Dispute Resolution Today
Or is it a reprise of yesterday’s ADR theme—“Play It Again, Sam?”
Use of ADR in Government Contract Transactions

NDIA Annual Education Seminar

Las Vegas, Nevada March 7, 2005

Charles E. Rumbaugh


·        ADR “Commitments”…

o       Military and Civilian agencies ADR commitments/reports.  http://www.adr.af.mil/.  Awards for Air Force ADR program.  “Overarching principles Between the AF and ____Concerning Use of ADR Processes” for primes.  Boards use of ADR. 

o       FAR Part 33.214.

o       Aerospace/Defense Industry Dispute Resolution Commitment.

o       Center for Public Resources Corporate Policy Statement on Alternatives to Litigation—www.cpradr.org

o       American Arbitration Association 2003 Dispute-Wise SM Business Management Report—www.adr.org

o       ABA/NDIA Guide to Fixed-Price Supply Subcontract Terms and Conditions.

·        Open issues from CODSIA January 8, 1998 letter on FAR ADR changes and other current ADR topics…

o       Allowability of ADR costs —Is there really an incentive to use ADR at prime level?  Certification of claims results in unallowable ADR costs at the Board!  Making ADR a “contract management function,” contract negotiation tool, and making ADR an allowable cost.  FAR Part 31.205-47(a) & (f).  DCAA AUDIT MANUAL 12-606 “Costs of Preparing and Supporting Equitable Adjustment Proposals or Claims.”

o       Binding Arbitration —Moving ADR to the left on contract formation, contract performance issues, etc. Letter Contracts/Subcontracts, etc.  Use of commercial ADR practices including “Baseball Arbitration.”   Board use of “Summary Trials.” 

o       Use of Judgment Fund by private neutrals—bias toward public sector “neutrals?”  Who is “really” neutral?  Complementary use and cost effectiveness of private ADR sector. 

o       Past Performance Ratings of Primes “may” depend upon use of ADR ?

o       Commercial ADR —Small Business/Subcontractors ADR opportunities.

o       Is Implementation of ADRA complete or merely a first step in a process?

·        Consolidation of Civilian Boards

·        Making ADR more user-friendly and reflecting the commercial marketplace—international arbitrations, etc.

·        Baseball Arbitration

“The parties shall exchange with each other and submit to the Arbitrator their last best offer(s) to the other.  The Arbitrator shall select one or the other of such two offers and shall award such selection.”