Building Procurement Fitness

1. Building Procurement Fitness Building Procurement Fitness Administrative Dispute Resolution (ADR) Joe Damico

2. Presentation Outline ADR What is it? Roll out in Virginia APSPM Procedures Fit in the Purchasing - Cycle Building Procurement Fitness

3. ADR – What is it? One of Many Ways to Deal with Conflict: Avoidance “Traditional” Negotiation Litigation ADR ADR: Provides alternatives to, but does not take the place of, “Traditional Processes” ADR is voluntary between parties Empowers parties to a dispute to seek solutions which they decide meet their needs Often uses a neutral 3rd party to assist in the solution by facilitating communication between the disputing parties Building Procurement Fitness

4. ADR – What is it? Interest-Based Conflict Resolution Principles Focus on the issues Separate the people from the problem Explore the interest underlying the issues Look at needs (interests), not just wants (positions) Be alert for new possibilities Be open, creative Seek ways to meet both parties’ needs Look for “win-win” solutions Building Procurement Fitness

5. ADR – What is it? Variety of ADR Methods: Negotiation Partnering Mediation Arbitration Mini-trial Conference Settlement Building Procurement Fitness

6. ADR – What is it? Benefits: Promotes partnership between parties Prompt dispute resolution Less costly than alternatives Easier, less formality Creative, practical solutions Solutions with “buy-in” likely to last Parties retain control and outcome Little downside by attempting ADR Building Procurement Fitness

7. Roll out in Virginia ADR Codified: Passed 2002 General Assembly Session Effective July 1, 2002 §§ 2.2-4115 through 4119 Encourages Use of ADR by Local Governments and State Executive Branch Agencies in Various Administrative Areas Creates an Interagency Dispute Resolution Advisory Council: Secretary of Administration (Chair) Members Include Representative from all Cabinet Secretariats, OAG, Governor Appointees (non-state employees) Began Planning ADR Implementation in Fall 2002 Requires Each State Agency to Adopt Written ADR Policy and Designate an Agency ADR Coordinator Building Procurement Fitness

8. Roll out in Virginia Advisory Council (http://www.vadra.virginia.gov) Training Reporting Surveys Collect Data Governor’s Management Objective Increase ADR Use Statewide 25% - 30% Conduct Six Pilots Building Procurement Fitness

9. Roll out in Virginia Advisory Council (http://www.vadra.virginia.gov) Pilots Board of Accountancy – mediation used to resolve consumer complaints Virginia Information Technologies Agency – facilitation used to resolve bid protests and other procurement/contract disputes Department of Forestry – mediation used to streamline the enforcement of DOF water quality law Department of Environmental Quality – facilitation used to improve public participation in agency decision-making on regulatory and permitting issues Department of Charitable Gaming – ADR practices incorporated within agency’s educational and enforcement responsibilities Department of Mental Health, Mental Retardation, and Substance Abuse Services – facilitation used to improve staff communication, cohesiveness and coordination in direct care facility Department of General Services – interest-based negotiation process established for resolving contractual disputes Building Procurement Fitness

10. APSPM Procedure Goals: Promote Agency/Contractor Partnership Less Formal Process Resulting in Faster and Less Costly Resolution Less Confrontational Parties Retain Control & Outcome Participants: All Agencies that Conduct Procurements in Accordance with the DPS APSPM Vendor Community that Conducts Business with Agencies in Accordance with the DPS APSPM Building Procurement Fitness

11. APSPM Procedure Steps Taken: DPS Research – Local Governments, Virginia Association of Governmental Purchasing, National Institute of Governmental Purchasing, Federal Acquisition Regulation Discussions with VITA Discussions with OAG Policy Developed and Approved by DPS Policy Committee and Director Policy Incorporated into the APSPM PIM #98-016; dated July 16,2004 General Term and Condition Appendix B, Section IB. Agencies Notified and Provided Instruction on Use of ADR Policy: DPS website Procurement forum – December 2004 and 2005 Added to DPS Virginia Contracting Officer Curriculum Building Procurement Fitness

12. APSPM Procedure Supporting Conditions & Challenges Supporting Conditions & Impacts: Prior to DPS ADR Policy, Vendors Only Option to Challenge Agency Contractual Dispute Decision Was Legal Action – Costly for All Involved Develop Partnerships Between Agencies and Vendors Vendors Reluctant to Challenge an Agency in Court – Concerned About Fallout Challenges & Solutions: Awareness of the DPS Policy Change the Business Practices of Vendors and Agency Buyers Education/Training Building Procurement Fitness

13. APSPM Procedure How It Works: Agency Denies a Contractor’s Claim Contractor Decided to Challenge Agency’s Denial Parties Encouraged to Use ADR: Contractor Gives Written Notice to Agency Purchasing Office Requesting ADR Process to Resolve Issue Each Party Appoints Senior Management Official Not Previously Involved in the Transaction to Negotiate on Their Behalf Each Party Shall Furnish to the Other Party all Non-Privileged Documents and Information with Respect to the Dispute that Either Party Believes to be Appropriate and Germane Informal – Attorneys Excluded Use of Facilitator Recommended Resolution Agreement Must be in Writing and Signed by Authorized Representatives of Both Parties Any Compensation Paid to Facilitator Shall be Shared Equally by All Parties Involved Building Procurement Fitness

14. APSPM Procedure Expected Benefits: Better: Communication Between Agencies and Contractors Less confrontational Means to Resolve Contract Disputes Parties Retain Control and Outcome Faster: Reduces Time to Resolve Contractual Disputes Less expensive to resolve dispute: The Described ADR Process is a Less Expensive Proposition than the Legal/Court Alternative Building Procurement Fitness

15. APSPM Procedure What’s Next: Agency procurement professionals and vendor community need: To be Informed that an ADR Process is Available Training on “Interest-Based Negotiations” To be Aware of Resources Available from VADRA Council to Assist with Conducting an ADR Process Building Procurement Fitness

16. ADR ADR ADR • Plan/Schedule • identify need • budget • market conditions • recommend products/services • advise on policy/regulation/legislation Fit in the Purchasing Cycle Building Procurement Fitness • Administer contract • receipt • payment • amend contract • termination/expiration • Select Supplier • determine method of purchase • prepare solicitation/sourcing • receive bids/proposals • tabulate bids/evaluate proposals • prepare contract