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