Alternative Dispute Resolution in Government

Abstract

Unlike most commercial business transactions, which are usually repetitive and involve a limited number of parties, construction contracts are unique and often complex agreements among multiple parties. Even a modest-sized public works project encompasses an array of contractual relationships that may represent well over 100 business interests. It is little wonder that within such a maze, unfulfilled expectations, disputes and claims arise. Alternative dispute resolution (ADR) techniques such as negotiation, mediation, minitrials, dispute review boards, and binding and nonbinding arbitration are effective ways to settle construction disputes in government contacts. However, the federal government’s use of these techniques has been limited to the few occasions when high-level initiatives are exercised. The time has come to make ADR the rule, not the exception. Government’s use of ADR has thus far been inefficient. This has resulted because it is necessary to design the ADR process and negotiate an ADR agreement between disputing parties anew each time it is used. Further, when the government uses a nonbinding ADR process, it requires the contracting officer to still produce full financial justification. When the settlement is really a compromise, the contracting officer goes through the useless and contrived exercise of backing into the agreed upon amount. The dispute resolution process should be specified in the construction contract to take advantage of appropriate ADR techniques. The government should embrace binding arbitration as equally valid alternative to litigation or actions before an agency’s board of contract appeals or the U.S. Claims Court. Binding decisions have the force of law and should not require contracting officer ratification or be subject to federal audit. When panels are selected for ADR procedures, such as DRBs or arbitration, they should always comprise individuals who are completely neutral and knowledgeable in the technical areas of the dispute. Continued attention should be given to dispute avoidance through the use of partnering. All levels of government should realize that allocating a percentage of construction costs is not a valid basis for determining or limiting professional fees. All professional services should be priced on the basis of a detailed scope of services including specific tasks and a methodology for design quality control