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SUBCHAPTER J. Procedures for Vendor Protests of Procurements §§1.1101 - 1.1107

The Texas Department of Insurance proposes new §§1.1101 - 1.1107 concerning procedures for vendor protests. These new sections are necessary to establish the procedures for vendor protests of procurements in accordance with §2155.076 of the Texas Government Code. Section 2155.076 requires that each state agency by rule shall develop and adopt protest procedures for resolving vendor protests regarding purchasing issues. These rules must be consistent with vendor protest rules adopted by the General Services Commission (GSC). The rules must also include standards for maintaining documentation about the purchasing process to be used in the event of a protest.

Proposed §1.1101 contains definitions and states that the purpose of the subchapter is to implement the provisions of Section 2155.076 of the Government Code. Proposed §1.1102 addresses the procedures for filing a bid protest. Proposed §1.1103 describes the process for review and determination of a bid protest. Proposed §1.1104 addresses appeals of a bid protest determination. Proposed §1.1105 states that protests and appeals must be filed timely in order to be considered. Proposed §1.1106 describes the status of the procurement during a protest and appeal. Proposed §1.1107 indicates the period of time that the department must retain documents related to the procurement.

Karen Phillips, Chief Financial Officer, has determined that for each year of the first five years the proposed sections will be in effect, there will be no fiscal impact to state and local governments as a result of the enforcement or administration of the rule. There will be no measurable effect on local employment or the local economy as a result of the proposal.

Ms. Phillips has determined that for each year of the first five years the sections are in effect, the public benefits anticipated as a result of the proposed sections will be the establishment of procedures for vendor protests. The proposed rules provide an efficient process by which issues related to procurement opportunity can be asserted and resolved. The proposed rules will provide a more equitable and efficient process for resolution of vendor protests. The probable economic cost to persons required to comply with the sections for each year of the first five years the sections are in effect, are the result of the legislative enactment of Section 2155.076 of the Texas Government Code, and are not the result of the adoption, enforcement, or administration of the proposed new sections. As such, there will also be no adverse economic effect on small or micro businesses. Additionally, because the requirements of this rule are mandated by the underlying state statute, and considering the statute's purpose, it is neither legal nor feasible to waive or modify the requirements of these sections for small and micro businesses, as doing so would result in a disparate effect on persons affected by these proposed sections.

To be considered, written comments on the proposal must be submitted no later than 5:00 p.m. on October 15, 2001 to Lynda H. Nesenholtz, General Counsel and Chief Clerk, Mail Code 113-2A, Texas Department of Insurance, P. O. Box 149104, Austin, Texas 78714-9104. An additional copy of the comment must be simultaneously submitted to Cynthia Villarreal-Reyna, Mail Code 110-1A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104. Any requests for a public hearing should be submitted separately to the Office of the Chief Clerk.

The sections are proposed under the Government Code §2155.076 and Insurance Code §36.001. Section 2155.076 provides that each state agency shall adopt rules, consistent with the rules adopted by the General Services Commission, establishing protest procedures for resolving vendor protests with respect to purchasing issues. Section 36.001 provides that the Commissioner of Insurance may adopt rules to execute the duties and functions of the Texas Department of Insurance only as authorized by statute. The following statute is affected by this proposal: Texas Government Code §2155.076

§1.1101. Purpose. The purpose of this subchapter is to provide a protest procedure to be used by any actual or prospective bidder, offeror, proposer, or contractor who is aggrieved in connection with the solicitation, evaluation, or award of a contract by the department. These procedures are consistent with rules adopted by the General Services Commission.

§1.1102. Filing of Protest.

(a) An actual or prospective bidder, offeror, proposer, or contractor who is aggrieved in connection with the solicitation, evaluation, or award of a contract by the department may file a written protest. The protest must be addressed to the department's chief financial officer and must be received no later than 10 working days after the aggrieved person knows, or should have known, of the occurrence of the action which is protested.

(b) The protest must be sworn and must contain the following:

(1) a specific identification of the statutory or regulatory provision(s) or procedure(s) that the action complained of is alleged to have violated;

(2) a specific description of each act alleged to have violated the statutory or regulatory provision(s) or procedure(s) identified in the protest;

(3) a precise statement of the relevant facts;

(4) an identification of the issue or issues to be resolved;

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

(6) a statement that copies of the protest have been mailed or delivered to all other identifiable interested parties.

(c) Upon written request, the department will furnish to the requestor a list of interested parties, as reflected in the records of the department's Purchasing and Contracts Administration Division.

§1.1103. Review of Protest and Determination.

(a) Upon receipt of a timely protest that conforms with this subchapter, the chief financial officer will review the protest. The chief financial officer may request written responses to the protest from any department staff and may request from department staff any and all documents related to the protest. The chief financial officer may solicit written responses to the protest from other interested parties.

(b) The chief financial officer has the authority, prior to appeal to the Commissioner, to settle and resolve the dispute concerning the solicitation or award of the contract.

(c) If the protest is not resolved by mutual agreement, the chief financial officer will issue a written determination on the protest.

(1) If the chief financial officer determines that no violation of rules, statutes, or procedures has occurred, the chief financial officer shall inform the protesting party and all other interested parties of that determination by letter, which must set forth the reasons for the determination.

(2) In a case where a contract has not been awarded, if the chief financial officer determines that a violation of the rules, statutes, or procedures has occurred, the chief financial officer shall inform the protesting party and all other interested parties of that determination by letter. The letter must set forth the reasons for the determination and may set forth any appropriate remedial action.

(3) In a case where a contract has been awarded, if the chief financial officer determines that a violation of the rules, statutes, or procedures has occurred, the chief financial officer shall inform the protesting party and other interested parties of that determination by letter. The letter must set forth the reasons for the determination and may set forth any appropriate remedial action, which may include canceling or voiding the contract to the extent allowed by law.

§1.1104. Appeal.

(a) A protesting party or any other interested party who is not satisfied with the determination of the chief financial officer may appeal the determination to the commissioner. The appeal must be submitted in writing to the commissioner and received in the office of the commissioner no later than 10 working days after the date of the chief financial officer's determination. The appeal is limited to review of the chief financial officer's determination.

(b) The appealing party must mail or deliver copies of the appeal to all other interested parties. The appeal to the commissioner must contain an affidavit that such copies have been provided.

(c) Upon receipt of a timely appeal that conforms with this subchapter, the commissioner may designate one or more members of the department's executive management staff or other employees of the department to review the protest, the determination of the chief financial officer, and the appeal of the determination. The designee(s) will prepare and submit to the commissioner a written recommendation regarding the appeal.

(d) The written decision of the commissioner shall be the final administrative action of the department regarding the protest and appeal.

§1.1105. Failure to File Timely. Protests and appeals that are not filed timely will not be considered, unless good cause for delay is shown or the commissioner determines that a protest or appeal raises issues significant to the department's procurement practices or procedures.

§1.1106. Status of Procurement During Protest and Appeal. If the contract being protested has not been awarded, upon the timely filing of a protest and appeal under these procedures, the department shall not proceed further with the solicitation or award of the contract unless the chief financial officer, in consultation with the appropriate executive management staff, makes a written determination that the award of the contract without delay is necessary to protect substantial interests of the State of Texas.

§1.1107. Retention of Documents. The department will maintain all documentation about the purchasing process to be used in the event of a protest or appeal in accordance with the department's retention schedule.



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