apportioned 15

equally between the department and the vendor. 16

(4) The role of a mediator is limited to assisting the 17

parties in attempting to reach an agreed resolution of the 18

issues. 19

(f) Final offer. 20

(1) The executive director will make a final offer to the 21

vendor within 90 days of beginning negotiations. 22

(2) If the disposition is acceptable to the vendor, the 23



vendor shall advise the director of contract services in writing 1

within 20 days of the date of the final offer. The department 2

will forward an agreed disposition involving payment to the 3

vendor for a final and binding order on the claim. 4

(g) Contested case hearing. If the vendor is dissatisfied 5

with the final offer, or if the claim is not resolved before the 6

90th day after negotiations begin, the vendor may petition the 7

executive director for an administrative hearing to litigate the 8

unresolved issues in the claim under the provisions of §1.21 et 9

seq. of this title (relating to Procedures in Contested Case 10

[Cases]). 11

12

§9.7. Protest of Contract Practices or Procedures. 13

(a) Application of section. This section provides a 14

general protest process for the award of a contract for which 15

the rules of the commission do not provide a protest process. 16

For the purpose of the application of this section, a rule that 17

merely provides that a protest, appeal, or other type of request 18

for review may be filed, without establishing any other steps 19

that must be satisfied, does not provide a protest process. 20

(b) Filing of protest. 21

(1) A person who is aggrieved in connection with the 22

solicitation, evaluation, or award of a contract to which this 23



section applies may file a written protest. The protest must be 1

received by the executive director not later than the sixth day 2

after the first day that the aggrieved person knows, or should 3

have known, of the action. A protest that is not filed within 4

the six-day period will not be considered. 5

(2) A protest must be filed in the manner and at the 6

address for submitting protests specified in the solicitation 7

for the contract. If the solicitation does not provide 8

instructions on how to file a protest, a protest must be sent by 9

United States Mail, overnight delivery, or hand delivery, to: 10

Executive Director, Texas Department of Transportation, 125 East 11

11th Street, Austin, Texas 78701. The time and date of filing 12

the protest is determined by the file stamp affixed by the 13

office of the department that received the protest filed in 14

accordance with this paragraph. 15

(c) Contents of protest. The protest must contain: 16

(1) the provision of the statute or rule that the action 17

is alleged to have violated; 18

(2) a specific description of the alleged violation; 19

(3) a precise statement of the relevant facts; 20

(4) the issue to be resolved; 21

(5) argument and authorities in support of the protest; 22

and 23



(6) a statement that copies of the protest have been 1

mailed or delivered to other identifiable interested parties. 2

(d) Informal resolution. The executive director may refer 3

the protest for alternative dispute resolution under Chapter 1, 4

Subchapter G of this title (relating to Alternative Dispute 5

Resolution). If the protest is resolved by agreement: 6

(1) the agreement will be reduced to writing; and 7

(2) if the solicitation or the award of the contract has 8

been suspended under subsection (e) of this section, the 9

solicitation or award will resume immediately after the 10

agreement is reached. 11

(e) Suspension of solicitation or award. If a protest has 12

been filed, the solicitation or the award of the contract will 13

proceed unless the executive director or, if the commission is 14

to decide the protest, the commission, determines that the delay 15

of the solicitation or award of the contract will not 16

substantially harm the interests of the department. 17

(f) Executive director's recommendation or decision. This 18

subsection applies if the protest is not resolved by agreement. 19

If the commission is to decide the protest, the executive 20

director will deliver to the commission, protesting party, and 21

interested parties identified in the protest a written 22

recommendation for a decision that includes the reasons for the 23



recommendation. If the department, rather than the commission, 1

decides the protest, the executive director will issue a written 2

decision to the protesting party and interested parties 3

identified in the protest that includes reasons for the 4

decision. The executive director may recommend to the 5

commission or may decide, as appropriate, that: 6

(1) no violation has occurred; 7

(2) a violation has occurred, but remedial action is 8

unnecessary; or 9

(3) a violation has occurred and it is necessary to take 10

remedial action that may include: 11

(A) declaring the contract void; 12

(B) reversing the award; or 13

(C) re-advertising the contract using revised 14

specifications. 15

(g) Commission's decision. If the commission is to decide 16

the protest, in addition to the executive director's 17

recommendation provided under subsection (f) of this section, 18

the commission may consider oral presentations and written 19

documents presented by the department, protesting party, or 20

interested parties. The chair shall set the order and the time 21

allowed for presentations. The commission's decision on the 22

protest will be adopted by order and may be made part of the 23



order awarding the contract that is the subject of the protest. 1

(h) Authority to make decision on protest. For the 2

purposes of this section, the commission decides a protest if 3

commission rules provide that the commission awards the contract 4

that is the subject of the protest. The executive director 5

decides the protests on other contracts. A decision of the 6

commission or executive director is final and the protest may 7

not be the subject of a contested case. 8

Date post:	25-Jul-2020
Category:	Documents
Upload:	others
View:	0 times
Download:	0 times

Texas Department of Transportation Page 1 of...

Documents