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Avoiding and Resolving
Government Contract Disputes
with the Federal Government
Richard W. Oehler
Perkins Coie LLP
1201 Third Avenue
Suite 4800
Seattle, WA 98101
(206) 359-8419
[email protected]
Avoiding and Resolving Contract
Disputes with the Federal Government
 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
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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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Issue Escalation Clause
 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
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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)
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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)
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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 nonbinding 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
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