The White House
Washington, DC 20500
Dear Mr. President:
The Report of the Interagency Alternative Dispute Resolution (ADR) Working Group, which is hereby submitted, marks the end of the first year of this government-wide effort to promote more collaborative ways to handle disputes. The report, prepared pursuant to your Memorandum creating the Working Group, was written jointly by the Department of Justice and officials from more than ten agencies, including the Environmental Protection Agency, the Federal Deposit Insurance Corporation, the
U.S. Postal Service, and the Department of the Air Force, whose staff served as chairs of individual sections of the group. As you will see from the report, there has been a great deal accomplished during the past year, and we plan to do much more in the months ahead.
In the past, the government has relied heavily upon traditional, adversarial processes to resolve both internal matters and disputes involving the public. Experience teaches us, however, that there are many costs to this approach. Even when the government wins a case, it can find that victory has come at too high a price. Litigation can destroy the underlying relationships between the parties, and this can be far more harmful in the long run. In the workplace area, for example, formal complaints often force employees working in the same office to take sides against one another. During the months or years required to process a complaint, and even long after it is over, the dispute can be extremely corrosive to the productivity of the office and the morale of its employees. Similarly, when contract and other disputes arise involving outside parties, previously healthy and productive relationships can be damaged if formal, adversarial processes are used.
Our experience has shown that ADR can resolve disputes in a manner that is quicker, cheaper, and less adversarial. For that reason, I call it "appropriate" dispute resolution, rather than "alternative" dispute resolution. In ADR, parties meet with each other directly, under the guidance of a neutral professional who is trained and experienced in handling disputes. They talk about the problems that led to the complaint and the resolution that will work best for them in the future. With the assistance of the neutral professional, they are able to retain control over their own dispute and work collaboratively to find creative, effective solutions that are agreeable to all sides.
We believe that every well-run agency should have at least one ADR program. Over the past year, the Working Group has worked to make this a reality. The Group has sponsored programs in the following areas: workplace, contracts and procurement, claims against the government, and civil enforcement. There have been more than 50 training sessions, meetings, and colloquia on all aspects of ADR. More than 500 representatives from across the government have been participating. We have created a Federal ADR website that has received tens of thousands of requests for information from across the country.
We have found many specific examples of time and money saved through the use of ADR. The U.S. Postal Service, for example, has one of the leading workplace mediation programs in the country. It has mediated more than 12,000 EEO complaints under this program. Its average mediation takes just 4 hours, and 81 percent of mediated cases are closed without a formal complaint being filed. Participants in the mediation are twice as satisfied with the amount of control, respect, and fairness in the ADR process compared with the traditional adversarial process (88 percent satisfaction rate versus 44 percent). The mediation program has also increased communication in the workplace, creating lasting and beneficial changes that help prevent future complaints. In the first year after full implementation of this ADR program, the number of new complaints filed by U.S. Postal Service employees dropped by 24 percent compared with the previous year. This translates into thousands of fewer complaints per year, which represents a huge cost savings, not to mention savings in morale and productivity.
In the contracting arena, the Department of the Air Force has used ADR to resolve more than $1 billion in recent procurement disputes. It has used mediation in more than 100 cases, and more than 93 percent have settled. Relations with contractors have improved, and parties on all sides are very pleased with the results. Due to the success of these programs, the Secretary of the Department of the Air Force has now committed to include ADR provisions in its contracts and ordered employees to use ADR "to the maximum extent practicable."
In addition to these savings in time and money, agencies have reported other important benefits. By emphasizing consensual resolution of disputes, these processes allow the participants to retain control over the outcome of the conflict. By moving away from winning and losing, and focusing instead on problem solving, these programs encourage the parties to identify what they really need to get the controversy resolved. We often see parties jointly engaged in finding creative, mutually acceptable solutions to disputes that no board, judge, or court would have the authority or the knowledge to impose.
Over the coming year, we will also work with individual agencies to assist them in developing ADR programs. While our first year was devoted to offering a broad-based introduction to ADR, we see our second year as requiring work with agencies on a more individually tailored basis. We hope to draw upon the expertise of agencies that have already been using ADR successfully to persuade and assist agencies that are not as well developed in this field.
As I wrote to you when I accepted the position of chair of this Working Group, I believe that ADR has the potential to transform significantly the way that Federal departments and agencies resolve disputes. We look forward to a continuing growth in the use of ADR and the establishment of new programs that can provide our citizens with a maximum amount of respect and a minimum amount of adversity. With your continued support, we look forward to a future where all government employees facing conflict will be able to act as peacemakers and problem-solvers.
REPORT TO THE PRESIDENT ON THE INTERAGENCY ADR WORKING GROUP
Disputes are inevitable. They arise in the course of doing our jobs as public servants and are part of life itself. Unfortunately, existing administrative systems to handle conflict are often overburdened and ineffective. They are clogged with delay, which often exacerbates the disputes, making negative feelings fester and grow. The formalistic procedures used tend to divide people rather than unite them. The parties involved in the dispute are often silenced by the process and rarely meet with each other directly. When a court or administrative body makes the final decision, parties have given up control over their own dispute. Even if the government wins a case, the relationship involved may be destroyed, and this can be far more costly in the long run.
The goal of Alternative Dispute Resolution (ADR), is to ensure that communication comes first and litigation comes last, if at all. Parties meet with a neutral third party who is trained and experienced in handling disputes, and they seek a resolution of their problem directly. Participants report that the opportunity to talk with each other, under the guidance of a dispute resolution professional, is often far more satisfying and effective than having their lawyers fight against each other before a tribunal.
The Interagency Alternative Dispute Resolution Working Group was created by Presidential Memorandum dated May 1, 1998, to assist agencies in utilizing these more effective ways to handle conflict. This Report sets forth the activities and successes of the Working Group thus far.
II. BENEFITS OF ADR
In the Memorandum directing all Federal agencies to promote greater use of ADR, the President recognized that ADR can "make the Federal Government operate in a more efficient and effective manner." Indeed, the Working Group has found numerous examples of advantages that ADR provides. The following chart sets forth the ten most common benefits of ADR that agencies reported to us:
|TEN COMMON BENEFITS OF ADR|
|Complaints are processed more quickly and resolved earlier.|
|Litigation and other costs are lower.|
|Future complaints are avoided as parties learn to communicate better with each other.|
|Parties are more satisfied with the problem solving process and with the results.|
|Relations with contractors and other outside parties are improved.|
|The process leads to more creative solutions.|
|Internal morale is improved.|
|Turnover is lower.|
|Parties comply better with their settlement agreements.|
|Productivity is improved.|
These benefits are demonstrated in the following specific examples from agencies that have participated in the Working Group.
United States Postal Service
The U.S. Postal Service has one of the nation's leading ADR programs in the workplace area. The average mediation takes just four hours, and the parties successfully resolve 61 percent of the cases at the mediation table. Overall, 81 percent of mediated cases are eventually closed without a formal complaint being filed. Satisfaction with the program is extremely high. Exit surveys completed anonymously by 26,000 participants show that 88 percent of employees are highly satisfied or satisfied with the amount of control, respect, and fairness in the ADR process. This figure is very significant because the satisfaction rate for the Postal Service's traditional adversarial workplace process is only 44 percent. Moreover, both employees and supervisors are equally satisfied with ADR.
Another benefit of the Postal Service program has been that mediation seems to be changing the behavior of people in the workplace. With the increased communication that mediation provides, employees and supervisors appear to be learning to get along better. In the first year after full implementation of the program, the number of complaints dropped by 24 percent as compared to the previous year. Formal complaints have continued to drop in FY2000, by an additional 20 percent. In an agency as large as the Postal Service, this reduction of several thousand complaints per year leads to huge cost savings. Processing a simple workplace case can cost the government $5,000 in administrative expenses alone, and a more complicated case that reaches a formal adjudication can cost up to $77,000. Thus the Postal Service program saves millions of dollars each year, in addition to improving morale and productivity.
Department of the Air Force
The Air Force has found ADR very effective in the government contracts area, where it has used ADR in more than 100 cases, and more than 93 percent have settled. Of particular note is the agency's recent successful use of ADR to resolve a $785 million contract claim with the Boeing company that had been unresolved, prior to the use of ADR, for more than ten years. This is one of the largest contract claims ever settled through an alternative dispute resolution process. In another recent major case with the Northrop Grumman Corporation, the agency settled a $195 million contract claim. Litigating either of these extremely large and complex cases through trial would have been enormously expensive and uncertain in outcome. Litigation could also have damaged relationships with some of the military's most important suppliers. The Secretary of the Air Force has recognized the success of these programs and codified them in formal agency procedures. It is now official Air Force policy to use ADR "to the maximum extent practicable."
The Air Force has also used ADR in more than 7,000 workplace disputes in the last three years, with a successful resolution rate exceeding 70 percent. This ADR program has helped make the agency's EEO process one of the most efficient in the Federal government. While Federal agencies require an average of 404 days to settle an EEO complaint, Air Force settlements require an average of only 258 days, a 37 percent difference.
Another measure of the impact of ADR at the Air Force is its EEO complaint flow-through rate, which is the rate at which employees who receive counseling (including ADR) nevertheless file formal complaints. In a recent typical year, this figure was only 23 percent, which is approximately half the Federal government average. The Air Force believes its aggressive use of ADR is a major component of this success.
Department of Health and Human Services
Before using ADR, the Provider Reimbursement Review Board at the Department of Health and Human Services (HHS) had a backlog of 10,000 pending cases. Although HHS had been able to settle 90 percent of its cases without assistance, most of these settlements occurred on the eve of the hearing, after three years of delay. HHS instituted an ADR program that has saved all parties both time and money. ADR resulted in settlements of 44 of the first 48 cases where it was used. Since then, use of ADR has increased. In 1999, the Office of Hearings and Appeals completed mediation of 81 cases and had mediation underway in an additional 53 cases. ADR has also reduced the time required to resolve these disputes from three years to six months.
HHS has also used ADR successfully to resolve state government challenges involving Food Stamp and Medicaid claim adjustments. All of the forty-one states that elected mediation under the Departmental Appeals Board's mediation program have successfully negotiated settlements. ADR has resolved more than $500 million in disputed funds in each of the past five years, and HHS estimates that it has saved the Federal government $600,000 in potential adjudication costs. In addition, the process saved considerable time, because administrative appeals could have taken two years, while mediation took an average of nine months. Finally, by the parties' own assessment, mediation allowed for a fairer and less acrimonious settlement of differences, preserving ongoing relationships between state and Federal officials involved.
Department of Energy
Ombuds staff at the Sandia National Laboratories assisted employees in more than 400 cases during FY 1999. Ombuds personnel counseled employees on available options for handling their disputes and advised them on how to proceed. Most of the work was with agency employees, but agency suppliers and technology transfer partners also used the ombuds services in some cases. Benefits of the program included improved productivity, lower turnover, and higher decision quality. The agency believes that a conservative estimate of the program's savings last year is $600,000 (50% more than the program cost). The program also generated considerable improvements in morale. Litigation and EEOC charges against Sandia have dropped well below the levels experienced prior to the creation of the program.
Federal Emergency Management Agency
After Hurricane Georges wreaked havoc on the Island of Puerto Rico in September 1998, a local community had disputes regarding a debris removal contract, including disagreements as to which company actually performed the work, the total amount of debris, and the amounts of money owed to the companies. This difficult situation was further complicated by an FBI criminal investigation, the incarceration of the community mayor, litigation filed against the community by a subcontractor, allegations of fraud and conspiracy by all parties, death threats, and bankruptcy petitions. Without a consensual resolution, expensive and time consuming litigation involving all parties to the seven relevant contracts was virtually inevitable.
FEMA suggested mediation. The Governor, the local community, and the three contractors agreed. The mediation was very difficult, but the mediators were able to craft an acceptable agreement. The principal contractor later wrote a letter to FEMA saying the following: "I write this letter to praise certain individuals who have gone above and beyond the call of duty in representing FEMA and the people of the United States.... Through [FEMA's] initiative and good judgment, mediation was arranged.... Had [FEMA] not pursued the matter with uncommon vigor, it would probably be wrapped up in court for many years."
Federal Labor Relations Authority
The FLRA has instituted an ADR program that encourages agencies and unions to resolve their problems before an unfair labor practice charge is filed. Following implementation of this program, the number of charges filed has fallen sharply, from 8,764 in 1993 to 5,686 in 1999. Even in instances where charges are not resolved and complaints are issued, these disputes as well are settling through the use of ADR. For example, 12.4 percent of all complaints went to trial in 1993. In 1999, only 9.2 percent of complaints went to trial. Significantly, cases are settling more quickly as well. The number of expensive, last-minute "courthouse steps" settlements (settlements reached immediately prior to hearing) have declined to just 1.9 percent of all settlements as parties have used ADR to settle their cases earlier in the process. In earlier years, these costly late settlements comprised as many as 15 percent of all settled matters.
Environmental Protection Agency
The Environmental Protection Agency (EPA) used a variety of ADR processes to facilitate settlement of the GE Pittsfield case, involving the cleanup of widespread contamination of the Housatonic River in Massachusetts. The agency used mediation to facilitate settlement discussions between eleven parties including EPA, GE, and other state and Federal regulatory agencies. The team of mediators assisted the parties in reaching agreement on a wide range of difficult issues including the cleanup of contaminated sediments and restoration of natural resources. EPA values the work to be accomplished by GE pursuant to this settlement at upwards of $200 million. Without the use of ADR, according to the EPA, negotiations among this large group of parties would have been very difficult. ADR has also permitted the parties to fashion their own remedy, including elements that a court would not have been able to order on its own. For example, in order to ensure meaningful public input, a neutral facilitator organized and is facilitating meetings of a Citizens Coordinating Council. The Council is composed of representatives of local communities affected by the cleanup. Finally, the parties established a neutral peer review process to resolve conflicts regarding technical aspects of the required remedial activities.
The EPA has also used three different types of ADR to resolve the Helen Kramer Landfill Federal and state litigation, concerning contamination at a hazardous waste site in New Jersey. EPA provided an internal convening professional to help the parties organize settlement efforts and retain a mediator. The efforts of the convener enabled a large group of defendants to coalesce and enter into a mediation agreement. Two experienced mediators then assisted the parties in reaching an agreement on the allocation of costs associated with remedial activities at the site. Finally, the parties entered into mediated discussions with EPA to resolve their liability for site contamination. The complex convening and mediations involved more than 200 parties and third-party defendants, including forty-four municipalities. The resulting settlement totaled more than $95 million. The agency believes that this case would have been enormously time-consuming and expensive to litigate if ADR had not been used.
III. ACCOMPLISHMENTS OF THE WORKING GROUP
The Working Group expects that success stories such as those described above will continue across the government as more agencies use ADR in the future. Our major goal for this first year was to assist every agency in creating at least one new ADR program or substantially enhancing an existing program. We are pleased to report that every cabinet agency and most administrative agencies met this goal.
The Working Group has built upon earlier government initiatives to increase the use of ADR. In 1996, Congress permanently enacted the Administrative Dispute Resolution Act, 5 U.S.C. §§ 571-584, which requires all executive agencies to promote the use of ADR. Specifically, this Act directs each agency to do the following:
- Adopt a policy that addresses the use of alternative means of dispute resolution;
- Designate a senior official to be the dispute resolution specialist of the agency;
- Provide ADR training on a regular basis; and
- Review each of its standard agreements for contracts, grants, and other assistance to encourage the use of alternative means of dispute resolution.
All agencies now have a senior official designated as their dispute resolution specialist. All cabinet agencies and most administrative agencies now have adopted ADR policy statements. Most agencies provide ADR training, and many have been taking advantage of the resources of the Working Group in this regard. With the assistance of the Contracts Section of the Working Group, agencies are increasing their use of ADR in the contracting arena as well.
In preparing this report, we conducted the first government-wide tabulation of Federal ADR resources. We learned that some 410 employees now work full time on ADR in the Federal government. Agency ADR programs now receive $36 million annually in dedicated budgets. Moreover, many agencies staff ADR programs through the use of collateral duty employees and fund these operations from their general budgets. Counting these resources, the government's total commitment is even higher than the figures mentioned above.
Working Group Activities
The Working Group began on September 14, 1998, with an initial organizing meeting hosted by the Attorney General and the Deputy Director for Management at the Office of Management and Budget. More than one hundred high-level representatives from nearly sixty Federal agencies attended this meeting. At this meeting, the Attorney General gave all agencies the goal of creating at least one new ADR program or substantially increasing an existing program by the end of 1999.
To assist agencies in developing specific programs to meet this goal, the Working Group created four Sections, organized by subject matter, to provide technical assistance and guidance on best practices in ADR program development. Sections have operated simultaneously to cover disputes in the following areas: civil enforcement, claims against the government, contracts and procurement, and workplace.
The Sections have conducted more than fifty training sessions, meetings, and colloquia on all aspects of ADR. Representatives from across the government have been participating. Topics have included incentives for Federal employees to use ADR, finding quality neutrals, designing an ADR training program, dispute systems design, evaluation of ADR programs, obtaining resources for ADR programs, overcoming barriers to ADR, ethics, confidentiality, and conflict assessment/case selection.
Materials Created by the Working Group
The Working Group has produced substantial materials to assist agencies in developing ADR programs. Most noteworthy are two resource books covering best practices in ADR. The Federal ADR Program Manager's Resource Manual is more than 200 pages long, and it is a comprehensive guide to creating and operating an ADR program in the Federal government. It includes relevant laws and regulations, links to Federal and private websites, and an extensive bibliography. The Electronic Guide to Federal Procurement ADR is an exhaustive manual covering procurement ADR programs, managing the process, training, neutrals, and resources. The guide includes hyperlinks to ADR-related materials, a listing of Federal ADR mentors, detailed profiles of existing procurement ADR programs, success stories, and sample ADR agreements. Both of these manuals are available on the website for all Federal employees and interested members of the public.
The Group created a website at www.financenet.gov/iadrwg that has had tens of thousands of requests for information in the year it has been in existence. The website includes agendas and minutes from Working Group meetings. A number of key ADR-related documents are available on the site, including the Administrative Dispute Resolution Act, the Presidential Memorandum creating the Working Group, a model Policy Statement on ADR, and a statement of key elements of a successful ADR program. The site includes additional links to other Federal agency ADR programs and private sector ADR organizations.
The Forums section of the website provides an opportunity for users to exchange information electronically (via e-mail) and to tap into the ADR-related expertise of hundreds of others around the country who are involved in government ADR programs. This feature of the website has facilitated productive discussions on such topics as recommendations of qualified neutrals, the availability and development of ADR training courses, and establishment of ADR policy.
To capture the current state of ADR in the Federal government, the Working Group asked each participating agency to complete an ADR survey on its activities. These surveys include contact information for each agency's dispute resolution specialist and ADR staff, data on its dedicated ADR budget and employees, a description of its ADR programs, success stories from these programs, and a statement of its ADR goals for the future. All of these surveys are available on the Working Group website.
Accomplishments of the Sections
The Civil Enforcement Section has provided participating agencies with information, training, and support to enable them to develop ADR programs in enforcement and compliance activities. Twenty-six agencies with unique statutory and regulatory missions, requirements, and regulated communities have participated in Section activities. Section consultation teams provided personalized assistance to agencies in a wide variety of areas, from dispute system design to training. Robert Ward of the EPA served as chair of the Section, with the assistance of David Batson and Lee Scharf of the EPA.
The Claims Against the Government Section has worked with agencies to use dispute resolution techniques to supplement traditional administrative adjudication of claims for money that are filed against the government. More than forty representatives from twenty different agencies have participated in the work of the Section, which was chaired by Peter Steenland of the Justice Department, with the assistance of Jeff Senger of the Justice Department.
The Contracts and Procurement Section has focused on assisting agencies with developing and operating ADR programs in the contracting arena. More than thirty agencies participated in the work of the Section. In addition to holding meetings on program design, ADR process, training, and neutrals, the Section produced the Electronic Guide to Federal Procurement ADR described above. The Section was chaired by Brigadier General Frank Anderson of the Air Force, with the assistance of Joseph McDade and Major Becky Weirick of the Air Force, as well as Tony Palladino and Rich Walters of the Federal Aviation Administration.
The Workplace Section, which was the largest in the Working Group, covered a broad range of workplace issues, including Equal Employment Opportunity, Federal Labor Relations Act, and Merit Systems Protection Board cases as well as grievances. Total attendance at the twenty-six programs the Section sponsored totaled more than 1000 participants. Section mentoring programs resulted in the formation of the Small Agency Caucus, an organization devoted to addressing the unique ADR program and resource needs of small Federal agencies. The Workplace Section was chaired by Erica Cooper of the Federal Deposit Insurance Corporation (FDIC) and Mary Elcano of the United States Postal Service (USPS), with the assistance of Cathy Costantino and Martha McClellan of the FDIC, and Cindy Hallberlin and Kim Brown of the USPS.
Further information about these accomplishments is provided in the Reports from the Sections to the Attorney General attached at the end of this report.
Plans for the Future
During the second year of its existence, the Working Group plans to offer additional seminars and discussions that are open to all government employees. We also plan to focus on mentoring agencies that desire to create new programs or improve existing ones. We will continue to offer consultation teams of experienced ADR professionals to assist agencies with their ADR efforts on an individualized basis.
The Working Group will also coordinate with the newly created ADR Council, a group of senior executives who will develop ADR policy guidance for the executive branch. This Council will focus on issues that cut across ADR programs at all agencies, such as confidentiality, best practices, and procedures for the use of arbitration.
Congress effectively summarized the problems with traditional administrative approaches to conflict and the benefits of ADR when it passed the Administrative Dispute Resolution Act of 1990:
[A]dministrative proceedings have become increasingly formal, costly, and lengthy resulting in unnecessary expenditures of time and in a decreased likelihood of achieving consensual resolution of disputes; alternative means of dispute resolution . . . in appropriate circumstances, have yielded decisions that are faster, less expensive, and less contentious; such alternative means can lead to more creative, efficient, and sensible outcomes.
With the continued assistance and support of the President, the Office of Management and Budget, and all participating agencies, we look forward to working together to use these processes to enhance the operation of the Government and better serve the public.
REPORTS OF THE SECTIONS
TO THE ATTORNEY GENERAL
CIVIL ENFORCEMENT SECTION REPORT TO THE ATTORNEY GENERAL
The goal of the Civil Enforcement Section (CES) has been to educate and assist member agencies in the use of dispute resolution techniques in civil enforcement and compliance cases as an alternative to traditional litigation and settlement methods. Through the efforts of the Section over the past year, substantial progress has been made by many Federal agencies in establishing and considering the appropriate use of ADR in civil enforcement and compliance activities. While making progress, CES member agencies faced a number of challenges related to the unfamiliarity of staff and management to the idea of using ADR in enforcement actions. To overcome these challenges, the Section focused its efforts on educating member agencies about the potential uses of ADR by providing them with the tools and information needed to undertake ADR as a viable alternative to unfacilitated dispute resolution.
Key actions taken by the Section fall into three broad categories:
- Provision of experienced on-site Consultation Teams to assist member agencies in developing ADR programs;
- Presentation of training opportunities to educate Section member agencies about ADR enforcement issues and ADR tools; and
- Establishment of an electronic interagency information-sharing network for Section members.
I. CES ACCOMPLISHMENTS
Over the past year, the Civil Enforcement Section has successfully initiated an important dialogue within the Federal government about the effective use of alternative dispute resolution in civil enforcement and compliance actions. Although not all agencies have been able to fully implement new ADR enforcement programs in the course of the past year, the Section's assistance has enabled them to gain greater understanding of why and how to include ADR in their repertoire of techniques for resolving enforcement cases. The Civil Enforcement Section regards this progress as very encouraging and believes that a firm basis has been established for the continued expansion of ADR use in Federal civil enforcement and compliance practices.
The Civil Enforcement Section has provided participating agencies with information, training, and support to enable them to develop ADR programs and institutionalize the use of ADR in enforcement and compliance activities. Twenty-six Federal agencies with unique statutory and regulatory missions, requirements, and regulated communities have participated in Section activities. The Section was chaired by W. Robert Ward, Dispute Resolution Specialist for the U. S. Environmental Protection Agency with the support of ADR experts with EPA Office of Enforcement and Compliance Assurance, David C. Batson and V. Lee Scharf.
Section activities were coordinated through the CES Steering Committee consisting of volunteers from Section membership. The CES Steering Committee designed and implemented training programs, held meetings that supported and enhanced Section activities, and coordinated the activities of Consultation Teams. The CES Steering Committee ensured a comprehensive approach to achieving the ADR goals announced by the Attorney General by participating in joint training sessions and participating in the preparation of the ADR Program Managers Resource Manual.
The numerous activities and accomplishments of the Civil Enforcement Section were geared toward meeting the needs of member agencies. Section members were encouraged to become directly involved in the development of one or more projects. The CES:
- Provided Section members with easily accessible ADR information, specifically tailored to their enforcement programs, through an Internet website, training programs, and handouts;
- Presented focused training programs led by experts and practitioners in the field created to meet members' needs for designing and implementing ADR programs;
- Provided and staffed expert Consultation Teams to support member agencies in using ADR in enforcement actions;
- Assisted Section members in the development of ADR policy statements;
- Documented Section members' use of ADR in civil enforcement;
- Participated in joint training sessions with other Working Group members; and
- Contributed to the production of an Interagency ADR Program Manager's Resource Manual.
B. SECTION MEETINGS
The Civil Enforcement Section held a series of meetings to develop the knowledge and skills of member agency representatives and to coordinate Section activities. Meeting topics were developed in consultation with Section members to ensure that training met the needs of enforcement ADR program managers. Educational sessions covered the full spectrum of knowledge and skills necessary to develop and implement an ADR program to support agency enforcement activities. Sessions were open to all Federal employees and were conducted by experienced CES members and other experts in the field of ADR. Each session was designed to provide an opportunity for presenters to share their personal experiences and "lessons learned" while promoting an interactive exchange of ideas and thoughts with session participants. Agendas and meeting materials are available through the Working Group website.
C. CONSULTATION TEAMS
To meet the desire of member agencies for real-time, in-house assistance, the Section developed a cadre of ADR experts to serve as specialized Consultation Teams. Upon request, a Consultation Team was established to provide ongoing personalized assistance to member agency staff in the development and implementation of an enforcement ADR program. Each Consultation Team was designed to meet the specific needs of the agency requesting assistance. CES Consultation Teams provided a wide range of services, from dispute system design to training. Coordinated by David Batson of EPA, CES Steering Committee members from numerous agencies served on Consultation Teams. This approach to supporting ADR programs was rated as highly effective by Section members and has been recognized as a model by the Department of Justice for future Interagency ADR Working Group efforts. The Office of General Counsel at NOAA found the services of a Consultation Team especially valuable, awarding its Consultation Team a special commendation which was accepted by David Batson in December 1999.
Over the past year, CES Consultation Teams provided specialized assistance to eight member agencies. A good example of the Consultation Team approach is Section efforts in support of the Federal Energy Regulatory Commission (FERC). At the request of FERC staff, a Consultation Team was convened to assist in the design and establishment of an organization-wide ADR program. Over several months, Consultation Team members assisted FERC staff through meetings with Commission managers, training of legal staff, and on-call consultations with ADR program staff on a wide variety of issues from dispute system design to budget and contracting considerations. In less than a year, the FERC ADR Office has gone from a vision to a fully established program. Based upon the success of CES Consultation Team efforts, fourteen additional member agencies have requested the services of a Consultation Team.
D. EVALUATION OF ADR PROGRAM SUCCESS
To fully support member agencies, the Civil Enforcement Section undertook an ongoing evaluation of Section and member agency progress in attaining ADR program goals. As a starting point, the Section sponsored an intensive training in program evaluation techniques where agencies learned the value of implementing an evaluation program. To assist in agency evaluation efforts, the Section prepared and distributed a series of survey questionnaires that provided information on key components of ADR program development and implementation. The results of these surveys provided valuable information to member agencies and were used by the CES Steering Committee to refine training sessions to ensure that member agency needs were continuously being addressed.
II. SUCCESS STORIES
Civil Enforcement Section member agencies made substantial strides in furthering the use of ADR in enforcement and compliance programs during 1999. Agencies joined the Civil Enforcement Section with widely varying experiences and expectations regarding ADR, in large part because agencies began with differing histories of ADR use. For example, a few have utilized mediation and other ADR techniques for many years to resolve enforcement disputes, while other agencies had never considered using ADR in their enforcement activities.
The CES believes that "success" in the arena of enforcement and ADR must be judged in light of a given agency's enforcement and its history of ADR use. In the case of an agency that had no established program at the beginning of the year but took concrete steps to create one, those development efforts should be recognized and applauded. At the same time, CES wishes to highlight some notable case examples where third-party neutrals were used to resolve disputes by agencies with established ADR enforcement programs.
Below, the report first examines the successes of some member agencies in taking concrete steps to introduce ADR into their civil enforcement programs, then focuses on some case examples of agencies' successful use of neutrals to resolve enforcement disputes. Additional information is also available in individual agency reports attached to the Attorney General's report available through the Working Group website listed previously.
Agency Program Development
At least eight agencies - the Nuclear Regulatory Commission, the Department of Agriculture, the U.S. Navy, the Social Security Administration, the Internal Revenue Service Appeals Board, the Securities Exchange Commission, the Federal Energy Regulatory Commission and the Environmental Protection Agency - in the past year have issued, modified, or are developing national policy and/or guidance on the use of ADR with application to enforcement disputes. Typical policies cover such issues as designation of an agency Dispute Resolution Specialist, case selection, standards for neutrals, confidentiality, tracking and evaluation, and encouragement for the use of ADR by agency personnel.
Use of an ADR Task Force
Six agencies - the Federal Trade Commission, the Internal Revenue Service, the Federal Energy Regulatory Commission, the Securities and Exchange Commission, the National Oceanic and Atmospheric Agency, and the Department of Agriculture - created task forces within the past year. The establishment of an ADR Task Force or working group within an agency is an important mechanism for developing broad support and enthusiasm for ADR. Indeed, the establishment of a task force sends a strong message that the use of ADR is an organizational priority, while also providing a vehicle for educating staff about ADR.
Training and Education
At least nine agencies in the past year - the U.S. Navy, the Securities and Exchange Commission, the Department of Agriculture, the Federal Trade Commission, the Internal Revenue Service, the Federal Energy Regulatory Commission, the Social Security Administration, the Environmental Protection Agency, and the Department of the Interior - initiated or expanded training opportunities relevant to the use of ADR in enforcement programs. ADR training and education is a critical component of many agencies' efforts to gain acceptance for the appropriateness and usefulness of ADR. Agency training and education initiatives, which have included a variety of topics and training methods, have served a broad range of audiences from staff to senior managers. Training has been conducted by internal agency experts, other Federal experts, and private industry contractors.
Establishment of ADR Programs
Many agencies undertook efforts to establish or expand agency ADR Programs during 1999. While the establishment of an ADR "program" might begin with a single step, such as issuance of an ADR policy or the initiation of training, for purposes of this report, the Section considers "program establishment" to involve the initiation (or expansion) of at least two activities or functions. At least ten agencies met these criteria in the past year, including the Internal Revenue Service's National Office of Appeals, the National Oceanic and Atmospheric Association, the Federal Trade Commission, the Federal Energy Regulatory Commission, the U.S. Navy, the Social Security Administration, the Nuclear Regulatory Commission, the Securities and Exchange Commission, the Environmental Protection Agency, and the Department of the Interior.
Establishment of Roster of Neutrals
One agency, the Environmental Protection Agency, reported the creation of a national roster of ADR professionals to provide support to disputants in selecting appropriate neutrals for enforcement, compliance and environmental disputes. The Department of Agriculture maintains an informal roster for its enforcement disputes.
Enactment of Procedural Regulations
In the past year, at least two agencies issued regulations or obtained codification of procedures to ensure the appropriate use of ADR in agency practice. These include the Federal Mine Safety and Health Review Commission (proposed Rule on using ALJs as settlement judges) and the Internal Revenue Service's National Office of Appeals (§ 7123 (b)(2) of the IRS Code mandating arbitration and § 3465 of RRA 98 codifying early referral, mediation and arbitration practices).
Institution of Evaluation/Tracking Systems
In the past year, at least three agencies instituted a system to track and evaluate whether and where ADR is being used or not being used in enforcement matters, and how successfully. Those agencies are the Securities and Exchange Commission, the Environmental Protection Agency, and the Department of Agriculture. In addition to providing information on the past use of ADR for disputants, the evaluation data will prove useful in agency strategic planning and resource allocation decisions.
Use of Neutrals in Enforcement Cases
During 1999, a number of agencies used a third-party neutral to assist in the resolution of enforcement or compliance disputes. Several agencies that had used ADR previously in civil enforcement disputes did so this year in greater numbers. Other agencies with little or no ADR case experience utilized ADR for the first time. The use of ADR in civil enforcement matters occurred in both administrative processes and in district court actions, resulting in many successful outcomes, including the resolution of many complex cases.
A number of notable cases involving the use of neutrals depict current and future uses of ADR:
- Third-party neutrals have been used by agencies to create partnering groups among Federal, tribal, state and local governments and the military;
- In-house and outside neutrals have consulted on and convened cases, assessing appropriateness for mediation;
- Third-party neutrals have served as allocators and mediators in enforcement disputes;
- Third-party neutrals have facilitated collaborative decision making where public participation is desired or required;
- Settlement judges have served as third-party neutrals in administrative penalty cases; and
- Binding arbitration has been codified and used by to resolve penalty disputes.
The following section provides more detailed information on specific success stories, along with the names and email addresses of agency contacts for each matter.
On March 13, 1999, the US Navy entered into an innovative partnering agreement with the State of Florida, addressing compliance with environmental regulations on naval installations. The goal of the Florida Partnering Charter is to achieve ecological protection and environmental compliance while meeting all national defense requirements. Through the cooperative agreement, state and Navy officials meet monthly for facilitated discussions to explore ways to resolve regulatory violations before a Notice of Violation is issued by the state environmental agency. The compliance Partnering Team began with an "off the record" multimedia inspection that uncovered potential violations and/or misinterpretations of regulations. Team members then determined and implemented appropriate solutions to resolve identified violations. The Navy hopes to use this successful cooperative process as a model for future partnerships with both state and Federal regulators.
Contact: Carole Houk (Houk.Carole@hq.nav.mil)
The Department of the Interior's Office of Surface Mining and nine other State and Federal agencies signed a "Resolution of Mutual Intent" with the Governor of West Virginia, forming a partnership for Statewide Watershed Management. An interagency group, comprised of 26 representatives from 18 Federal and State agencies and guided by a contracted facilitator, was charged with developing a framework for watershed management. The framework document was intended to coordinate watershed management activities and promote consistent, long-term management across all watersheds in West Virginia. It provided a mechanism to identify common water quality goals and problems, as well as ways of implementing cost-effective solutions. An Interagency Steering Group was formed from the signatory agencies to implement the Watershed Management Framework, and this steering group is the decisionmaking mechanism for this process. The partnership created by the Resolution of Mutual Intent is voluntary and does not alter the statutory or regulatory authority of the participating agencies. Similar Watershed Management programs have been developed in six additional States.
Contact: Bob Baum, Dispute Resolution Specialist, DOI (Robert_Baum@iosiscns1.ios.doi.gov)
Use of Multiple ADR Processes
The Environmental Protection Agency has utilized a variety of ADR processes to resolve complex enforcement litigation. One example is the Helen Kramer Municipal Landfill litigation which encompassed a series of public and private lawsuits concerning contamination at a hazardous waste site in New Jersey. In the Helen Kramer dispute, three different types of ADR use were supported by EPA to assist parties in reaching settlement agreements. At the request of private parties, EPA provided an internal convening professional to assist parties in organizing settlement efforts and retaining the services of a mediator. The efforts of the EPA convener enabled a large group of defendants to coalesce and enter into a mediation agreement. Two experienced mediators then assisted the parties in reaching an agreement on the allocation of costs associated with remedial activities at the site. In addition, the parties entered into mediated discussions with EPA to resolve their liability for site contamination. The complex convening and mediations which involved more than 300 parties and third-party defendants, including forty-four municipalities, resulted in a settlement totaling in excess of $95 million.
Contacts: Tom Lieber, ADR Specialist, EPA Region 2 (email@example.com)
David Batson, Senior ADR Specialist, EPA OECA (firstname.lastname@example.org)
Neutral Dispute Resolution Hotline
The Federal Energy Regulatory Commission has established an innovative method of assisting the regulated community to resolve private commercial disputes, avoiding the need for enforcement action. The FERC Hotline provides disputing private parties with informal neutral evaluation and facilitation services to assist in conflict resolution. For example, two recent callers to the Hotline complained about the activities of an electric utility company. Hotline attorneys investigated the disputed transactions involved. In the first call, the party accepted the opinion of a neutral evaluation that the utility had acted properly. In the second, Hotline staff successfully mediated an agreement between the utility and the caller.
In another example, Hotline staff assisted in the successful resolution of forty landowner complaints against a natural gas pipeline company without litigation or additional costs to the landowners. The disputes addressed a multitude of issues including repair of right-of-ways and other property damaged during pipeline construction and restoration of natural springs and wells used for agricultural and domestic consumption. In each situation, Hotline third-party neutrals worked with the landowners and the pipeline to resolve problems to the satisfaction of all parties.
Contact: Richard Miles, Director of Dispute Resolution Services, FERC (Richard.Miles@ferc.fed.us)
The Nuclear Regulatory Commission is establishing a collaborative decision-making process for public participation in Commission determinations. NRC regulations, 10 CFR Part 20, provide for the decommissioning of NRC licensed sites under "restricted use" conditions if certain criteria are met. One criterion is for the licensee to demonstrate that it has sought the advice of individuals and institutions in the community potentially affected by the decommissioning, preferably through a "site specific advisory board." An advisory board can consider a number of issues including whether institutional controls required to achieve restricted use will be enforceable and whether they will impose undue burdens on the community or other affected parties. The NRC believes that the use of neutral conveners and facilitators will assist the licensee and the public to effectively evaluate the feasibility of convening a Board, ensure fair representation on the Board, and assist the community and the licensee in having a constructive dialogue on the issues.
The NRC is exploring the feasibility of using the United States Institute for Environmental Conflict Resolution to provide a framework for providing this neutrality and expertise. It is anticipated that the Institute will develop guidelines for convening and facilitating public involvement in the decommissioning process for use by ADR professionals hired by licensees.
Contact: Francis (Chip) Cameron, Special Counsel, NRC (FXC@NRC.GOV)
Facilitated Public Involvement
The Environmental Protection Agency is piloting the use of a facilitated decision-making process to provide meaningful public involvement in decisions regarding the cleanup of contaminated "Brownfields" sites. Brownfields sites are abandoned, idled, or underused industrial and commercial facilities where expansion or redevelopment is complicated by real or perceived environmental contamination. A critical first step in cleaning up a Brownfield site is an assessment of potential contamination for which remedial actions may or may not need to be taken. To explore methods of ensuring effective community involvement in assessment decisions, EPA retained the services of neutral facilitators to conduct a collaborative decision making process at ten pilot sites located throughout the nation. The facilitated process assists community members in understanding complex statutory and/or regulatory issues and reaching consensus on key community interests. In addition, facilitation has proven successful in bringing reluctant property owners to the table, reducing scientific uncertainty and promoting effective working relationships among Federal, tribal, state and local jurisdictions.
Contact: Lee Scharf, ADR Program Coordinator, EPA OECA (email@example.com)
Use of Multiple ADR Processes
The Environmental Protection Agency used a variety of ADR processes to facilitate community involvement in the settlement of a recent enforcement action. The GE Pittsfield case addressed the cleanup of widespread polychlorinated biphenyl contamination in sediments of the Housatonic River in Massachusetts. In the GE Pittsfield matter, EPA employed several separate ADR processes to facilitate settlement and public involvement in oversight of remedial activities. Mediation was used to facilitate settlement discussions between eleven parties including EPA, GE and other state and Federal regulatory agencies. The team of mediators assisted the parties in reaching agreement on a wide range of difficult issues including the cleanup of contaminated settlements and restoration of natural resources costing in excess of $200 Million. In order to ensure meaningful public input into matters relating to the cleanup, a neutral facilitator organized and is facilitating meetings of a Citizens Coordinating Council. The Council is composed of representatives of local communities affected by the cleanup. Finally, a neutral peer review process was established to resolve conflicts regarding technical aspects of the required remedial activities. The parties are currently negotiating the membership of the peer review process with the assistance of a mediator.
Contact: Elissa Tonkin, ADR Specialist, EPA Region 1 (firstname.lastname@example.org)
Use of Settlement Judges
The Federal Mine Safety and Health Review Commission has proposed the use of Settlement Judges in its procedures for the resolution of administrative litigation. The Commission serves as an administrative court, having no independent regulatory or enforcement powers (Federal Mine Safety and Health Act of 1997, 30 U.S.C. § 801) (FMSHA). On November 10, 1999, the Commission published a proposed rule (64 Federal Register 61236) establishing an innovative settlement procedure for contested cases arising under the FMSHA. Upon request, Administrative Law Judges will be assigned to serve as mediators (settlement judges) tasked with assisting parties to reach settlement prior to an administrative hearing. To ensure the effectiveness of the settlement judge process, the proposed rule exempts settlement judges from the restrictions on ex parte communications contained in the Commission's Rules of Procedure and allows them to function as mediators. The rule also poses strict time deadlines and contains confidentiality provisions consonant with the Administrative Dispute Resolution Act of 1996.
Contact: Norm Gleichman, General Counsel, FMSHRC (email@example.com)
Environmental Protection Agency procedures provide for the use of settlement judges to assist in the resolution of administrative litigation. A recent example of the benefit of using a settlement judge involved negotiations between the Agency and the U.S. Navy over alleged violations of the Resource Conservation and Recovery Act at the Washington Navy Yard and Anacostia Naval Station in Washington, D.C. Negotiations toward resolution of the alleged regulatory violations had reached a seemingly insurmountable impasse. At the request of the parties, an EPA Administrative Law Judge was assigned as a settlement judge to facilitate settlement discussions. Through a series of mediated teleconferences held over a period of five months, the parties were successful in reaching agreement on four separate consent agreements resolving all contested issues.
Contact: Stephen McGuire, Administrative Law Judge, EPA (firstname.lastname@example.org)
In response to growing taxpayer interest, the Internal Revenue Service, National Office of Appeals, has completed the design of a binding arbitration program to resolve tax assessment disputes. An announcement for public comment will be published by the end of December 1999. The IRS procedures will provide for binding arbitration when jointly requested by a taxpayer and the Office of Appeals to resolve a dispute that cannot be resolved through informal settlement efforts. Binding arbitration is mandated by the IRS Restructuring and Reform Act of 1998 which codifies Office of Appeals ADR procedures, including early referral, mediation, and arbitration.
Contact: Tom Louthan, Director of ADR & Customer Service, IRS (email@example.com)
III. OBSTACLES OVERCOME IN USING ADR IN ENFORCEMENT PROGRAMS
Anyone who has tried to integrate ADR processes into Federal enforcement programs has encountered concerns of agency staff. Nonetheless, the Section has been very successful in assisting agencies in overcoming these obstacles. Below is a brief listing of the challenges Section members encountered while encouraging agency enforcement programs to consider using ADR:
- Lack of knowledge by staff about ADR tools and techniques;
- Misperceptions by staff and management that:
- Using ADR would signal a weak case;
- ADR processes would not succeed if unassisted negotiations have been tried and failed;
- Concerns that litigators would lose control if they brought in a third-party neutral because:
- A third-party neutral would not understand the limits of enforcement staff settlement authority;
- Opposing counsel would abuse the ADR process by using it as a delaying tactic and/or a vehicle for free discovery, or would force the use of ADR where enforcement staff believe it inappropriate;
- An ADR process would be ineffective because the staff has limited flexibility in enforcement matters with respect to potential relief, which is often circumscribed by statute, regulation, agency policy, or practice;
- A loss of confidentiality of settlement discussions would result from the use of ADR.
IV. THE SECTION'S PLANS FOR THE FUTURE
Agencies can and have overcome many of these challenges to the use of ADR. The experience of CES members indicates that doing so requires above all a change in culture - a new way of thinking about a litigator's role and the enforcement program's process for reaching agency goals. Some of the concerns raised by enforcement staff are based upon sound experience and will appropriately limit the use of ADR in enforcement matters. Most, however, are based upon on lack of knowledge and misperceptions about ADR.
The Civil Enforcement Section believes that, while progress has been made in the development and use of ADR techniques in Federal enforcement programs, much remains to be done. Over the coming year, the Section plans to take the following steps to increase the use of ADR in this area:
- Continued use of Consultation Teams to assist in program development;
- Creation of a resource manual for civil enforcement staff, including boilerplate legal briefs and model language addressing issues faced by staff in using ADR;
- Creation of a sample training module in ADR advocacy for enforcement staff; and
- Offering of periodic issue symposia on relevant and current issues.
CLAIMS AGAINST THE GOVERNMENT SECTION
REPORT TO THE ATTORNEY GENERAL
The Claims Against the Government Section has worked with agencies over the past year to determine whether dispute resolution techniques can be used in an efficient and effective manner to supplement traditional administrative adjudication for resolving many of the claims for money that are filed with Federal agencies. More than forty representatives from twenty different agencies have participated in the work of the Section. Peter Steenland, Senior Counsel for ADR at the Department of Justice, served as Chair of this Section, with the assistance of Jeff Senger, Deputy Senior Counsel for ADR.
This report begins with a discussion of current practices involving the resolution of claims for money that are made against the government. Next, the report includes several examples of success stories from participating agencies. Finally, the report sets forth the Section's plans for the future as well as a description of a Pilot Arbitration Program that the Section plans to implement over the coming year.
The Section is dedicated to finding better ways to resolve claims filed against the government that seek money damages. We have focused on the administrative stage of these claims, because that is the subject of the Administrative Dispute Resolution Act that created the Working Group. We did not cover monetary claims that arise from workplace and contracting controversies, as these types of disputes are addressed in other Sections of the Working Group.
A large number of monetary claims are filed against the government under the Federal Tort Claims Act, 28 U.S.C. §§ 2671-2680 (FTCA). For example, a citizen who slips and falls on the steps of a government building or is involved in an automobile accident with a government vehicle may file a tort claim under the FTCA seeking damages from the United States. The Section reviewed monetary claims that arise under other statutory regimes as well. For example, claims are filed at the Department of Agriculture seeking money damages as a result of that agency's denial of a loan or a farm subsidy. The Department of Interior and the U.S. Army Corps of Engineers handle demands for money under the Just Compensation Clause of the Fifth Amendment for takings of private property due to various regulatory and environmental protection regimes. The Department of Health and Human Services has an administrative process in its Provider Reimbursement Review Board to resolve allegations that certain reimbursement rates for health services are too low. Other agencies are also confronted with demands for monetary payments unrelated to government contracts or workplace matters. Apart from the administrative processes set up by the FTCA, some agencies have developed a formal mechanism for addressing these matters and others have not, electing to handle them on a more ad hoc basis.
Virtually all of these claims are initiated by an administrative demand for payment filed with the agency in the first instance. After investigating the claim, the agency can agree to pay the amount demanded, make a compromise offer, or deny the claim outright. If the agency denies the claim or fails to reach a final disposition after six months (under the FTCA), the claimant may file a lawsuit in United States District Court. Claimants alleging an unconstitutional taking of private property generally file suit in the United States Court of Federal Claims. Once a suit is filed, the matter is transferred to the Department of Justice for litigation purposes. 28 U.S.C. § 2675.
Agencies generally have the authority to settle cases at the administrative stage for amounts up to $25,000. If an agency wishes to settle an administrative claim for more than this amount, it must present the proposed settlement to the Department of Justice, which must give written approval. In some circumstances, the Attorney General has delegated higher settlement authority amounts to several agencies. An agency may decline to settle administratively a case when a demand has been made in excess of its settlement authority without consulting the Justice Department. 28 U.S.C. § 2672.
III. SUCCESS STORIES
In the past, ADR has been used relatively infrequently in cases involving monetary claims against the government, but its use has been increasing recently. Agencies participating in the Section report a number of success stories in this area, some of which are discussed below.
A. CLAIMS FOR PROVIDER REIMBURSEMENT
Before using ADR, the Provider Reimbursement Review Board at HHS had a backlog of 10,000 pending cases. Parties waited up to three years for a hearing and another year after that before a decision could be rendered. Some HHS managers were initially skeptical of using ADR, fearing it would add yet additional delays to the process. Others at HHS thought ADR was unnecessary because more than 90 percent of the cases were settling without any assistance. However, most of these administrative claims did not settle until the eve of the hearing. This was often three years after the claim had been filed and after the lawyers had done considerable work to prepare the dispute for a hearing.
The Board instituted an ADR program that has saved all parties both time and money. ADR resulted in settlements of 44 of the first 48 cases where it was used. With this initial success, use of ADR has greatly increased. In FY 1999, the Office of Hearings and Appeals completed mediation of 81 cases and has mediation underway in an additional 53 cases. This has reduced the number of pending appeals and also reduced the time required to resolve them from three years to six months.
B. CLAIMS FOR FOOD STAMPS AND MEDICAID
ADR has also been used successfully to settle Food Stamp and Medicaid claim adjustments involving state governments. After the Secretary of HHS issued determinations regarding reductions in certain state Food stamp and Medicaid claims in early 1999, forty states and the District of Columbia filed appeals. Congress required HHS to process these appeals within strict time frames. HHS offered mediation to all the appellants under the Departmental Appeals Board's mediation program. All forty-one appellants who elected mediation have succeeded in negotiating settlements.
HHS estimates ADR in these cases has saved the Federal government $600,000 in potential adjudication costs and resolved more than $500 million a year, for five years, in disputed funds. In addition, the process saved considerable time, because administrative appeals could have taken two years, compared to the nine months for mediation. Finally, by the parties' own assessment, mediation allowed for a fairer and less acrimonious settlement of differences, thus preserving ongoing relationships between state and Federal officials involved.
C. CLAIMS FOR DRUG RATE REIMBURSEMENT
The Health Care Financing Administration initiated a dispute resolution pilot program for states and drug companies. These companies would dispute and withhold rebate payments due to the states (and the Federal government on a Federal medical assistance percentage basis). The agency has found that mediation in these cases has been very cost efficient. In calendar year 1999 meetings, the agency spent $2,400 in travel expenses to send two staff members to Denver for a week. During that one week, those staff members participated in the resolution of more than $50 million in disputes. In total, this program has resulted in the resolution of claims for more than $520 million. The total travel expenses involved are only $80,000 since the program's inception in 1994.
The Drug Rebate Program was selected as one of the twenty-four finalists for the prestigious Innovations in Government Award by the Ford Foundation, the John F. Kennedy School of Government at Harvard, and the Council for Excellence in Government. The program received a $20,000 grant award, which will be used to provide information about the project's effectiveness to a wide audience of potentially interested parties. The agency has also published a "Best Practices Guide for Dispute Resolution under the Medicaid Drug Rebate Program," using a public/private partnership, which was distributed to all manufacturers and states. The Dispute Resolution Project is a continuing effort.
D. CLAIMS AGAINST THE TENNESSEE VALLEY AUTHORITY
In July 1999, the Tennessee Valley Authority (TVA) implemented an ADR pilot program which includes mediation and arbitration for various claims filed against the agency. The program includes claims arising out of vehicular accidents, injuries on TVA's lakes and land, power supply interruptions, damage to property resulting from TVA's construction, title disputes, and environmental issues. TVA offers claimants the opportunity to participate in mediation of their claims on a voluntary basis after initial attempts at unassisted negotiation have failed. TVA, which has independent litigating authority, offers to mediate any claim, regardless of amount.
TVA also offers claimants the opportunity to submit their claims to an arbitrator for certain matters involving $30,000 or less. The arbitrator's decision is final and binding on all parties. TVA does not offer arbitration in cases where the agency believes it is inappropriate, such as cases involving significant legal principles that could adversely affect TVA and thus should be decided by the courts.
TVA pays the cost of both the mediation and arbitration proceedings for smaller claims. For larger, more complex claims that generally require more time, TVA divides the costs with the claimants. Through the use of ADR, TVA saves the costs normally associated with litigation, including the considerable time spent by TVA employees on discovery proceedings and testimony at depositions and trials throughout the country. Litigation costs can range from a few thousand dollars for simple cases to hundreds of thousands of dollars for more complex cases. The agency also believes the public views these alternative procedures favorably, because claimants gain similar cost savings and often resolve their claims in a more prompt and less adversarial setting than is encountered in litigation.
The program has only been in existence for less than a year, but it has led to
the successful resolution of a number of claims. Even in cases where ADR did not result in a settlement, the agency believes the issues often were narrowed or at least defined more clearly as a result of the discussions with the claimants.
IV. THE SECTION'S PLANS FOR THE FUTURE
Section participants have stated they would like to share agency best practices in handling claims cases. They would like to create a record of jury verdicts for various types of claims as a benchmark for settlements and a database of experts used by all agencies and the Justice Department in claims cases. Finally, participants would like more training in ADR, including training provided by the Justice Department's Legal Education Institute. The Section plans to work on these suggestions over the coming year.
Finally, the Section has decided to work over the coming year toward the creation of a Pilot Arbitration project to handle claims against the government. This proposal is covered in detail below.
PILOT ARBITRATION PROGRAM
The Section on Monetary Claims Against the Government proposes to create a pilot arbitration program for the resolution these cases. In keeping with the requirements of the Administrative Dispute Resolution Act, participation in such a program would be strictly voluntary. No legislation is believed necessary to institute such a program, but agencies would be required to maintain careful records of the disposition of claims by arbitration, in order to develop a body of data that could then be shared with all members of the Interagency Working Group in the context of evaluating the program for either termination or expansion.
B. KEY FEATURES OF THE PROGRAM
The following key features of the proposed arbitration pilot program reflect the present intentions of the Section on Monetary Claims. The ultimate scope and design features of the program may change, based on further consideration by the Section and comments by potential participating agencies.
Participating agencies: Any Federal agency currently processing monetary claims against the government would be invited to participate in this program, on a regional or national basis.
Scope of the program: As a program adopted pursuant to the Administrative Dispute Resolution Act, this pilot would be available to resolve administrative claims for money, up to the limit of the agency's existing settlement authority for the compromise of such claims.
Nature of claims: The participating agencies would identify those claims it finds are suitable for resolution by arbitration. That decision would be final and not reviewable. However, a claimant could reject the agency's offer to arbitrate without prejudice to the fair and expeditious processing of the claim.
Size of claims: Each participating agency would retain the discretion to set a ceiling on the dollar value of claims submitted to arbitration. However, in no case could an agency agree to arbitrate a dispute where the claim exceeds the agency's existing settlement authority.
Other relief: Only claims that solely seek monetary damages would be eligible for this program. Demands for equitable or other types of relief would render a dispute ineligible for this program.
Arbitrators: Each dispute in this program would be decided by a single arbitrator who would be selected by the claimant from a panel assembled by the participating Federal agencies.
Role of the arbitrator: The arbitrator would be required to issue a final award within thirty days of the time that the claim was submitted for resolution. The powers of an arbitrator are established in the Administrative Dispute Resolution Act. In making awards, arbitrators would be required to apply existing judicial and administrative precedents.
Procedures: The participating agencies would promulgate procedures for the fair and efficient resolution of disputes that are less formal than established administrative or litigation processes. These procedures would reflect the experiences of TVA described above, and of those parties that have used arbitration in the Federal courts, pursuant to the Alternative Dispute Resolution Act of 1998. In all tort cases, the arbitration would be completed within the six-month statutory period for administrative consideration of such claims.
Costs: Each party would bear its own costs of the arbitration. However, the agency participating in the arbitration would bear the cost of the arbitrator.
C. POTENTIAL BENEFITS OF THE PROGRAM
Whether a Federal agency is proceeding under the FTCA or some other statutory process for resolving monetary claims against the government, binding arbitration can offer something for everyone in appropriate cases. An agency can conserve its resources and staffing by using these expedited, informal procedures. Those resources can then be better spent on those disputes that present significant legal principles or where the government believes no liability has attached. Similarly, claimants can use arbitration to save on legal fees and litigation costs. A swift and final resolution of these disputes can benefit all parties. Moreover, this program can resolve a number of disputes that otherwise would be destined for the Federal courts. In essence, the Section proposes to create the equivalent of a "Small Claims Court" to resolve administrative claims for monetary disputes. Moreover, because the entire program would be voluntary in nature, with the agency charged with the initial screening of appropriate cases, and the claimant retaining the ability to pursue for formal processes if desired, there can be no claims of "second class justice" since the benefits of arbitration will be realized only by those who are willing to use the process.
The Section believes that ADR can be extremely valuable in assisting with the settlement of monetary claims against the government. It is not a silver bullet that will work in every case where it is used. But when it is used in appropriate cases, ADR can result in settlements that can free resources for other matters that cannot or should not be settled. Even where cases would eventually settle on their own without ADR, we have found that these processes can result in quicker and cheaper settlements. We look forward to continuing to work with agencies throughout the Federal government in creating additional ADR programs and fine-tuning existing programs. We also are eager to begin implementation of the Pilot Arbitration Program to facilitate the resolution of monetary claims against the government.
CONTRACTS AND PROCUREMENT SECTION
REPORT TO THE ATTORNEY GENERAL
The Contracts and Procurement Section had a very active and successful first year of operation. The goals of the Section included: (1) surveying current procurement ADR programs of the participating Federal agencies and the use of ADR by those agencies to resolve procurement disputes; (2) promoting the use of ADR through educational programs; and (3) developing and publishing a Guide to Federal Procurement ADR as its major deliverable. The Section was chaired by Brigadier General Frank J. Anderson, Jr., with the assistance of Joseph McDade and Major Becky Weirick of the Air Force, as well as Tony Palladino and Rich Walters of the Federal Aviation Administration at the Department of Transportation. As is more fully discussed herein, the Section achieved each of its goals.
The Section completed a survey of the current status of procurement ADR programs for the more than thirty Agencies that participated in the work of the Section. With respect to the Section's educational efforts, a series of five meetings and programs were held during the course of the year. These were designed to educate agency representatives and the general public concerning ADR resources available in the areas of program design, the ADR process, available ADR Neutrals, ADR Training, and general ADR resources.
The Section's primary deliverable, the Electronic Guide to Federal Procurement ADR, was published on the Internet in the Fall of 1999. The Section believes that the Guide will prove to be a valuable tool for advancing ADR use as an integral part of the Federal procurement process.
II. SECTION ACTIVITIES
The Section's activities during its first year of operation concentrated on identifying the needs of the agencies in the procurement ADR area; addressing those needs in a series of programs; and providing the most up-to-date information and resources available to Federal procurement professionals through an Internet-based publication. Each of the three major areas of Section activities is addressed below.
A. MEETINGS AND OTHER SECTION ACTIVITIES
The Section convened a total of four formal meetings and participated in one ADR Conference between October 1998 and May 1999. In addition, Section leadership met on several occasions to plan program meetings, work on the Electronic Guide, and organize other ADR programs and activities. The formal meetings/programs and conference are discussed below.
The Section's organizational meeting on October 14, 1998, addressed the government's interest in efficiently and effectively managing contractual conflicts, and the need to work with contractors to avoid the cost of unnecessary litigation. A judge from the Armed Services Board of Contract Appeals discussed the Board's role in dispute resolution and agreed to coordinate with judges of other Boards to identify a panel of neutrals available to the Section's participants. The resulting Neutral's Matrix is incorporated in the Electronic Guide and is available on the Working Group website. The meeting also focused on implementation of ADR efforts by various agencies. Participants discussed efforts that have been made by their agencies, the Boards of Contract Appeals, and the GAO to employ ADR to settle procurement disputes.
The second meeting of the Section on December 10, 1998, had the theme of "Refining the Vision and Defining Success." The Section established four task forces to cover program design, ADR process, ADR training, and ADR neutrals. The task forces were charged with organizing and presenting information on their topics in future Section Programs and were asked to develop the Section's main deliverable, the Federal Electronic Guide.
The third meeting of the Section on March 2, 1999, focused on presentations by the Training task force and the Neutrals task force. The participants heard an overview of procurement ADR training, including awareness training, user training, and ADR neutrals' training. The training segment covered the need to obtain high level agency "buy-in" for the ADR process; the need to convince employees of the worth of ADR; targeting the appropriate audience within the agency; and identifying the proper persons to conduct and participate in the training. Speakers emphasized that training is an ongoing process, and that it is particularly important to train senior managers, who must have a full understanding of ADR and its benefits in order for the Agency to commit to an ADR program. Speakers noted key elements that should be covered in any user training program, including demonstrating the needs and goals of the program, identifying the benefits of ADR, clearly defining the user's ADR authority, exploring ADR options, and identifying available ADR resources.
On April 26, 1999, the Section participated in an ABA program entitled "ADR: A Quiet Revolution in Managing Government Contract Controversies." A number of section members served as speakers for the program, which focused on the procurement ADR programs of the Court of Federal Claims, the Boards, and the agencies. More than 100 agency and private sector representatives attended the Program.
On May 19, 1999, the Section heard presentations by the Program Design Task Force and the ADR Process Task Force. The Program Design Task Force presented its report, which discussed the critical elements of the design of any ADR program. A panel discussion followed, including representatives of several agencies that identified the design of their own programs and provided insight into how other agencies may develop procurement ADR programs. The ADR Process Task Force then reported on its efforts, discussing key issues in the ADR process including the decision of whether to use ADR in a particular case, the various types of ADR available, preparing and participating in the ADR process, the role of legal counsel, and the need for written ADR and settlement agreements.
B. THE ELECTRONIC GUIDE TO PROCUREMENT ADR
In the early stages of the Section's work, General Anderson, with input from Section's members, established the development and publication of a Federal procurement ADR Guide as the major Section deliverable for the year. Each of the four task forces was charged with preparing a portion of the Guide. The ADR Process Task Force was charged with incorporating the reports of all the other task forces as part of the Guide and of compiling appropriate Guide appendices.
After further discussions, the Section decided that the Guide would be developed and published on the Internet as an Electronic Guide. This permitted the Guide to be readily available to all Federal procurement personnel and interested private parties from their desktop computers, without having to separately purchase hard copies. This approach also avoided the significant cost and logistical problems attendant to traditional publication. The Air Force separately purchased the necessary technical assistance for the Guide development.
General Anderson had directed that the main Guide document itself be relatively brief in length, no longer than 50 pages. This page limitation was readily accommodated by the electronic form of the Guide, which includes extensive hyperlinks to the best ADR resources and documents available on the Internet.
Richard C. Walters, Esq., and Anthony N. Palladino, Esq., both of the FAA, served as the Managing Editors of the Guide, which was published on the Internet in the Fall of 1999. It includes sections on designing ADR programs, managing the ADR process, ADR training, ADR neutrals, and ADR resources. Each section incorporates hyperlinks to ADR-related materials.
The Resources section of the Guide includes, among other things, a listing of Federal ADR mentors, detailed profiles of existing procurement ADR programs, agency ADR success stories, sample ADR agreements, and links to other ADR Internet sites. The Guide may be accessed through the Working Group website.
C. GETTING THE WORD OUT
In addition to publishing the Electronic Guide, various members of the Section made significant efforts to ensure procurement officials and attorneys were informed about efforts to promote ADR. For example, the Air Force hosted or participated in the following ADR presentations:
- The Air Force Systems and Logistics Course (nationwide satellite broadcast, Aug. 98)
- The Air Force Judge Advocate General School's Negotiation and ADR Course (five-day ADR skills course for attorneys, Aug. 98)
- The Social Security Administration (one-day ADR training session, Sep. 98)
- The ADR SuperConference sponsored by Forbes Magazine (panel discussion, Oct. 98)
- The Air Force Acquisition Law Seminar (panel discussion, Feb. 99)
- East Coast National Contract Management Association Seminar (speech, Mar 99)
- Board of Contract Appeals Bar Association Annual Seminar (panel discussion, Apr 99)
- The Department of Defense Procurement Conference (panel discussion, May 99)
- Air Force ADR Champion Conference (two-day ADR training, Jul 99)
- DoD Class of Contracting Professionals (luncheon speech, Sep 99)
- National Press Club Roundtable with Nash and Cibinic (roundtable discussion, Nov 99)
- The Millennium Construction Super Conference (panel discussion, Dec, 99)
The Air Force also met with some organizations within the ADR community to discuss the Working Group efforts generally and Air Force ADR efforts in particular, i.e., The Center for Public Resources.
D. AGENCY ADR ACTIVITIES: SPECIFIC ACCOMPLISHMENTS AND GENERAL ADR ACTIVITY
A number of Federal agencies engaged in significant ADR activity. The text below highlights some of the most significant accomplishments from the most active agencies.
Department of the Air Force
The Department of the Air Force has taken great strides to promote ADR use in contract controversies. Over the past 15 months, the Air Force used various ADR techniques to successfully resolve a number of contract disputes, including two disputes worth almost $1 billion. Air Force ADR activity during this reporting period is summarized below.
A. ADR Settlements of Major Cases Valued at $1 Billion
The Air Force, the Department of Justice, and The Boeing Company entered into a mediated settlement agreement with the assistance of an Armed Services Board of Contract Appeals (ASBCA) judge acting as a third-party neutral to settle the AC-130U Gunship Litigation. The parties resolved contract claims and disputes valued at $785 million that had been unresolved for more than 10 years. A structured process was used to analyze the claims; focus on cost, schedule, and performance issues; and isolate the matters in dispute. This is one of the largest contract claims ever resolved through an alternative dispute resolution process.
In another major case, Northrop Grumman Corporation and the Department of the Air Force settled certain contract claims valued at $195 million that involved the production of Joint Surveillance Target Attack Radar System aircraft. The settlement was reached with the assistance of an ASBCA judge who acted as a third-party mediator and adopted the settlement in a Consent Judgment.
B. Corporate-Level ADR Agreements With Top Suppliers
Mrs. Darlene Druyun, Principal Deputy Assistant Secretary for Acquisition and Management (SAF/AQ), has drafted corporate-level ADR agreements that seek a commitment between the parties to use ADR before commencing litigation. To date, the Air Force has signed corporate-level agreements with the following companies:
Alliant Techsystems Inc.
Northrop Grumman Corporation
Raytheon Company, Inc.
GE Aircraft Engines
GTE Government Systems
The Boeing Company
ITT Industries, Defense & Electronics
Tracor Aerospace, Inc.
Litton Industries Inc.
Lockheed Martin Corporation
United Technologies Corporation
Collectively, these companies account for a majority of the total Air Force procurement budget in any one year. While ADR use is voluntary, the Air Force's intent is to work with the corporate leaders of the organizations that signed these agreements to make ADR the option of first choice.
C. Program-Level ADR Agreements For Major Weapon System Programs
In May 1995 the Air Force announced several initiatives, referred to as "Lightning Bolts," to reform the Air Force's acquisition and sustainment processes toward a faster, better, and cheaper way of conducting business. The original Lightning Bolts have been implemented, and they have resulted in $30 billion in cost savings and cost avoidance. On April 23, 1999, the Air Force announced Lightning Bolt 99-4, which requires every major Air Force acquisition program to have a program-level ADR agreement in place by October 1999. More than 40 of the largest Air Force acquisition programs and their prime contractors have signed documents committing them to using ADR. The Air Force's goals for this effort are straightforward:
- Ensuring that ADR, rather than litigation, is the first choice whenever negotiation of contract issues reaches impasse;
- Using ADR to resolve controversial contract issues at the lowest level and as early as possible using the least expensive means; and
- Using ADR to enhance long-term partnering between the Air Force and industry by seeking creative, efficient and sensible outcomes to contractual disagreements.
D. Five-Year ADR Plan for Acquisition Disputes
To support the commitment to ADR made in these agreements, the Air Force began an five-year plan in June 1999 to design and implement an infrastructure to match its ADR needs with appropriate resources and advice. The program involves the following components:
- Engaging industry at the corporate and program-levels to foster ADR use;
- Appointing an ADR Advisory Team to assist in screening cases and to help match Air Force ADR needs with appropriate resources;
- Appointing ADR Champions at major contracting activities throughout the Air Force;
- Developing new ADR case-screening methodology;
- Creating a website to improve access to ADR information;
- Collecting data on potential contract controversies to establish an "early warning system" for disputes that may be candidates for ADR; and
- Establishing an information management and analytical capability to facilitate prompt resolution of contract controversies
Most of these elements are already completed or already well underway.
Department of the Navy
The Department of the Navy reports that its ADR program was instrumental in the convening and preparation of the parties for a mediation in a nearly decade-long litigation involving the largest dollar-value Government contract case filed to date. Although the Government had lost in large measure at the trial level, the Navy hoped that the Court of Appeals for the Federal Circuit would reverse the trial court's finding that the Government had terminated the disputed contract for convenience rather than default. The expectation that the case would eventually be remanded for a trial on the merits led the Navy to urge consideration of alternative means of resolving this dispute rather than spend five to ten more years of litigation. The appellate court's July 1, 1999, decision reversing the trial court's finding on termination was the impetus for the parties to seriously explore an appropriate ADR process. Because the Navy had used an innovative blend of war-gaming and strategic simulation workshops to introduce the idea of ADR to the Department of Defense, the Navy, and the Department of Justice, the Government was fully prepared to sit down with the contractors and discuss the possibilities of settlement when the appellate court acted.
The Navy ADR Program Office drafted the ADR Process Agreement used by the parties to structure the mediated negotiation and assisted the parties in the selection of the neutrals. The mediation is still in progress as of the date of this report, but the Navy is hopeful that this ADR attempt will resolve this matter.
Armed Services Board of Contract Appeals
The ASBCA reported significant ADR activity in FY 99 as is reflected in the chart below:
Year ADR Requests ASBCA Appeals Binding ADR Non-Binding ADR Resolution Rate
FY 98 63 90 26 37 97%
FY 99 68 111 31 37 97%
Totals 131 201 57 74 97%
General Accounting Office
In FY 99, the General Accounting Office (GAO) saw a substantial increase in the number of cases using ADR in bid protests. The GAO reports that in FY 98 it had fifty-three cases in which ADR was used and in FY 99 this number increased to eighty-eight cases. This increase was realized even though the overall caseload declined from fiscal year 1998 to 1999. More importantly, ADR succeeded in resolving the protests (or cost claim) in 95% of the cases in which ADR was used, compared to a success rate of 83% in FY 98. The GAO reports that the increasing successful use of ADR aids the prompt resolution of protests and cost claims which benefits the GAO, the procuring agency, and the protestor.
Federal Aviation Administration/Department of Transportation
The FAA established its Office of Dispute Resolution for Acquisition ("ODRA") on May 14, 1996. The ODRA has provided the Agency and its contractors with a streamlined dispute resolution process, which places heavy emphasis on the use of ADR techniques. This process was significantly enhanced during Fiscal Year 1999, when the ODRA published its Final Procedural Rule and began its implementation. The Rule established ADR as the primary dispute resolution method to be employed by FAA for procurement disputes. Pursuant to the Rule, whenever a protest or contract dispute is filed with the ODRA, an ODRA Dispute Resolution Officer ("DRO") is immediately designated to serve as a potential neutral in order to explore ADR options with the parties. The parties also may opt to use Board of Contract Appeals judges in lieu of DROs to serve as ADR neutrals or may employ third-party compensated neutrals for ADR proceedings. In a related action, the FAA's Acquisition Executive executed the Section's ADR Pledge to express the FAA's top-level commitment to early expeditious resolution of procurement controversies by ADR.
During Fiscal Year 1999, the FAA attempted to employ ADR techniques through the ODRA process in a total of forty-two cases. ADR settlements were reached in 95% of all contract disputes filed with the ODRA during Fiscal Year 1999 and in 53% of all bid protests filed with the ODRA during Fiscal Year 1999. The aggressive use of ADR techniques by the ODRA is partly responsible for the comparatively short resolution timeframes achieved by the ODRA. Bid protests are resolved through ADR in an average of twenty-seven calendar days, while contract disputes have been resolved by ADR in an average of fifty-four calendar days.
Department of the Army
The Army Corps of Engineers, which initiated its ADR program to resolve contract disputes in 1985, continued to use a variety of ADR methods to settle construction contract claims and appeals in fiscal year 1999. The Corps of Engineers participated in seventeen ADR sessions, involving both private third-party neutrals and board of contract appeals judges as neutrals. In fifteen of the seventeen ADR sessions, the parties were successful in resolving the disputes. The other two ADR sessions were still pending at the end of the fiscal year. The total amount of the claims was approximately $25 million and the amount of the settlements was approximately $9 million. In addition, the Corps of Engineers recovered $750,000 for the United States in an affirmative government claim against a contractor.
Federal Agency ADR Activity Survey
The section sought and obtained specific information from more than thirty agencies whose programs, when taken together, represent most of the Federal government's procurement activities. Each agency was asked to provide information concerning the status of its ADR procurement programs. The agencies also completed detailed Agency Profiles, which provide information to Agency personnel and the general public concerning the agency's procurement ADR program. Each of these profiles is now included in an Appendix to the Section's Electronic Guide to Federal Procurement ADR.
In addition to completing the Agency Profiles, each agency was asked to provide several categories of information, including the following:
- Whether a signed ADR policy is in effect;
- Whether the agency has an ADR program or program design plan in effect;
- Whether the agency offers ADR awareness training to appropriate personnel;
- Whether the agency offers ADR skills training;
- The number of ADR attempts made in Fiscal Year 1999; and
- The number of ADR settlements reached in Fiscal Year 1999.
All the above categories of information are included in the Agency ADR Matrix. The Matrix demonstrates that significant progress has been made by the participating agencies. Most of the participating agencies completed and submitted individual ADR profiles. More than half of the participating agencies have signed ADR policies in effect. Also, more than half of the agencies have either ADR program in place or a program design implementation plan in progress. Twelve of the agencies offer ADR awareness training to appropriate personnel. Ten of the agencies also offer ADR skills training. The number of ADR attempts and settlements identified by the Agencies in Fiscal Year 1999 varied significantly. Thirteen of the participating agencies identified one or more procurement ADR settlement reached during Fiscal Year 1999.
III. THE SECTION'S PLANS FOR THE FUTURE
The Section believes that significant progress was made during the past year, through the Section's meetings and the Electronic Guide, to promote the development and expansion of agency-based procurement ADR programs. The Section's future plans are geared to furthering these developments and increasing the use of ADR to resolve Federal procurement-related disputes.
The Section will continue to work with industry leaders in support of ADR. The Section also proposes to meet with and brief agency acquisition executives directly on procurement ADR and available ADR resources, using the Electronic Guide.
WORKPLACE SECTION REPORT TO THE ATTORNEY GENERAL
The Workplace Dispute Section was chaired by Erica Cooper of the Federal Deposit Insurance Corporation (FDIC) and Mary Elcano of the United States Postal Service (USPS), with the assistance of Cathy Costantino and Martha McClellan of the FDIC, and Cindy Hallberlin and Kim Brown of the USPS. The report summarizes the actions taken by the Section over the past year to further the Federal interagency ADR mission.
The Section's co-chairs hosted a meeting on October 28, 1998, to determine the individual needs of the Section member agencies. To facilitate the work of the Section, "workplace dispute" was defined broadly to include Equal Employment Opportunity (EEO), Federal Labor Relations Act (FLRA), and Merit Systems Protection Board (MSPB) cases as well as grievances. Agencies were invited to provide information about the types and number of their workplace disputes. Attendees were asked to identify specific ADR issues that confront them and training they would like to receive.
The co-chairs used the data collected at the meeting to develop a strategic plan based on the expressed needs and requests of the attendees. The Strategic Plan was presented to the Section at a second meeting on December 15, 1998. Presentation of the plan launched a year-long effort that included:
- Offering twenty-four topical programs;
- Supporting a mentoring program;
- Developing a Federal ADR Program Manager's Resource Manual; and
- Proposing recommendations for continuing the Section's work in the year 2000.
I. THE 1999 STRATEGIC PLAN
A. THE ASSESSMENT
The Section's first task was to design a tool that would effectively measure each agency's current workplace dispute resolution mechanisms and that would identify needs and areas for improvement. An initial coordination team consisting of representatives from the USPS developed a needs assessment matrix and a conflict audit. The conflict audit was designed to collect data on a broad range of workplace dispute issues including:
- Agencies' current workplace dispute caseload;
- Agencies' current workplace dispute resolution options;
- Agencies' resistance and constraints on the use of ADR; and
- Agencies' labor-management climate.
The needs assessment and the conflict audit were distributed at the section's first organizational meeting in October 1998. More than 150 individuals representing forty-nine agencies met in small, facilitated groups to identify their needs and expectations, and to develop strategies on how best to meet those needs.
The information obtained from the needs assessment matrix and the conflict audit were used to establish the Section's goals. This data became the basis of the 1999 Strategic Plan and served as a benchmark for an agency's program development and implementation. These tools also generated specific information relating to an agency's grievance or complaint caseload and identified impediments to implementation of an ADR program. With this information agencies were able to determine which dispute resolution processes would be of greatest value to them.
These tools proved highly valuable as they revealed, for example, that of the forty-two agencies that responded, thirty-six currently had ADR programs. The programs included:
- Thirty-six for Equal Employment Opportunity (EEO) complaints;
- Twenty-three to address grievances; and
- Twenty-two to handle either FLRA or MSPB complaints.
In the EEO arena, twenty-eight agencies had fewer than 100 informal complaints annually while only three agencies reported more than 1,000 per year. Twenty-nine agencies reported less than 100 formal complaint filings and one agency reported more than 15,000 annually. Overall, most agencies agreed that mediation would be the most valuable ADR technique for handling any of their agency's disputes.
Armed with this information, the Section's challenge was to provide guidance and hands-on assistance to all Federal agencies despite their size or available resources. More than half of the agencies identified the need for assistance in the areas of program design and evaluation as well as budget development, marketing and training. A smaller group requested assistance with the selection of neutrals and in identifying best practices.
The final tabulation of this information led to the development of the 1999 Strategic Plan. Given the diversity of the needs reported on the conflict audit, the responses were categorized and divided into three tracks. Track One was developed to assist agencies that were not currently using ADR; Track Two assisted agencies with an ADR program that wanted to improve their efforts; and Track Three focused on activities for those agencies wishing to share resources or explore complex policy questions.
B. THE PLAN
Track One offered a series of activities for agencies interested in learning about the basics of establishing an ADR workplace disputes program. The goal of this Track was to ensure that those who attended the programs developed a clear understanding of the various ADR mechanisms, identified the appropriate mechanisms for their agency, gained an awareness of the components necessary to create a successful program, and undertook major steps in program design and at least preliminary steps toward program implementation.
Track Two targeted those agencies that desired to build upon an existing ADR workplace dispute program. The programs in this track focused on identifying cost-effective marketing techniques, developing successful strategies for implementation, reviewing best practices, and evaluating program effectiveness.
Track Three focused on issues unique to agencies with established ADR programs. Special attention was given to sharing lessons learned, with an eye toward avoiding roadblocks to full and effective implementation. Specific issues that warranted attention were confidentiality, ethics, and development and funding of an external panel of neutrals. Track Three participants also explored opportunities for establishing a mentoring program for agencies with less established programs.
Although the 1999 Strategic Plan was divided into three tracks, all participants were encouraged to attend any sessions they felt would benefit their program. Each track offered sessions on a wide range of topics identified by the participating agencies. Twenty-four panel discussions, training sessions and interactive workshops were developed and led by either the Federal Deposit Insurance Corporation or the United States Postal Service.
Additionally, the Plan encouraged use of an informal mentoring program whereby experienced agencies would provide advice to agencies in their early stages of program development. Finally, the Strategic Plan included a networking component designed to assist agencies in exploring ways to share resources, expertise and lessons learned.
II. IMPLEMENTATION OF THE PLAN
The unifying goal of the Section was to provide each agency, regardless of its ADR experience or expertise, with the information, training, and support needed to design, implement, and administer a workplace disputes resolution program. To this end, the Section hosted a total of twenty-six programs (two joint organizational sessions in 1998 and twenty-four topical sessions in 1999). The sessions were well-attended and well-received:
- Total attendance at Section programs was 1,262 participants, from 101 agencies or agency components;
- 119 presenters, many of whom were from the member agencies, participated in panel discussions, training sessions, facilitated discussions and interactive workshops; and
- Approximately 90% of the attendees responding found the sessions useful and informative and the speakers effective and knowledgeable.
In addition to the topical sessions, the Section sponsored an informal mentoring program that provided a variety of opportunities for inexperienced agencies to learn from those with more ADR expertise. The mentoring effort resulted in the formation of the Small Agency Caucus, an organization devoted to addressing the unique ADR program and resource needs of small Federal agencies.
The wealth of information developed for the topical sessions provided the basis for the Section to collaborate with the Enforcement and Compliance Section, the Claims Against the Government Section and the Small Agency Caucus to develop a Federal ADR Program Manager's Resource Manual. The Manual was drafted by members of each of the participating groups and is intended to be a practical guide to designing and developing ADR programs.
A. THE SECTION STUDY GROUP SESSIONS
The twenty-four topical study group sessions were organized not only according to the stages of ADR development but also according to unifying themes such as evaluation, ADR design, and neutral identification and selection. Each track consisted of eight sessions, ranging from one to three hours. The sessions began on January 14, 1999, and ended on September 30, 1999.
Track One sessions provided a basic introduction to ADR principles, ADR practices, and the essentials of ADR program design for novices. Presentations included a training session on basic ADR theory and practice, a panel discussion on ADR program marketing ideas and strategies, and an interactive workshop on current ADR issues and questions. According to attendee feedback, these sessions were very successful. For example:
- More than seventy representatives from forty-one agencies attended the panel discussion on marketing;
- 100% of those returning a feedback questionnaire found the marketing panel informative and expected to use the information learned at the session;
- A training session on facilitation drew more than seventy attendees from thirty-four agencies; and
- 94% of those responding approved of the facilitation session and believed they would use the information they learned.
Track Two presentations were designed to assist agencies in improving or expanding existing ADR programs. These sessions included a panel discussion of the roles and responsibilities of Federal unions and management organizations, interest-based design techniques, and specific design issues such as evaluation and confidentiality. Attendees' responses to these sessions were enthusiastic:
- Thirty-eight representatives from twenty agencies attended an interactive workshop on ADR program evaluation.
- 96% approved of the evaluation session and believed it would assist them in developing agency-specific evaluation methodologies.
Track Three was intended to provide a forum for those agencies interested in ADR policy issues and ADR program development and implementation. This series included sessions on a variety of topics including issues about neutrals, arbitration, and incentives for Federal employees to use ADR. In addition, there was a program on mentoring and one designed to address the unique needs of small agencies. A panel discussion on how the various workplace dispute agencies (i.e. EEOC, MSPB, FLRA, OSC, and OPM) work and interact with ADR was one of the highlights of this series. More than 100 attendees from forty-five agencies participated in this session. Of those responding, 93% approved of the session content, speakers, and materials.
The topical presentations were the centerpiece of a larger information package developed for each session. Attendees received extensive written materials to supplement the two- or three-hour programs, including relevant laws and regulations, program practice and procedures, and model forms and clauses. The agenda and minutes from each session were placed on the Working Group website as were many of the forms and training materials. The Section developed and maintained a contact list of all attendees on the website to facilitate networking and information sharing. The FDIC videotaped its sessions, and these videotapes are available upon request.
B. THE MENTORING EFFORTS
The mentoring and networking component of the plan was intended to assist agencies in understanding and applying what they were learning at the sessions. Mentoring and networking opportunities were incorporated into every session by providing ample time for questions and informal discussions. In addition, two sessions were devoted solely to mentoring, including one training session for mentors and mentees and another devoted to small agency issues. Response to these two sessions was enthusiastic: 98% of the attendees responding thought the mentoring sessions provided valuable information and contacts.
C. THE FEDERAL ADR PROGRAM MANAGER'S RESOURCE MANUAL
The Federal ADR Program Manager's Resource Manual is a collaborative effort of four entities: the Workplace Dispute Section, the Enforcement and Compliance Section, the Claims Against the Government Section, and the Small Agency Caucus. It is the work product of representatives from numerous agencies and is designed to be a practical guide to developing and implementing an ADR program. The manual incorporates the information accumulated from sessions sponsored by the four participating groups and includes both theory and practical advice. The manual also contains relevant laws and regulations, links to Federal and private ADR websites, an extensive bibliography, and a list of agency ADR specialists and other ADR contacts. The manual is available on the Working Group website.
D. SUCCESS STORIES
The Workplace Disputes Section, at its May and June 1999 meetings, devised and distributed a survey to gather information on the progress of participating agencies' ADR programs. Several participants have made significant strides in program development and implementation. Some of their success stories are reported below.
The Department of Veterans Affairs has sponsored a variety of workplace mediation programs for hospital employees, and it recently instituted a comprehensive and ambitious ADR policy, VA Directive 5978. Among other things, this Directive requires Department officials to make the option of mediation available to all VA employees and provide all VA employees with a basic understanding of mediation and the ADR program available at their facility. Each of the VA's 173 hospitals have be directed to take steps to have a mediation program in place by close of FY 2000.
Department of Energy
The Sandia National Laboratories Ombuds Program was involved in more than 400 conflict cases during FY 1999. This is consistent with the annual case load over the seven years the program has been in place. Most of the conflicts were employee related. The savings accrued by ombuds involvement was principally achieved through improved productivity, lower turnover, and higher decision quality. The case rate of 400 in FY 1999 has been very conservatively estimated to generate savings of at least $600,000 (50% more than the program cost) and improvements in morale that cannot be measured. Litigation and EEOC charges against Sandia continue well below the levels experienced prior to the creation of the program.
Social Security Administration
The SSA had concerns about fostering buy-in for the development of its ADR program. These concerns were allayed after SSA representatives attended Section presentations and had an opportunity to discuss their situation. Once they realized that other agencies had effectively dealt with similar issues, they solicited advice on how to proceed. With this advice and encouragement from other agencies' ADR success stories, they were able to proceed with their project. As a result, SSA recently completed negotiations with its unions and began to implement a pilot ADR program.
National Security Agency
After attending several Section meetings and learning about ADR programs in other agencies, NSA gained confidence that its program contributed to the well being of its workforce. This awareness was aided by NSA's realization that a successful program is not evaluated solely in terms of dollars. By reviewing issues regarding resolution and trust as well as dollars, NSA was able to find ways to design its program to be more flexible and fit the organization's unique culture. Thereafter, NSA shifted its definition of success from "dollars" to "improved organizational culture."
NSA ADR personnel are especially encouraged that high level managers are beginning to recommend ADR to their employees. The NSA program continues to experience higher rates of use and, since its inception, there is a noticeable increase in the development of trust between agency personnel.
United States Department of Justice
Bureau of Prisons
The BOP was committed to designing and implementing a new ADR system within the agency. It began by hiring a Dispute Resolution Counsel who learned about ADR program development by attending the Section programs. In 1999 BOP developed four different pilot programs in order to test different ADR processes. Two of the pilots used ADR to address formal EEO complaints. One pilot is testing the use of mediation in the informal EEO counseling stage and a different pilot is exploring the use of an impartial ombuds, who is available to all employees. This ombuds is selected jointly by a Prison Warden and a union representative. After completion of the pilots, BOP will analyze the data and decide which process to implement within the agency.
United States Patent and Trademark Office
During the development of its new ADR program, the USPTO was not clear on the best way to address the issue of union involvement. Initially it was thought that the best way to address this issue was to exclude the unions from the process. After attending several Section programs, USPTO representatives learned that the successful development of a program required them to involve the unions in the process and obtain their buy-in early in the process.
National Archives and Records Administration
Representatives from the NARA attended the Section meetings to obtain general information on ADR and gather information on the issue of confidentiality. After attending a session on ethics and confidentiality, NARA representatives were able to compose a document that specifically defined the issue of confidentiality for employees and management.
Pension Benefit Guaranty Corporation
PBGC had been using ADR in their General Counsel's office and sometimes informally with EEO complaints, and it had decided to develop a formal EEO ADR process that would be used more extensively. The Section meetings helped PBGC do this by bringing people together with similar concerns from different agencies who served as mentors for each other. As a result of this process, PBGC was able to benefit from lessons learned by other agencies.
Department of Interior
Interior developed a departmental program designed to address any workplace concern of any employee at the earliest opportunity and the lowest level. The COnflict REsolution program (CORE) will supplement any existing dispute resolution mechanisms used in each bureau to address human resources and EEO concerns. Approximately 100 people will be trained to be CORE dispute resolution specialists.
III. THE SMALL AGENCY CAUCUS
The Small Agency Caucus was established as an outgrowth of the Workplace Disputes section to address the dispute resolution needs of smaller agencies. The caucus membership consists of representatives of small Federal agencies. Its mission is to provide small agencies with information on alternative dispute resolution, to act as a support network, and to create opportunities to share resources.
The purpose of the first session of the Caucus was to provide representatives of small agencies with an opportunity to discuss the unique needs of small agencies, create the caucus, and provide opportunities for networking. The representatives were divided into six groups to brainstorm on the organizational structure and goals for the caucus. Before the end of the meeting, representatives presented recommendations to the entire caucus for consideration and further discussion.
The steering committee then met weekly at the General Accounting Office, chaired by Dolores H. Crawford and co-chaired by Dorothea Taylor Kennedy and Julia Roig. The committee members consisted of volunteers from various small agencies. These members are ADR professionals who were available to small agencies who needed ADR information and a contact for support and advice in developing and implementing ADR programs. The steering committee developed a mission statement, goals and objectives, organizational structure, and a strategic plan for the small agency caucus.
To assist small agencies in the formation of their ADR programs, the caucus developed (1) a comprehensive ADR resource guide on how to develop an ADR program, including sample forms and materials from established programs; (2) a forum for information exchange, networking and support; (3) a pool of small agency ADR professionals to contact for advice or support in developing and monitoring ADR; and (4) information and opportunities to share neutrals and ADR training.
The Caucus also held several workshops and seminars on such topics as ADR program design and agency obligation to notify the union when mediation occurs during the formal stage of the EEO process.
IV. THE SECTION'S PLANS FOR THE FUTURE
The Section's 1999 program design was based on the needs and expectations of the member agencies as articulated at an organizational meeting on October 28, 1998. Much of the success of the program series was the result of tailoring the sessions to the expressed needs of the members.
We believe the best approach for maintaining the momentum developed over the past year is to continue to offer programs and direct assistance designed to meet the current needs of the Section members. We are also mindful of a need to coordinate with the other Working Group Sections to maximize the opportunities for sharing information and expertise without duplicating efforts.
The following plans are based on feedback gathered from numerous sources, including the attendees at each session, suggestions received from members on the Section's midyear survey, agency responses to the Department of Justice survey, observations of session presenters and trainers, and our own experience over the past year.
The goal of the Section's program series offered this year was to provide the information, training, and support agencies need to design, implement, and administer an ADR program for workplace disputes. Sessions were designed to meet the needs of agencies, regardless of their level of ADR expertise. Member agencies made important progress in meeting their individual ADR goals over the past year and, for the most part, have no further need for introductory or basic ADR skills training. As their programs mature, agencies experience sophisticated problems and need specific training to address them.
The Section will develop a series of short skills seminars, each designed to focus on a specific aspect of ADR design or practice. These seminars will allow members to choose the topics most relevant to them and their workplace dispute resolution programs, and allow them to work with similarly situated agencies and designated ADR specialists in small, facilitated sessions. For example, suggested session topics include how to analyze program data and how to build and nurture relationships between the ombuds and the unions.
The increasing sophistication of Federal ADR programs and specialists has resulted in an increasing awareness of and sensitivity to ethical considerations, especially in mediation and ADR program administration. The Section dedicated two programs to ethics and ethical issues during the past year, but much more time and thought needs to be devoted to these important issues.
We will develop a series of seminars devoted to specific ethical problems and issues. These seminars will address issues such as mediator ethics, program administration ethics, confidentiality of the mediation process, and the competing ethical considerations facing Federal ADR workplace dispute resolution programs.
Formal mentoring program
Mentoring was an important, although informal, component of this year's program. The success of these initiatives was a direct result of the collaborative spirit of the member agencies and was most clearly demonstrated in the formation of the Small Agency Caucus. As agency programs develop and their problems become more complex, ADR program managers will need direct access to experienced ADR practitioners on a systematic basis.
We will develop a formal mentoring program to pair experienced agencies with those seeking advice and guidance in developing their ADR workplace dispute resolution programs.
How to identify and hire competent neutrals became a recurring theme throughout all of the Section's sessions. Although the shared neutrals program administered by HHS is an example of how agencies can cooperate to provide affordable, quality neutrals in an organized way, it is limited. The shared neutrals program uses only Federal in-house mediators and does not address the common problem of locating appropriate private neutrals in an efficient, cost-effective manner. The Section will collaborate with the other Working Group Sections and the newly formed ADR Council to support the shared neutrals effort and to explore additional options for identifying appropriate neutrals.
The USPS and the FDIC are proud to have been a part of this exciting first year of the interagency ADR initiative. Our partnership was a unique undertaking in the Federal sector and provided an unprecedented opportunity for agencies to obtain high-quality training and guidance from experts in every facet of ADR practice. Working together, the USPS and FDIC were able to offer twenty-four topical sessions led by outstanding ADR specialists from the private and Federal sectors at no cost to attendees.
Attendee feedback confirms the success of our efforts. Section members reported that all the sessions were useful, effective, and well received. We believe the Section's efforts have increased Federal sector awareness of ADR and have had a significant impact on the consideration and use of ADR in workplace disputes throughout the Federal government.