1. 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 roehler@perkinscoie.com

2. 2 14011819  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

3. 3 14011819 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

4. 4 14011819 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

5. 5 14011819  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

6. 6 14011819 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

7. 7 14011819 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

8. 8 14011819 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

9. 9 14011819 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

10. 10 14011819 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

11. 11 14011819 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

12. 12 14011819 Partnering – Workshop Agenda  Workshop Agenda  Establish expectations  Describe partnering  Importance of communication and cooperation  Mutual vision

13. 13 14011819 Partnering – Workshop Agenda  Workshop Agenda (cont)  Potential problems  Common Goals  Plan to sustain the relationship  Draft and sign Charter

14. 14 14011819 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

15. 15 14011819 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

16. 16 14011819 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

17. 17 14011819 ASBCA ADR  Settlement Judge  ASBCA judge not assigned to the appeal  Procedures can be altered based on parties' agreement  Non-binding mediation  Mediation Statement

18. 18 14011819 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

19. 19 14011819 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

20. 20 14011819 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

21. 21 14011819 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

22. 22 14011819 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

23. 23 14011819 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

24. 24 14011819 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

25. 25 14011819 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

26. 26 14011819 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.

27. 27 14011819 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