1 National 8(a) Association Winter Conference February 11, 2014 Christine V. Williams Richard W. Oehler Perkins Coie LLP

2 Perkins Coie  With more than 900 lawyers in 19 offices across the United States and Asia, Perkins Coie represents great companies across a wide range of industries and stages of growth-from start-ups to Fortune 50 corporations.  Listed on Fortune magazine’s “100 Best Companies to Work For” for eleven consecutive years (2003 – 2013)  Ranked as a leading firm in Chambers USA.  Law 360 Award for Top Government Contracting Firm.  Extensive SBA Knowledge.

Avoiding and Resolving Government Contract Disputes with the Federal Government Christine Williams Rick Oehler February 11, 2014

4  Having disputes with the Federal Government can be a time consuming and costly process  We will discuss concepts for avoiding and resolving Government Contract disputes with the Federal Government  We will discuss some processes and also some substantive tips Avoiding and Resolving Contract Disputes with the Federal Government

5 Differences in Resolving Claims with Federal Government  A contractor's chances of resolving an issue or dispute improves if he submits to the Government a well-reasoned explanation of his position and supporting documentation  In our experience, this is true regardless of where the parties are in the issue resolution process  So, typically, the sooner the better

6 Differences in Resolving Claims with Federal Government  Early documentation of an issue helps ensure that one identifies all relevant events and compiles all relevant information  Avoid potential lack of timely notice defense asserted by the Government  Differing Site Conditions – Prompt written notice to the CO before the condition is disturbed  Changes – Within 30 days of receipt of change order

7  Prescribes a specific process (usually with deadlines) for consideration of an issue at 2 or 3 levels within the contracting agency and the contractor  Limited use in Government Contracts, but becoming fairly common in commercial contracts Issue Escalation Clause

8 Issue Escalation Clause - Elements  First Level – Involves personnel who are familiar with the dispute  Second Level – Involves personnel who are not involved in the dispute  Sometimes a third, senior level

9 Issue Escalation Clause – Elements  The time periods to convene the first level and subsequent levels typically are tight (such as 10 days)  Sometimes provides for an alternative dispute resolution (ADR) mechanism if multi-level consideration by the parties has not resolved the dispute  ADR = Non-judicial resolution (mediation or arbitration)

10 Issue Escalation Clause  Easy to draft and use such a clause  No need to involve a third party neutral under this clause and can be scheduled when convenient  This process conceivably could be utilized before a CDA claim or REA is submitted  Can result in a quick resolution

11 Partnering  Focuses on the relationship between the parties and the achievement of mutually beneficial objectives  Build an alliance, improve communications and avoid disputes  U.S. Army Corps of Engineers – leader in use of partnering  USACE includes Partnering clauses in some solicitations

12 Partnering  Parties seek to accomplish their goals through their own actions without the involvement of a third party neutral  Focus is more on business interests than contract rights  Initiated at the beginning of the contract  Must have the buy-in of all stakeholders

13 Partnering  Usually a workshop immediately after award to identify mutual objectives, roles and responsibilities of the parties, methods to ensure effective communications and establish an issue resolution ladder  Involves cost of facilitator and training  Substantial involvement of management including senior management

14 Partnering – Workshop Agenda  Workshop Agenda  Establish expectations  Describe partnering  Importance of communication and cooperation  Mutual vision

15 Partnering – Workshop Agenda  Workshop Agenda (cont)  Potential problems  Common Goals  Plan to sustain the relationship  Draft and sign Charter

16 Resolving a Dispute After the CO's Final Decision  This focuses on the alternative dispute resolution (usually mediation) that may be available in the forums where contractors appeal and litigate an adverse Contracting Officer's Final Decision

17 Resolving a Dispute After the CO's Final Decision  Armed Services Board of Contract Appeals (ASBCA) – solid program  Civilian Board of Contract Appeals (BCA)  Court of Federal Claims – Appendix H

18 Alternative Dispute Resolution (ADR)  Less common in Government Contract disputes, but we frequently try to convince the Government to use ADR  It can produce a result in less time than traditional litigation  It also may result in a business solution  There may be something of value (other than money) that the Government can provide and the contractor values

19 ASBCA ADR  Three ADR techniques generally used at ASBCA  Settlement judge (non-binding mediation)  Mini-trial (non-binding)  Summary trial with binding decision  ASBCA allows the parties to use any ADR method, or combination of methods, regardless of the amount in dispute  Mutual agreement and Board concurrence required to use ADR

20 ASBCA ADR  Settlement Judge  ASBCA judge not assigned to the appeal  Procedures can be altered based on parties' agreement  Non-binding mediation  Mediation Statement

21 ASBCA ADR  Mini-trial  Each party presents an abbreviated version of its position to principals with authority and to a Board- appointed neutral advisor  Upon conclusion of presentations, settlement discussions are conducted  Neutral advisor's recommendations are not binding

22 ASBCA ADR  Summary Trial with Binding Decision  Expedited appeal hearing  Trial informally before a judge  A summary bench decision at the conclusion of the hearing or a summary written decision issued NLT 10 days after conclusion of trial or after receipt of trial transcript  The decision is final and nonappealable  Decision has no precedential value  Pretrial, trial and post-trial procedures generally modified or eliminated to expedite resolution of the appeal

23 ASBCA ADR Procedure  If non-binding ADR is unsuccessful, the appeal will be restored to the docket  ASBCA judge who participated in the non- binding ADR will not:  Participate in the restored appeal, unless explicitly requested by both parties and approved by the ASBCA Chair  Discuss the merits or substantive matters with other ASBCA judges

24 CFC ADR  ADR Automatic Referral Program  All cases, except bid protests, assigned to certain judges shall automatically be referred to an ADR judge for ADR consideration  There is then a early meeting with the ADR judge to understand the differences between the parties and the prospects for settlement  After the initial meeting with the ADR judge, the parties indicate whether they agree to go forward with ADR

25 ADR Prior to Submitting a Claim  ADR may be employed to resolve a Request for Equitable Adjustment  Use of ADR must be voluntary by both parties  Remain aware of any time bars for submitting your claim  Even after a claim is submitted, the parties can agree to postpone a final decision and possible appeal to the ASBCA pending ADR proceedings

26 Benefits of ADR  Parties save in terms of cost  Parties save in terms of time  A formal ASBCA appeal (including pleadings, discovery, trial, post-trial briefing and time for the judge to write the decision) can take two to three years

27 When ADR Makes Sense  Routine matters are well suited for ADR  For matters that are more significant ("bet the company" disputes), litigation may be a more appropriate approach

28 Lessons Learned  Keep the process as simple as possible  Allow for sufficient, but not excessive, information exchange  Ensure that business representatives and financial decision-makers are available and willing to commit the necessary time  Identify funding sources for an anticipated settlement prior to beginning ADR

29 Funding An ASCBA Settlement  Funds allocated to the contract  Judgment Fund – for "judgments"  Binding ADR decisions for BCA appeals qualify as judgments

30 Funding an ASBCA Settlement  For non-binding ADR, the parties may agree to a "stipulated judgment" and request the board to treat it as a consent judgment  Also payable from the Judgment Fund  Parties must reach agreement on how to treat CDA interest for settlements paid from the Judgment Fund

31 Combination ADRs  "Med-Arb" proceedings have become more common  Process begins with a full mediation  Parties agree that if mediation is unsuccessful, it will be followed by a summary trial with a binding decision  "Last Chance" arbitration is where, prior to a judge rendering a decision in a summary trial proceeding, the parties attempt a mediated settlement (usually just a few hours). If unsuccessful, the judge issues a decision.

32 Confidentiality  Written material prepared specifically for use in ADR, oral presentations made in ADR, and all discussions in connection with ADR proceedings are confidential  The underlying facts and information used during ADR are not confidential  The parties can agree to allow the admission of ADR materials and discussions as evidence in future proceedings

33 Questions or comments? Christine Williams Perkins Coie LLP 1029 West Third Ave., Suite 300 Anchorage, AK (907) Rick Oehler Perkins Coie LLP 1201 Third Ave., Suite 4800 Seattle, WA (206)