Electronic Guide to Federal Procurement ADR
Designing an ADR Program
his section of the Guide provides guidance and access to helpful resources to enable procurement professionals to design ADR programs for their agencies. It is important to note there is no "one right design" for a procurement ADR program. Different agencies rightly adopt different approaches that accommodate their disparate missions and cultures. Because the institution of an ADR program can significantly impact an agency's procurement culture, it is vital that the program design involve the participation and commitment of top agency officials. It is especially important to the success of any ADR program that those officials commit the agency financially to the program.
SECTION II CONTENTS
- Involving Stakeholders in the Design Process
- Steps in the Design Process
STEP 1-- NEEDS ANALYSIS
STEP 2 -- PROGRAM DESIGN
STEP 3 -- TRAINING AND EDUCATION
STEP 4 -- PILOT PROGRAM
STEP 5 -- PROGRAM IMPLEMENTATION
STEP 6 -- PROGRAM EVALUATION
Potential stakeholders who might participate in the ADR program design include:
- Agency policy and decision makers.
- Procurement policy and decision makers.
- Contracting officers and their technical representatives.
- Program managers.
- Procurement attorneys and associated legal staff.
- Trial attorneys and associated legal staff
The ADR program design group should understand clearly the task at hand, and should be empowered and supported by top agency officials. All members of the design group should have a basic understanding of federal contracting and ADR concepts and should be given additional training on these topics, as necessary.
The following six steps, which were developed based on the experiences of people who have designed successful procurement ADR programs, should be undertaken in any program design effort.
STEP 1 - NEEDS ANALYSIS
The process of identifying the needs of an agency is critical to ADR program design. Agencies are more likely to devote personnel time and financial resources to an ADR program if there is a perceived value to the agency. Determining this value and being able to describe it, therefore, is essential to the successful initiation of an agency’s ADR program. Thus, the first task of any design group is to conduct an agency needs analysis to determine the potential value to the agency of using ADR. Topics to be considered during the needs analysis include:
Agency Interests - Consider the reasons for and benefits of an ADR program. Determine what the agency hopes to accomplish through its ADR program, i.e., to comply with the law and Presidential memorandum, to conserve agency resources, to help foster better relationships between the agency and contractors, etc.
Current Dispute System - Analyze the agency’s philosophy and practice for the handling of disputes. This includes information on the nature of the agency’s procurement function (centralized or decentralized), the types of disputes that generally occur and who has authority (or plays a role) in resolving disputes. This also includes an analysis of the strengths and weaknesses of the agency's present dispute resolution approach. Determine how disputes currently are tracked.
Current Resource Costs - Identify the number and types of cases involving procurement related litigation over the past 3 years and determine the kinds of costs and other impacts to agency resources that have been incurred in connection with such litigation. These costs and impacts may include: (1) the investment of time by agency program personnel and managers in analyzing and defending against claims; (2) the impact of protracted litigation on employee morale/job satisfaction and related employee productivity; (3) consultant and expert witness fees and costs; (4) other resources consumed by litigation (travel, reproduction, transcription, clerical and other costs); (5) impacts to intangibles, such as customer satisfaction; and (6) the impact of the litigation on the agency's overall reputation, goodwill and relationships with its contractors.
Types of ADR - Evaluate the applicability and appropriateness of the various types of ADR techniques that are most likely to be used by the agency. See Guide Section III.B for a description of ADR types.
Available ADR Resources - Assess fiscal resources that are available for an ADR program. Address personnel resources that are appropriate and available for coordinating the ADR program and serving as ADR neutrals.
Barriers - Identify potential sources of and reasons for resistance to an ADR program.
STEP 2 - PROGRAM DESIGN
The overriding task of a design group is to plan a program that is easily understandable and usable by its contracting community and one that is not overly bureaucratized. The design group should be tasked with articulating as simply as possible the policy and procedures to follow in order to access the ADR program. It is generally advisable to formalize the ADR program through a written document. A written program with adequate definition of procedures will notify the agency stakeholders and the contracting community of the agency’s position regarding the use of ADR and the procedures it expects to follow in processing ADR matters. It will also inform all the stakeholders of their roles and responsibilities. If a written document is used, its format (i.e., regulation, policy statement, memorandum to staff, directive, handbook) may not be as significant as its actual content. Topics frequently addressed in written ADR documents include:
Policy Statement - The head of the agency or other appropriate top official should publish an ADR policy statement emphasizing the agency’s commitment to using ADR to resolve disputes. This policy statement will help establish that the ADR program applies to all agency staff, including procurement and legal staff. It should articulate the reasons for developing the ADR program and should list what the agency hopes to accomplish by using ADR and the ADR program.
Background - Summarize the history of ADR in federal government contracting. Review the statutes and regulations pertinent to ADR, the CDA, the ADRA of 1996, and the FAR Parts 33.201, 33.214 and 52.233-1(g).
Roles and Responsibilities or Definitions - Set forth definitions for important ADR terms, and describe the roles and responsibilities of the stakeholders in the ADR program.
Procedures - Outline the procedures to follow when using the ADR program.
ADR Pledge - Consider drafting an ADR Pledge, which is a voluntary agreement whereby the parties to a contract commit themselves to resolve issues in controversy via ADR, where possible, rather than litigating them.
Neutrals - Determine how and from what sources the agency plans to obtain ADR neutrals. See Guide Section V.
Training Requirements - Determine and commit to meeting the ADR training needs of all stakeholders. See Guide Section IV
Case Selection - Establish broadly defined, non-exclusive criteria for selecting cases for ADR. See Guide Section III.A
Evaluation - Decide how the agency expects to measure the success of the ADR program, and evaluate needed changes.
Resources - Identify the funding for the ADR program, as well as the personnel involved, including program coordinators and neutrals.
Implementation Plans - Address the steps the agency expects to take to activate the program.
In designing an agency ADR program, the following "lessons learned" should also be considered:
- If the agency has an educational component, consider teaming with it; it may help coordinate and fund training.
- Check with other agencies’ ADR program personnel; they are often willing to help design and conduct training.
- Consider what other federal agencies are doing, what training and programs they have in place, and whether, and at what price, the design group can tap into those resources.
- Design a program that helps to resolve disputes as early as possible at the lowest level.
- Have the design group evolve into an ongoing user advisory group to assist in implementation and evaluation improvements.
STEP 3 - TRAINING AND EDUCATION
In order to design a successful procurement ADR program, it is important that stakeholders have an appropriate understanding of the ADR process and the full range of available ADR techniques. Therefore, a training plan needs to be developed that addresses:
Design Group Training - To participate effectively in a design effort, design group members should be familiar with the traditional contract disputes processes, as well as general ADR concepts and techniques that are applicable to federal contracting. While individual briefings or training may be required, instruction can frequently be provided through group training, i.e., the design group can be trained at the outset of the design process or at their first meeting. As a general rule, the success of the design group will be in direct proportion to how well this groundwork is laid. This training and education will also result in increased "buy-in" from the members of the design team. For copies of agendas previously used to provide design group training, see Agendas.
Awareness Training - To make informed decisions about prospective ADR programs, both top agency officials and agency middle management should, at a minimum, have a basic understanding of the federal ADR movement and its applicability to their agency. This can often be accomplished through briefings.
User Skills Training - Once the agency’s ADR program has been designed, it is important that the users (e.g., Contracting Officers) and other persons involved in the procurement process (e.g., procurement attorneys) receive basic ADR skills training. This training should be tailored to their anticipated role and should be sufficient to familiarize them with the various ADR options, what the agency’s policy is on their use, how to initiate a request for ADR, and how to obtain the services of a neutral. For more information on the various types of ADR training, see Guide Section IV.
Neutrals Training - To insure skilled and qualified neutrals, agencies may wish to establish minimum training requirements for the ADR neutrals it uses.
Also, in planning any ADR training program, the following lessons learned should be considered:
- Remember to emphasize in training that ADR makes good business sense.
- If at all possible, use a top official to introduce the trainers, endorse the course, and task the participants with learning about and actually using ADR to resolve contract issues in controversy. The top official would not necessarily stay for the entire course but using someone for the introduction can give added emphasis to the training.
- If appropriate at the end of the training, discuss with the participants what the next steps are and what is expected from them, i.e., meet [date] to develop a design for the program, develop an agenda for next meeting by [date], go out and use ADR, refer cases to the program. Do not let the training end without clearly articulated "next steps."
STEP 4 - PILOT PROGRAMS (OPTIONAL)
A limited pilot test should be conducted before full implementation of a new program. A pilot program permits the agency to observe the ADR program under actual conditions. The pilot program should provide important information about the effectiveness of the selected dispute resolution techniques and the efficiencies of the proposed procedures. The lessons learned will provide the bases for making necessary changes to the program before full implementation. Also, the pilot program should generate several "success stories" that can be used to promote and market the ADR program during implementation. Items to be considered in developing a pilot program include:
Vision Statement - Prepare a statement from a high level official at the agency that endorses and describes the importance of the pilot program. This statement should also include the scope of the pilot program as well as the goals that the agency hopes to achieve through the use of the pilot program.
Goals and Performance Measures - Clearly state the goals of the pilot program. Participants need to understand how the pilot program will be evaluated. Success should not be limited to merely a resolution of disputes, but should include other success factors, i.e., resolving part of the dispute, narrowing of issues or discovery, repairing relationships, reducing the number of appeals.
Program Site Selection - Set limitations on the scope of the pilot program in order to ensure manageability. The limited scope could be defined in various forms including geographic regions, type of agency program, type of contract, or dollar amounts. The type or procedural status of the case - i.e., bid protest, formal contract dispute, pre-litigation, or litigation - may also be used to limit the scope of the program.
Funding - Identify specific funding for the pilot program to pay for start-up costs, including training, materials, and costs associated with the design team travel. In addition, there will be costs for continued briefings, marketing, site visits, technical assistance, and evaluations. Specific funding will also show program managers the importance the agency has placed on the success of the pilot program.
Timeframe - Establish a defined timeframe for the pilot program in order to effectuate a reasonable model for evaluative purposes. This time period should be long enough to generate sufficient experience.
Written Guidance - Create some form of guidance on the pilot program to insure proper usage. This guidance should be in writing and instruct the users on the scope of the program, goals, and procedures. The form of the instructions may be varied, including draft regulations, draft policy procedures, pamphlets, or actual guidance manuals/handbooks.
Training - Require basic ADR awareness and user skills training. This is necessary to overcome resistance to the pilot program. Initial training should include those officials at the agency that will be involved in the ADR process. These officials should include managers of the program(s) involved in the pilot program, trial and staff attorneys, contracting officers and contracting officers’ technical representatives. The training may also be used to market the ADR program.
Technical Assistance - Ensure that some form of technical support is available to ADR participants, so as to foster trust and confidence in the pilot program. The support may be in the form of a pilot program advisor, the design team, or some combination of both.
Neutrals - Provide guidance to the pilot program users regarding neutrals and types of ADR techniques available through the pilot program.
ADR Agreements - Generate sample ADR agreements for the parties to use. This will assist program participants by making the use of the ADR program user friendly. The ADR agreements could be made available by e-mail, web site, or through general publication.
Evaluations - Establish criteria to evaluate the pilot program. The criteria should be consistent with both the stated vision statement and the program goals. Periodic reports should be used to aid in the evaluation process.
Briefings - Conduct periodic briefings to inform agency officials about the status of the pilot program. Briefings will allow the design team timely to identify and discuss both the successes and shortcomings of the pilot program.
In terms of initiating a pilot program, the following lessons learned should be considered:
- Remember that people are often, and understandably, nervous when they are asked to try something new. The better the training and the more understood the program is, the more comfortable users will be with trying it.
- Start off small with pilot programs that have some likelihood of success.
- Do not measure the success of the program only by the number of disputes resolved. Consider other things such as resolution of part of the dispute, narrowing of issues or discovery, repaired relationships, reduction of future disputes, and stakeholder satisfaction with the process.
- There are important lessons to be learned during the pilot program even when disputes are not resolved.
- Be aware of the following barriers typically encountered during pilot programs and develop plans to overcome them:
- Middle management hierarchical control problems.
- Resistance to "compromise," and a "we’re here to litigate" attitude.
- Power issues; loss of control issues.
- Clients already have a settlement process and don’t see an advantage to changing that process.
- Problems relating to job security and interest in maintaining the status quo: "I have my job and I don’t want to see it change."
- Resistance to ADR because of the perception it forces settlement.
- Low priority given to ADR because of limited resources: "It's just one more thing to do."
- Absence of direction or support from top management.
- Lack of understanding about ADR: "knee-jerk responses."
- Fear of precedent or obtaining the reputation of "caving-in."
- Individuals wanting to use ADR to increase their role in the claims process.
STEP 5 - PROGRAM IMPLEMENTATION
Once an ADR program has been designed, a plan for implementation of the program must be developed. Senior management must be willing to provide the support and resources necessary for the new program, and managers at all levels must motivate individuals to consider ADR options. Many of the considerations set forth for conducting a pilot program are also relevant here. A design group that has conducted a successful pilot program will be in a strong position to implement a permanent ADR program. There are several factors that should be addressed or re-addressed during the program implementation phase:
ADR Champion - Identify a senior management official to be responsible for advocating the ADR program. This person should be designated and trained in advance of other implementation actions to insure smooth and integrated implementation of the program. The ADR "champion" must be strongly committed to ADR and should have a visible role in training and marketing efforts for the program.
Program Manager - Assign a committed program manager to take the lead in implementing and formally managing the program. The program manager should become an expert resource who is able to provide ADR training suggestions and general and case specific technical assistance for ADR. The program manager should collaborate with stakeholders to ensure the continued vitality of the program.
Publications - Make this Guide available to all stakeholders, either electronically or in hard copy form, and mandate its use. In addition, publish a reference guide for the agency's ADR program to disseminate essential information about the ADR program, its organization, procedures, mandatory reports, help aids and training, and include in that guide any regulatory documents that are required to authorize the program,.
Funding of ADR Expenses - Address the financial responsibilities and resources available to the various participants in ADR. This guidance enables participants to focus on the process and helps eliminate funding problems.
Marketing - Design a marketing plan to inform clients, customers, business partners and employees about the ADR program. The plan may be a combination of methods which go beyond traditional marketing, i.e., training for targeted employee audiences, briefings at already established annual conferences, informational programs for clients, customers and business partners, articles and interviews in in-house and trade publications, e-mail and regular mail announcements.
ADR Agreements - Provide sample ADR agreements that contain the various types of ADR. These should be readily available to users when needed in dispute situations. See Sample ADR Agreements.
ADR Case Selection Criteria and Suitability Screens - Publish guidelines for selecting cases appropriate for ADR. This guidance will vary depending on the type of ADR to be used. See Guide Section III.A, Deciding Whether To Use ADR In Your Case. Emphasis should be placed on the timing of ADR, with a preference for early ADR to maximize savings. This guidance may be included in the program’s reference guide/handbook. Consider establishing tools that emphasize and encourage ADR use. Such tools may include providing and using "ADR suitability screens" consisting of pre-prepared forms or questionnaires that require contracting officers or attorneys to analyze the factors in each dispute that support (or do not support) the use of ADR.
ADR Pacts or Commitments - Consider reaching voluntary, non-binding agreements with contractors and contractor associations to consider ADR in all disputes and to use it whenever appropriate. Such agreements provide a visible expression of high-level ADR support and help to create a pro-ADR attitude.
Training - Review ADR training received to date to ensure all elements of the workforce who are involved with ADR have received appropriate training. Conduct training for those who have not received training and conduct refresher training as necessary. Training should include "awareness training" to acquaint potential users to the ADR program and its operation or "user skills training" for those employees who will actually be utilizing the ADR program. See Guide Section IV.
Selection of Neutrals - Provide criteria for selecting a neutral. The criteria should identify desired qualifications of neutrals (depending on type of ADR to be used), list possible/preferred sources of neutrals, and emphasize the need to check references of unknown neutrals. See Guide Section V.
Reporting - Reports should be tailored to support other essential elements of the program, including types of ADR used, feedback on effectiveness of neutrals, savings from ADR, costs of the program, lessons learned, etc.
Success Stories - Publicize the successful use of ADR. This is essential to reinforcing program success and creating a culture in which ADR is accepted as beneficial to the agency. Success stories should have an analytical focus on "why" the ADR was successful as well as providing feedback on the various positive aspects of the ADR.
Continuous Improvement - Emphasize continuous improvement principles during the implementation of the program. Feedback should be encouraged with an organizational orientation towards receiving, evaluating and implementing suggestions at all stages of program implementation.
Incentives - Recognize contributors to the ADR program publicly. A simple scheme of recognition or awards for in-house and outside ADR participants could be publicized as part of a marketing program.
When implementing an ADR program, keep in mind the following lessons learned:
- Establish communications mechanisms to keep others informed of progress with the ADR program.
- Appear at as many existing agency events as feasible (conventions, seminars, etc.) to promote ADR and inform attendees about the ADR program.
- Encourage the use of ADR by providing monetary awards or other recognition at the agency’s highest management levels. Institute a yearly team award for the successful implementation of ADR.
STEP 6 - PROGRAM EVALUATION
A program evaluation provides the means to identify and collect the data necessary to determine the current "pulse" and success of the program. A plan for periodic program evaluation will help an agency to maintain the ADR program’s effectiveness. When an agency establishes an ADR program, it must be careful not to allow the program to become outdated over the course of time. There is a need for continuous evaluation of the ADR program’s effectiveness and efficiency in order to determine whether it is meeting its goals, accommodating agency changes, and addressing customer and contractor relationships. The following are elements that should be addressed in establishing a process for program evaluation:
Evaluation Plan - The evaluation plan that has been designed and developed must be implemented. Keep in mind that conducting a program evaluation is often a demanding task. However, it is critical to establishing an effective and valued ADR program. Clearly assign specific tasks relating to the collecting, collating and reporting on data associated with program evaluation. Ensure that the work is consistently accomplished.
Evaluation Team - Establish an evaluation team at the outset of program implementation. The evaluation team will bring an objective viewpoint to the analysis and can provide suggestions to the program manager for the continuous improvement of the program.
Case Tracking - It may be useful to institute a single computerized reporting system. This allows program managers a simple means to be kept informed of ongoing ADR applications.
Reports - Agencies may want to consider developing ADR case reports that provide a description of the case, the ADR technique selected, the outcome of the case, and whether any changes are recommended in future uses of ADR. It should state the government’s potential monetary liability, if any, and the amount settled for, if appropriate. Additionally, the report should state the time and costs spent on resolving the case through ADR and an assessment of the time that would have been spent if the case were resolved through litigation. It may also be useful to report on how the mission has been affected by the use of ADR. This includes reporting when the ADR proceeding has not resulted in a settlement.
Evaluation Forms - Make the evaluation forms simple and easy to follow. Use a continuum from "strongly disagrees" to "strongly agrees." Suggested questions might include whether: (1) the ADR program was sufficiently explained; (2) the services of the neutral were satisfactory; (3) the results were satisfactory; and (4) there are any suggestions for improving the program.
Contractor Input - Listen to contractor comments about the ADR program or a specific ADR application. Contractor comments may be helpful in evaluating the marketing of the program, identifying resistance by some participants to using ADR, and in finding ways to improve the program.
Economics - Establish an economic analysis for the ADR program. The use of quantifiable data to measure the ADR program is advised. Recognize that there are often intangible benefits of an ADR program that are difficult to quantify. See Guide Section III.J, Measuring ADR Success.
Shared Experience - Maintain an easily accessible forum, i.e., an e-mail group or chat room that posts suggestions to the ADR program and reports success stories. This can also list training opportunities and provide a means to post questions and answer questions.
Publicize Successes - Publish the results of successful ADR use. This will continue to reinforce the importance of the program. The means of publishing success can be as formal as a case study or as simple as an e-mail account of the resolution.
Under the President’s Memorandum, ADR implementation is now the responsibility of every agency. The six step design approach described above will provide a framework for designing a successful ADR program that can be tailored by any agency to meet its unique needs. Additional resources on procurement ADR and ADR program design can be found in the Bibliography in Guide Section VI.