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Avoiding and Resolving Government Contract Disputes with the Federal Government
Richard W. OehlerPerkins Coie LLP
1201 Third AvenueSuite 4800
Seattle, WA 98101(206) 359-8419
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Having disputes with the Federal Government can be a time consuming and costly process
We will discuss concepts for avoiding and resolving Government Contract disputes with the Federal Government
We will discuss some processes and also some substantive tips
Avoiding and Resolving Contract Disputes with the Federal Government
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Differences in Resolving Claims with Federal Government
A contractor's chances of resolving an issue or dispute improves if he submits to the Government a well-reasoned explanation of his position and supporting documentation
In my experience, this is true regardless of where the parties are in the issue resolution process So, typically, the sooner the better
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Differences in Resolving Claims with Federal Government
Early documentation of an issue helps ensure that one identifies all relevant events and compiles all relevant information
Avoid potential lack of timely notice defense asserted by the Government Differing Site Conditions – Prompt written notice to
the CO before the condition is disturbed Changes – Within 30 days of receipt of change order
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Prescribes a specific process (usually with deadlines) for consideration of an issue at 2 or 3 levels within the contracting agency and the contractor
Limited use in Government Contracts, but becoming fairly common in commercial contracts
Issue Escalation Clause
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Issue Escalation Clause - Elements
First Level – Involves personnel who are familiar with the dispute
Second Level – Involves personnel who are not involved in the dispute
Sometimes a third, senior level
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Issue Escalation Clause – Elements
The time periods to convene the first level and subsequent levels have tight timelines (such as 10 days)
Sometimes provides for an alternative dispute resolution mechanism if multi-level consideration by the parties has not resolved the dispute
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Issue Escalation Clause
Easy to draft and use such a clause No need to involve a third party neutral
and can be scheduled when convenient This process would be utilized before a
CDA claim or REA is filed Can result in a quick resolution
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Partnering
Focuses on the relationship between the parties and the achievement of mutually beneficial objectives
Build an alliance, improve communications and avoid disputes
Corps of Engineers – leader in use of partnering Includes Partnering clauses in solicitations
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Partnering
Parties seek to accomplish their goals through their own actions without the involvement of a third party neutral
Focus is more on business interests than contract rights
Initiated at the beginning of the contract Must have the buy-in of all stakeholders
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Partnering
Usually a workshop immediately after award to identify mutual objectives, roles and responsibilities of the parties, methods to ensure effective communications and establish an issue resolution ladder
Involves cost of facilitator and training Substantial involvement of management
including senior management
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Partnering – Workshop Agenda
Workshop Agenda Establish expectations Describe partnering Importance of communication and
cooperation Mutual vision
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Partnering – Workshop Agenda
Workshop Agenda (cont) Potential problems Common Goals Plan to sustain the relationship Draft and sign Charter
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Resolving a Dispute After the CO's Final Decision
This focuses on alternative dispute resolution in the forums for appeal of a CO's Final Decision
ASBCA – solid program CBCA Court of Federal Claims – Appendix H
Not used much in practice
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Alternative Dispute Resolution (ADR)
Less common in Government Contract disputes, but I frequently try to convince the Government to use ADR
It can produce a result in less time than traditional litigation
It also may result in a business solution
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ASBCA ADR
Three ADR techniques generally used at ASBCA Settlement judge (non-binding mediation) Mini-trial (non-binding) Summary trial with binding decision
ASBCA allows the parties to use any ADR method, or combination of methods, regardless of the amount in dispute
Mutual agreement and Board concurrence required to use ADR
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ASBCA ADR
Settlement Judge ASBCA judge not assigned to the appeal Procedures can be altered based on parties'
agreement Non-binding mediation Mediation Statement
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ASBCA ADR
Mini-trial Each party presents an abbreviated version of
its position to principals with authority and to a Board-appointed neutral advisor
Upon conclusion of presentations, settlement discussions are conducted
Neutral advisor's recommendations are not binding
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ASBCA ADR
Summary Trial with Binding Decision Expedited appeal hearing Trial informally before a judge A summary bench decision at the conclusion of the
hearing or a summary written decision issued NLT 10 days after conclusion of trial or after receipt of trial transcript
The decision is final and nonappealable Decision has no precedential value Pretrial, trial and post-trial procedures generally
modified or eliminated to expedite resolution of the appeal
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ASBCA ADR Procedure
If non-binding ADR is unsuccessful, the appeal will be restored to the docket
ASBCA judge who participated in the non-binding ADR will not: Participate in the restored appeal, unless
explicitly requested by both parties and approved by the ASBCA Chair
Discuss the merits or substantive matters with other ASBCA judges
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ADR Prior to Submitting a Claim
ADR may be employed to resolve a Request for Equitable Adjustment
Use of ADR must be voluntary by both parties Remain aware of any time bars for submitting
your claim Even after a claim is submitted, the parties can
agree to postpone a final decision and appeal to the ASBCA pending ADR proceedings
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Benefits of ADR
Parties save in terms of cost Parties save in terms of time
A formal ASBCA appeal (including pleadings, discovery, trial, post-trial briefing and time for the judge to write the decision) can take two to three years
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When ADR Makes Sense
Routine matters are well suited for ADR For matters that are more significant ("bet
the company" disputes), litigation may be a more appropriate approach
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Lessons Learned
Keep the process as simple as possible Allow for sufficient, but not excessive,
information exchange Ensure that business representatives and
financial decision-makers are available and willing to commit the necessary time
Identify funding sources for an anticipated settlement prior to beginning ADR
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Funding The Settlement
Funds allocated to the contract Judgment Fund – for "judgments" Binding ADR decisions for BCA appeals qualify as
judgments For non-binding ADR, the parties may agree to a
"stipulated judgment" and request the board to treat it as a consent judgment Also payable from the Judgment Fund
Parties must reach agreement on how to treat CDA interest for settlements paid from the Judgment Fund
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Combination ADRs
"Med-Arb" proceedings have become more common Process begins with a full mediation Parties agree that if mediation is unsuccessful, it will
be followed by a summary trial with a binding decision "Last Chance" arbitration is where, prior to a
judge rendering a decision in a summary trial proceeding, the parties attempt a mediated settlement (usually just a few hours). If unsuccessful, the judge issues a decision.
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Confidentiality
Written material prepared specifically for use in ADR, oral presentations made in ADR, and all discussions in connection with ADR proceedings are confidential
The underlying facts and information used during ADR are not confidential
The parties can agree to allow the admission of ADR materials and discussions as evidence in future proceedings