Putting the Lid on Litigation

February 1996

FEDERAL ACQUISITION GUIDE

Alternative dispute resolution curbs bid protests.

Despite progress being made as a result of acquisition-reform legislation, the federal procurement system still is plagued by excessive litigation. Last year, almost 4,000 bid protests were filed with the General Accounting Office, the General Services Administration's Board of Contract Appeals, the district courts and the Court of Federal Claims. Protests have become so common that many vendors now build litigation expenses into their bid-preparation figures-and eventually pass those costs on to federal customers.

Agencies complain that protests cost too much to defend and delay contract awards for months or even years. During that time, workers in agency procurement shops are forced to focus on defense preparation for their bids instead of mission objectives.

In an effort to stem the tide of protests, President Clinton recently issued an executive order intended to encourage agencies and vendors to use alternative dispute resolution (ADR) techniques to resolve grievances. The order requires agencies, in almost all cases, to suspend contract performance if companies opt for ADR instead of filing formal protests. In the past, many losing bidders ignored the ADR option because-unlike formal protests-it could not halt a disputed contract while negotiations took place.

ADR procedures-such as mediation, arbitration, mini-trials and neutral fact-finding-are faster, cheaper and less contentious than traditional contract litigation. President Clinton's executive order is an attempt to bolster support for ADR.

"ADR techniques can preserve good working relationships, increase the odds of developing lasting solutions to conflict, and provide opportunities to craft win-win solutions that meet the needs of the parties to a dispute," says Michael Gerich of the Office of Federal Procurement Policy.

The procurement office, which has been providing ADR program assistance, has secured pledges from 24 agencies to use alternative dispute resolution in 60 contracts. An estimated 20 percent of all federal contract disputes in 1996 are expected to be resolved through ADR techniques.

Some agencies have had tremendous success with alternative dispute resolution. Since 1991, for instance, the Army Materiel Command has used ADR techniques to resolve 337 protests internally and has avoided litigation in all but 37 cases.

"The fundamental principles needed to ensure fair problem resolution are honesty, candor and objectivity," says Richard Couch, the Army Materiel Command's assistant counsel. "We offer all of these in an alternative protest forum that provides appropriate contractor relief where warranted with almost no impact on military readiness."

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