Federal Acquisition Regulation; Alternative Dispute Resolution 1996

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 6, 24, 33, and 52

[FAC 97-09; FAR Case 97-015; Item III]

RIN 9000-AH72

Federal Acquisition Regulation; Alternative Dispute Resolution--

1996

AGENCIES: Department of Defense (DoD), General Services Administration

(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense

Acquisition Regulations Council have agreed on a final rule amending

the Federal Acquisition Regulation (FAR) to implement the

Administrative Dispute Resolution Act of 1996 (Pub. L. 104-320) and

Section 4321(a)(7) of the Clinger-Cohen Act of 1996 (Pub. L. 104-106).

This regulatory action was not subject to Office of Management and

Budget review under Executive Order 12866, dated September 30, 1993,

and is not a major rule under 5 U.S.C. 804.

EFFECTIVE DATE: December 29, 1998.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS

Building, Washington, DC 20405, (202) 501-4755, for information

pertaining to status or publication schedules. For clarification of

content, contact Mr. Jack O'Neill, Procurement Analyst, at (202) 501-

3856. Please cite FAC 97-09, FAR case 97-015.

SUPPLEMENTARY INFORMATION:

A. Background

This final rule amends FAR Parts 6, 24, 33, and 52 to implement the

Administrative Dispute Resolution Act of 1996 (Pub. L. 104-320) and

Section 4321(a)(7) of the Clinger-Cohen Act of 1996 (Pub. L. 104-106).

The rule makes clear the authority to contract with a neutral person as

an exception to requirements for full and open competition, revises

requirements for certification of a claim under the Administrative

Dispute Resolution Act to conform to the requirements under the

Contract Disputes Act, and specifies that certain dispute resolution

communications are exempt from disclosure under the Freedom of

Information Act.

A proposed rule was published in the Federal Register at 62 FR

55678, October 27, 1997. Comments were received from eight sources. All

comments were considered in the development of the final rule.

B. Regulatory Flexibility Act

The Department of Defense, the General Services Administration, and

the National Aeronautics and Space Administration certify that this

final rule will not 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 rule adds guidance

pertaining to, but does not significantly alter the procedures for,

alternative dispute resolution. Alternative dispute resolution

procedures allow voluntary resolution of issues in controversy.

C. Paperwork Reduction Act

The Paperwork Reduction Act does not apply because the 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. However, it does

reduce the information collection requirements relating to

Certification of Claims, OMB Control No. 9000-0035. Accordingly, a

request to reduce the total burden hours has been submitted to OMB.

List of Subjects in 48 CFR Parts 6, 24, 33, and 52

Government procurement.

Dated: October 22, 1998.

Edward C. Loeb,

Director, Federal Acquisition Policy Division.

Therefore, 48 CFR Parts 6, 24, 33, and 52 are amended as set forth

below:

1. The authority citation for 48 CFR Parts 6, 24, 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 6--COMPETITION REQUIREMENTS

2. Section 6.302-3 is amended by revising paragraph (a)(2)(iii) to

read as follows:

6.302-3 Industrial mobilization; engineering, developmental, or

research capability; or expert services.

(a) * * *

(2) * * *

(iii) To acquire the services of an expert or neutral person (see

33.201) for any current or anticipated litigation or dispute.

* * * * *

PART 24--PROTECTION OF PRIVACY AND FREEDOM OF INFORMATION

3. Section 24.202 is amended by adding paragraph (c) read as

follows:

24.202 Prohibitions.

* * * * *

(c) A dispute resolution communication that is between a neutral

person and a party to alternative dispute resolution proceedings, and

that may not be disclosed under 5 U.S.C. 574, is exempt from disclosure

under the Freedom of Information Act (5 U.S.C. 552(b)(3)).

PART 33--PROTESTS, DISPUTES, AND APPEALS

4. Section 33.201 is amended by revising the definition

``Alternative dispute resolution (ADR)'' to read as follows:

33.201 Definitions.

* * * * *

Alternative dispute resolution (ADR) means any type of procedure or

combination of procedures voluntarily used to resolve issues in

controversy. These procedures may include, but are not limited to,

conciliation, facilitation, mediation, fact-finding, minitrials,

arbitration, and use of ombudsmen.

* * * * *

[[Page 58595]]

33.204 [Amended]

5. Section 33.204 is amended in the fifth sentence by removing

``Public Law 100-522'' and inserting ``(5 U.S.C. 571, et seq.)''.

6. Section 33.207 is amended by revising paragraph (a) to read as

follows:

33.207 Contractor certification.

(a) Contractors shall provide the certification specified in

paragraph (c) of this section when submitting any claim exceeding

$100,000.

* * * * *

7. Section 33.214 is amended at the end of paragraph (a)(3) by

inserting ``and''; at the end of paragraph (a)(4) by removing ``; and''

and inserting a period; by removing paragraph (a)(5); by revising

paragraph (b); and by adding paragraphs (f) and (g) to read as follows:

33.214 Alternative dispute resolution (ADR).

* * * * *

(b) If the contracting officer rejects a contractor's request for

ADR proceedings, the contracting officer shall provide the contractor a

written explanation citing one or more of the conditions in 5 U.S.C.

572(b) or such other specific reasons that ADR procedures are

inappropriate for the resolution of the dispute. In any case where a

contractor rejects a request of an agency for ADR proceedings, the

contractor shall inform the agency in writing of the contractor's

specific reasons for rejecting the request.

* * * * *

(f)(1) A solicitation shall not require arbitration as a condition

of award, unless arbitration is otherwise required by law. Contracting

officers should have flexibility to select the appropriate ADR

procedure to resolve the issues in controversy as they arise.

(2) An agreement to use arbitration shall be in writing and shall

specify a maximum award that may be issued by the arbitrator, as well

as any other conditions limiting the range of possible outcomes.

(g) Binding arbitration, as an ADR procedure, may be agreed to only

as specified in agency guidelines. Such guidelines shall provide advice

on the appropriate use of binding arbitration and when an agency has

authority to settle an issue in controversy through binding

arbitration.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

8. Section 52.233-1 is amended by revising the date of the clause

and paragraphs (d)(2)(i) and (g) to read as follows:

52.233-1 Disputes.

* * * * *

Disputes (Dec 1998)

* * * * *

(d)(2)(i) The Contractor shall provide the certification

specified in paragraph (d)(2)(iii) of this clause when submitting

any claim exceeding $100,000.

* * * * *

(g) If the claim by the Contractor is submitted to the

Contracting Officer or a claim by the Government is presented to the

Contractor, the parties, by mutual consent, may agree to use

alternative dispute resolution (ADR). If the Contractor refuses an

offer for ADR, the Contractor shall inform the Contracting Officer,

in writing, of the Contractor's specific reasons for rejecting the

offer.

* * * * *

[FR Doc. 98-28957 Filed 10-29-98; 8:45 am]

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