The following statutes lay the foundation for the use of ADR in the field of federal contracts.
The Administrative Dispute Resolution Act of 1990 (ADR Act):
Institutionalization of ADR in the Federal procurement arena began in the 1990’s when Congress passed the ADR Act, Pub. L. No. 101-552, 104 Stat. 2736. Congress premised its Act by finding that using ADR as an alternative administrative procedures can offer prompt, creative, efficient, and sensible resolutions to claims by and against the government. The ADR Act encouraged Federal agencies to use ADR processes to help resolve disputes and required federal agencies to adopt policies on ADR use. Of particular interest for this Guide, the sections in the ADR Act provide:
- Section 2: The Congressional findings supporting the use of ADR.
- Section 3: Required agencies to review their contracts and grants, and consider whether standard language should be updated to address ADR. See Ch.14, FAR Contract Claims (reflecting changes to standard FAR language). It also required agencies to adopt an ADR policy. In creating those policies, agencies were to look at how ADR could be used in formal and informal adjudications, rulemakings, enforcement actions, licensing decisions, contract administration, and litigation brought by or against the agency. To better make use of ADR, each agency is required to have a senior agency official designated as the “Dispute Resolution Specialist” (DRS), in charge of implementing the new policies as well as enforcing mandatory regular training in ADR for employees.
- Section 4: Amended Chapter 5 of Title V of the United States Code in several ways:
- Section 6: Amended the Contract Disputes Act (CDA) to address ADR. The amendments are now found in 41 USC 7103 (h)) (formerly codified at 41 USC 605).
The last section of the ADR Act contained a sunset provision, effective October 1, 1995, which terminated agencies’ general authority to use ADR, as well as the amendments made to the United States Code.
The Administrative Dispute Resolution Act of 1996 (ADRA of 1996):
Approximately six years after enactment of the original ADR Act, President Clinton signed into law the ADRA of 1996, Pub.L. No. 101-320 (codified at 5 USC 571, et seq.) The ADRA of 1996 removed the sunset provision the original ADR Act, and made several other adjustments to the original statute. Of particular interest for this guide:
- Section 3: Adjusted the confidentiality provisions by creating an exemption from the Freedom of Information Act. See Ch.29, Confidentiality.
- Section 4: Authorized the Attorney General to establish what is now the Interagency ADR Working Group “to facilitate and encourage agency use” of ADR.
- Section 7: Authorized non-competitive acquisition procedures (i.e., sole source) to obtain the neutral services for use in alternative dispute resolution processes. See Ch.24, Neutrals.
- Section 8: Removed prior authority vested in the head of an agency to vacate an award, and instead required limitations on the amount that can be awarded. See Ch.21, Arbitration.
The Contract Disputes Act (CDA):
The ADRA of 1996 amended the CDA to state that a contracting officer and a contractor may use “any alternative means of dispute resolution [under the ADRA of 1996] . . . or other mutually agreeable procedures, for resolving claims.” 41 USC 7103(h)(1) (previously codified at 41 USC 605). Requirements for claim certification remain in place. Id. at 7103(h)(2). The CDA was also amended to require that when either party rejects the other party’s request for ADR proceedings the rejecting party must provide written “specific reasons” for rejecting the request. Id. at 7103(h)(3).
The Alternative Dispute Resolution Act of 1998 (ADR Act of 1998):
The ADR Act of 1998 required federal trial courts to make ADR programs available to litigants. The U.S. Court of Federal Claims has an “ADR Automatic Referral Program” in place as a result of the 1998 Act. At the Court of Federal Claims, once parties notify their assigned judge of their desire to enter into ADR, the judge forwards their request to the clerk of the Court, and a new judge as a settlement judge or third-party neutral is assigned to the case. During the ADR processes, the case remains on the docket of the original assigned judge, and is removed only when the clerk reports it as settled.