TITLE 34. PUBLIC FINANCE

PART 4. EMPLOYEES RETIREMENT SYSTEM OF TEXAS

CHAPTER 67. HEARINGS ON DISPUTED CLAIMS

34 TAC §67.201

The Employees Retirement System of Texas (ERS) proposes amendments to 34 Texas Administrative Code (TAC) Chapter 67, concerning Hearings on Disputed Claims, by amending §67.201, concerning Procedures Governing Bid Protests.

Section 67.201, Procedures Governing Bid Protests, is proposed to be amended to update the roles of ERS staff involved in the bid protest process due to the reorganization of procurement functions within ERS. It is proposed that vendors will file formal bid protests with the Director of Procurement and Contract Oversight. The proposed amendment also directs when a protest must be filed in order to be filed timely and takes into consideration recent updates to the Comptroller of Public Accounts' bid protest rules.

The amendment further proposes to broaden when a protesting party may be required to post a bond. Currently bonds may only be required if ERS utilizes professional actuarial services in connection with any recommendation to award a contract to a vendor. The proposed amendment permits ERS to require a bond when it is necessary for ERS to utilize professional services by actuaries, consultants or other professionals in its efforts to resolve the protest. Posting of a bond in these instances is in the best interest of the expenditure of ERS' trust funds and is necessary to limit or prevent the filing of protests that are frivolous, filed in bad faith, filed for the purpose of delaying the solicitation and/or award process, or for other reasons not supported by applicable law and facts.

Ms. Paula A. Jones, Deputy Executive Director and General Counsel, has determined that for the first five-year period the rules are in effect, there will be no fiscal implication for state government or local government as a result of enforcing or administering the rules. There are no known anticipated economic costs to persons who are required to comply with the rules as proposed unless a person filing a bid protest is required to post bond and forfeits same upon losing the protest, and, to her knowledge, small businesses should not be affected except potentially for the bond requirement to the extent necessary to comply with the amendment.

Ms. Jones also determined that for each year of the first five years the rules are in effect the public benefit anticipated as a result of enforcing the rules would be clarification of protest procedures reflecting that the ERS Office of Procurement and Contract Oversight now has primary responsibility to oversee any bid protests, which further streamlines the process. Enforcing the rules will also ensure that the trust fund may be made whole in the event protests are filed in bad faith, are frivolous or otherwise are done for purposes of delay.

Comments on the proposed rule amendments may be submitted to Paula A. Jones, Deputy Executive Director and General Counsel, Employees Retirement System of Texas, P.O. Box 13207, Austin, Texas 78711-3207, or by email to Ms. Jones at paula.jones@ers.state.tx.us. The deadline for receiving comments is Monday, August 7, 2017, at 10:00 a.m.

The amendments are proposed under Texas Government Code §815.102(a)(4) and (5), which provide authorization for the ERS Board of Trustees to adopt rules for hearings on contested cases or disputed claims and the transaction of any other business of the Board.

No other statutes are affected by the proposed amendments.

§67.201.Procedures Governing Bid Protests.

(a) A vendor who is aggrieved by the solicitation, evaluation, or award of a contract by ERS, hereinafter referred to as the Protesting Party, may file a formal protest with the Director of Procurement and Contract Oversight of ERS [ERS Chief Financial Officer]. Such protests must be in writing and received in the Office of Procurement and Contract Oversight [ERS Chief Financial Officer's office] within the time stated in subsection (d) of this section [10 calendar days after the Protesting Party knows, or reasonably should have known, of the occurrence of the action that is protested]. Formal protests must conform to the requirements of this subsection, subsection (c), subsection (d), and, when applicable, subsection (e) [(d)] of this section, and shall be resolved in accordance with the procedure set forth in subsections (f) - (m) [(f), (g) and (h)] of this section. Copies of the protest must be mailed or delivered by the Protesting Party to ERS and other Interested Parties. For the purposes of this section, "Interested Parties" means all vendors who have submitted bids or proposals for the applicable contract. The protest must be mailed or delivered to Interested Parties contemporaneously with filing the protest with the Director of Procurement and Contract Oversight of ERS [ERS' Chief Financial Officer].

(b) In the event of a timely protest or appeal under this section, ERS shall not proceed further with the solicitation or with the award of the contract unless the [ERS] Executive Director of ERS makes a [written] determination that the award of the contract or implementation of the contract without delay are necessary to protect the best interests of ERS.

(c) A formal protest must be sworn and, under the penalties of perjury, contain:

(1) a specific identification of the statutory or regulatory provision(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) identified in paragraph (1) of this subsection;

(3) a precise statement of the relevant facts;

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

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

(d) To be considered timely, the protest must be filed:

(1) by the end of the posted solicitation period, if the protest concerns the solicitation documents or actions associated with the publication of solicitation documents; or

(2) no later than 10 calendar days after the notice of award, if the protest concerns the award.

(e) [(d)] [If ERS utilized the professional services of an actuary in connection with any recommendation to award the contract to a vendor, then this subsection shall apply.] If ERS determines that it may need to utilize the services of an actuary, consultant, or another professional (Professional Services) in its efforts to resolve the protest, the Protesting Party shall be required to post a bond in an amount no less than the estimated cost to ERS for such Professional Services [actuarial services ]. The amount of the bond shall be determined in the sole discretion of ERS [by the ERS Chief Financial Officer]. The Protesting Party shall post the bond within five calendar days of notice from ERS that such bond is required or shall be deemed to have waived the right to protest.

(1) If such Professional Services [actuarial services] are utilized by ERS and the bid protest is not finally resolved in favor of the Protesting Party, the Protesting Party shall be required to forfeit its bond.

(2) If such Professional Services [actuarial services] are not utilized by ERS and/or the bid protest is finally resolved in favor of the Protesting Party, the Protesting Party's bond shall be returned to the Protesting Party after final resolution of the bid protest.

(f) The Director of Procurement and Contract Oversight of ERS may accept written responses to the protest from Interested Parties and ERS staff.

(g) [(e)] The Director of Procurement and Contract Oversight of ERS [ERS Chief Financial Officer] may confer with the [ERS] General Counsel of ERS [and/or Director of Procurement] in his/her review of the protest.

(h) [(f)] The Director of Procurement and Contract Oversight of ERS [ERS Chief Financial Officer] shall have the authority to settle and resolve the protest [dispute concerning the solicitation or award of a contract, and may accept written responses to the protest from Interested Parties and ERS staff].

(i) [(g)] If the protest is not resolved by mutual agreement, the Director of Procurement and Contract Oversight of ERS [ERS Chief Financial Officer] will issue a written determination on the protest.

(1) If the Director of Procurement and Contract Oversight of ERS [ERS Chief Financial Officer] determines that no violation of rules or statutes has occurred, he/she shall so inform the Protesting Party and Interested Parties by letter that sets forth the reasons for the determination.

(2) If the Director of Procurement and Contract Oversight of ERS [ERS Chief Financial Officer] determines that a violation of the rules or statutes has occurred in a case where a contract has not been awarded, he/she shall so inform the Protesting Party and Interested Parties by letter which sets forth the reasons for the determination and the appropriate remedial action.

(j) [(h)] The determination of a protest by the Director of Procurement and Contract Oversight [ERS Chief Financial Officer's determination on a protest] may be appealed by the Protesting Party to the [ERS] Deputy Executive Director of ERS. An appeal of the [ERS Chief Financial Officer's] determination by the Director of Procurement and Contract Oversight of ERS must be in writing and must be received in the office of the [ERS] Deputy Executive Director of ERS [Director's office] no later than 10 calendar days after the date of the [ERS Chief Financial Officer's ] determination by the Director of Procurement and Contract Oversight. The appeal shall be limited to the review of the determination by the Director of Procurement and Contract Oversight [ERS Chief Financial Officer's determination]. Copies of the appeal must be mailed or delivered by the Protesting Party to ERS and Interested Parties contemporaneously with filing the appeal to the [ERS] Deputy Executive Director of ERS. The appeal must contain a certified statement that such copies have been served on all parties as required by this subsection.

(k) [(i)] The [ERS] Deputy Executive Director of ERS may confer with the [ERS ] General Counsel of ERS [and/or Director of Procurement] in his/her review of the matter appealed.

(l) An appeal that is not filed timely shall not be considered unless good cause for delay is shown. The Deputy Executive Director shall determine if good cause exists. Good Cause means that a person's failure to act was not because of a lack of due diligence the exercise of which would have caused a reasonable person to take prompt and timely action. A failure to act based on ignorance of the law or facts reasonably discoverable through the exercise of due diligence does not constitute good cause.

(m) [(j)] A decision issued in writing by the [ERS] Deputy Executive Director of ERS shall be the final administrative action of ERS, and no further appeal shall be permitted.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on June 23, 2017.

TRD-201702452

Paula A. Jones

Deputy Executive Director and General Counsel

Employees Retirement System of Texas

Earliest possible date of adoption: August 6, 2017

For further information, please call: (877) 275-4377