Building Vendor Relationships through ADR

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Building Vendor Relationships through ADR
Steve Hudson, Dept.of General Services Mark
Rubin, The McCammon Group 11/30/04
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Agenda

• Intro to ADR
• ADR the Vendors Manual
• Pot-of-Gold Case Study
• Tips for Improving your
• Communications Skills

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ADR improves the way Virginia does business

• Conflict wastes time money
• No extra resources to be tied down on unnecessary
  conflict
• Increases efficiency

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What exactly is ADR?

• Any method to resolve issues outside the
  courtroom.
• Empowers the parties to a dispute to seek
  solutions which they decide meet their need.
• Often uses a neutral 3rd party to assist in the
  solution.

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Why use ADR?

• Promotes vendor partnerships
• Fast resolution
• Less costly
• Easier, less formal
• Less confrontational
• Neutral parties may be used
• Parties retain control outcome
• Creative, practical solutions

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Reasons not to use ADR

• Anticipation of bad faith
• When one party seeks delay
• Need for legal precedent
• Options are dictated or limited by law

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Variety of ADR Methods

• Negotiation
• Mediation
• Arbitration
• Mini-trial
• Conference Settlement

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Negotiation

• No third party
• Set communication decision ground rules
• Jointly identify issues
• Brainstorming
• Emphasize respect, cooperation

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Partnering

• ADR is done through a workshop shortly after
  contract is signed
• Especially applicable for construction
• Agency/Contractor team
• Develops methodology to resolve future disputes
• Identifies potential disputes
• Maintain open communications during entire
  project

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Mediation

• Most common ADR method
• Mediator is a trained, neutral expert
• Voluntary, structured, confidential
• Mediator identifies clarifies issues
• Oriented to parties self-determination
• Mediator doesnt decide anything

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Arbitration

• 3rd party Arbitrator acts as judge
• Will have subject-matter expertise
• No appeal process
• Can include non-binding version
• (binding arbitration not permitted in VA)

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Mini-trial

• Hearing before judge(s)
• Less formalized than normal court proceeding
• Each party presents its position
• Testimony of expert witnesses

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Conference Settlement

• Usually court-ordered
• Encourages parties to narrow and resolve issues
• Judge usually presides
• Judge leads discussion of settlement options
• Judge may advise on law, precedent, likely
  outcome

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Virginia Administrative Dispute Resolution Act

• Encourages use of ADR by local governments and
  state agencies in a variety of administrative
  areas
• Requires agencies to develop policies addressing
  the use of ADR
• Process is confidential (exempt from the FOIA)

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• Creates the Interagency Dispute Resolution
  Advisory Council to promote ADR usage.
• Requires each agency head to appoint an employee
  to serve as the agencys Dispute Resolution
  Coordinator.

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ADR applications for Virginia

• Procurement disputes (including goods services,
  construction, professional services)
• Employee grievances
• Permits/licenses
• Students/parents faculty issues
• Tax disputes
• Customer complaints

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ADR ideal for construction projects

• Completion delays caused by poor weather
• Ambiguous construction drawings
• Liquidated damages
• Retainage
• Change orders
• Concealed site conditions

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ADR Process for Virginia(goods services)

• The General Terms Conditions encourages
  agencies contractors to resolve disputes using
  ADR (Article B, Applicable Laws and Courts)
• Voluntary process
• Participating does not relieve the contractor
  from complying with the filing of claims provided
  by law

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)

• Does not imply that the agencys
  previously-issued decision is suspended or no
  longer final.
• DPS Vendors Manual (9.17) outlines the ADR
  steps to be used in the resolution
• 1. If an agencys decision denying a
• contractors claim is challenged,
  the
• parties are encouraged to use ADR
  to
• resolve the dispute.

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• 2. The contractor gives written notice to
• the agencys purchasing office
• requesting ADR
• 3. Each party appoints senior manage-
• ment official not previously
  involved
• in the transaction to negotiate on
  their
• behalf
• 4. Informal attorneys excluded

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• 5. Use of a facilitator recommended.
• 6. Resolution agreement must be in
• writing and signed by the duly-
• authorized representatives of
• both parties.
• 7. Any compensation paid to a
• facilitator shall be shared
  equally
• by the two parties.

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• The Pot-of-Gold case study
• Tips for Improving your Communication
  (Negotiation) Skills

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ADR Summary

• Not a means for frivolous delays
• Currently only to be used for contract disputes
  not pre-award issues.
• Use it you have more to gain than lose! (make it
  a win-win solution).