Why yes, yes you can! In fact, there is a little known provision of the Federal Acquisition Regulations (FAR) that speaks directly to a contractor’s right to request government participation in Alternative Dispute Resolution (ADR) for any contracting “issue in controversy.” And as long as the four essential elements of ADR stated therein are met, a contracting officer must either agree to such ADR or provide a written explanation with cited statutory or legal authority for rejecting the request.
FAR 33.214 covers contractor-contracting office ADR. It says ADR “may be used at any time that the contracting officer has authority to resolve the issue in controversy.” It also says the objective of such ADR is “to increase the opportunity for relatively inexpensive and expeditious resolution of issues in controversy.”
The FAR lists the four “essential elements of ADR” as follows:
- Existence of an issue in controversy;
- A voluntary election by both parties to participate in the ADR process;
- An agreement on alternative procedures and terms to be used in lieu of formal litigation; and
- Participation in the process by officials of both parties who have the authority to resolve the issue in controversy.
So, provided a contractor or contracting agency has identified an issue in controversy as a good candidate for ADR, the next step is to request ADR and get both parties’ consent. Either party can request ADR. And there is a lot of flexibility regarding ADR, as there is a lot of agency discretion and really no set ADR timeframes or deadlines.
The FAR, however, does prohibit agencies and solicitations from requiring ADR as “a condition of award, unless arbitration is otherwise required by law.” On that note, it adds, “[c]ontracting officers should have flexibility to select the appropriate ADR procedure to resolve the issues in controversy as they arise.”
The FAR also speaks to situations where other types of contract dispute litigation or procedures have already been initiated. It says:
If a claim has been submitted, ADR procedures may be applied to all or a portion of the claim. When ADR procedures are used subsequent to the issuance of a contracting officer’s final decision, their use does not alter any of the time limitations or procedural requirements for filing an appeal of the contracting officer’s final decision and does not constitute a reconsideration of the final decision.
In perhaps the most impactful part of the FAR’s ADR provisions, it details the options of the non-requesting party in responding to an ADR request. Where a contractor requests ADR, it says:
If the contracting officer rejects a contractor’s request for ADR proceedings, the contracting officer shall provide the contractor a written explanation citing one or more of the conditions in 5 U.S.C. 572(b) or such other specific reasons that ADR procedures are inappropriate for the resolution of the dispute.
And where a contracting agency requests ADR proceedings, it requires any contractor rejecting such request to “inform the agency in writing of the contractor’s specific reasons for rejecting the request.”
But if neither party objects to ADR, it results in the “voluntary election by both parties to participate in the ADR process[,]” meaning the FAR’s second essential element is also met. The next step, then, is to negotiate and execute a formal ADR agreement setting forth the specific “alternative procedures and terms to be used in lieu of formal litigation.” This agreement, the FAR requires “be in writing” and “specify a maximum award that may be issued by the arbitrator, as well as any other conditions limiting the range of possible outcomes.”
In that regard, the FAR adds the following:
Binding arbitration, as an ADR procedure, may be agreed to only as specified in agency guidelines. Such guidelines shall provide advice on the appropriate use of binding arbitration and when an agency has authority to settle an issue in controversy through binding arbitration.
As for selection of an arbitrator, the FAR again provides vast agency discretion and allows the parties substantial freedom to contract. It does note, “[w]hen appropriate, a neutral person may be used to facilitate resolution of the issue in controversy using the procedures chosen by the parties.” Lastly, the FAR explains such ADR proceedings are subject to confidentiality and “shall be protected consistent with 5 U.S.C. 574.”
It is clear from the language of the FAR that ADR is a solid option for contractors and contracting agencies to consider for resolving any contract disputes and issues in controversy. In fact, ADR is strongly encouraged for its ability to keep costs down for both contracting parties and get things resolved much faster than more traditional procedures often can. This is why the FAR only allows a party to reject an ADR request with a detailed written explanation as to why ADR would be “inappropriate” (even requiring agencies to cite any statutory conditions supporting their rejection of ADR procedures).
As such, in situations where contract issues, performance problems, delays, etc., arise for more complex reasons or based on the actions/inactions of more than one party, an ADR request can be a really smart option for contractors. It is often something we encourage contractors to consider–and at least request the agency consider–where a contractor is facing a cure notice, notice of potential default or potential partial or full termination of any kind, and/or circumstances necessitating a request for equitable adjustment or cost claim.
Questions about ADR or this post? Email us. Need legal assistance? Call us at 785-200-8919.
Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook.