Information provided by:
Charles Rumbaugh
ADR Offices of Charles Rumbaugh
Arbitrator/Private Judge/Mediator/ADR Consultant
PO Box 2636, Rolling Hills (Los Angeles), CA 90274
Tel: (310) 373-1981 / Fax: (310) 373-4182
Toll Free 1-888-ADROffice (888-237-6334)
ADROffice@rumbaugh.net www.rumbaugh.net
Please click Regulatory Update / ADR Tip for further information:
Regulatory/Contractual Update September 29, 2008 (Vol.13 Issue 10)
Regulatory/Contractual Update July 23, 2008 (Vol.13 Issue 8)
Regulatory/Contractual Update May 22, 2008 (Vol.13 Issue 6)
Regulatory/Contractual Update April 28, 2008 (Vol.13 Issue 5)
Past Regulatory Updates* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
On March 20, 2007, the Federal Register noticed a major Government policy change in the area of Alternative Dispute Resolution (ADR) in the form of a new Navy Instruction 5800.15 o n the “Use of Binding Arbitration for Contract Controversies.” This Instruction applies to all contracting activities of the Department of the Navy and authorizes Contracting Officers “to use binding arbitration procedures contained” in the “Department of the Navy Contract Arbitration Procedural Guidance” that is attached to the Instruction. Briefly, this Instruction, and as amplified in the Guidance, authorizes binding arbitration for issues in controversy, as defined by FAR 33.201, and subject to:
• certain regulatory/statutory provisions on ADR, appropriated and non-appropriated funding,
• the approval of the “Associate General Counsel (Litigation) (AGC(L)) on a case-by-case basis in consultation with the Assistant General Counsel (Alternative Dispute Resolution)” and;
• “The approval of appropriate contracting officers and other officials ordinarily required for approval of settlements, as measured by the maximum award cap identified for the proposed arbitration.”
This authorization covers the normal ADR procedure of binding arbitration but also combined mediation/arbitration (MedArb), Dispute Resolution Boards (in greater use in the construction industry), etc. “One intent of this Instruction is to provide as many options to the parties as possible for cost-effective, collaborative dispute resolution.”
In addition the Instruction requires that “all contracting activities shall consider the use of alternative dispute resolution methods, including arbitration, for pending and future claims and issues in controversy” and “Parties rejecting offers of binding arbitration under this instruction shall provide written reasons in accordance with FAR 33.214. Key headings in the Instruction include Parties (e.g. subcontractors can use arbitration with “sponsorship by the prime contractor”), Decision to Use Binding Arbitration, The Arbitration Agreement (and scope of same including maximum liability or cap, confidentiality, discovery, record, etc.), Arbitrators and Hearings, Awards, and Review by US District Court (under the Federal Arbitration Act).
Click here to view the instruction
COMMENT: Almost 10 years ago Industry recommended, among other things, that the Government permit voluntary “binding arbitration” when the current FAR Part 33 on ADR was first proposed as an implementation of the 1996 Administrative Dispute Resolution Act. Other items of comment by industry at that time included the need for clarification on access to the Judgment Fund, clarification that ADR is an allowable Contract Management cost, use of private neutrals, etc.—all, to some, remain open items.
The prior use of Summary Trials at the BCA level has been subject to controversy given the absence of CO authority to use arbitration.
The Instruction also provides that “ASBCA has agreed to make administrative judges available to serve as arbitrators under this Instruction.” Private neutrals can also be utilized but given the “no-(direct) cost” charge to the litigating parties by use of ASBCA judges, the existing general practice in the non-use of the private sector ADR neutrals may be continued.
Public comments are neither solicited nor that aspect discussed in the Federal Register publication.
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The Section 1423 Acquisition Advisory Panel has issued a draft report "for public comment," notwithstanding that it is "not required to accept further public comment" given, in part, that it has had "31 public meetings" as well as website postings. The report includes an Intro/Executive Summary covering 27 pages with the definitive draft being 448 pages. Comments are due by January 5, 2007, to Laura_G._Auletta@omb.eop.gov or fax to 202 395 5101 (she is out of the office until January 2nd). The report can be accessed at http://www.acquisition.gov/comp/aap/draftfinalreport.html
There are seven chapters in the report...
• Commercial Practices
• Improving Implementation of Performance-Based Service Acquisitions in the Federal Government
• Interagency Contracting
• Small Business
• The Federal Acquisition Workforce
• Appropriate Role of Contractors Supporting Government
• Report on Federal Procurement Data