Breakout Sessions # 709 and 710 Terry L. Albertson Crowell & Moring LLP April 28, 2004

1. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

2. ADR and the Board Case Breakout Sessions # 709 and 710 Terry L. Albertson Crowell & Moring LLP April 28, 2004 10:30 – 12:40 NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

3. Overview • Why and when to use ADR • What form and what forum • When to commit to ADR • Selecting a neutral • To bind or not to bind • Prime contract disputes and subcontract disputes • Cost and cost allowability considerations • Geographic considerations NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

4. Why Use ADR? • Less expensive than litigation • Faster than litigation • Less likely to create long-term relationship problems than litigation • May improve relationships • No good witnesses are available • Prime/sub issues resolved in one form NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

5. What Issues for ADR? • Better for factual disputes than for legal disputes • Better for disputes where neither party thinks it has a slam-dunk argument • Do not use if you want a complete victory • Essential that both parties are committed to good faith negotiation of a fair settlement NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

6. Timing of ADR • Pre-decision ADR • Cost allowability advantages for contractor • Positions may be more flexible • Jurisdictional issues for Boards and Courts • Discovery may be unavailable or voluntary • Post-decision ADR • Issues more likely to be well-developed • Opportunity for real discovery NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

7. Choosing a Forum • Boards of Contract Appeals • ASBCA • GSBCA • Other Boards • Pre- or post-decision • Real party in interest on the other side • Prime/sub disputes in a single forum possible • Control over selection of judges? • Court of Federal Claims • Pre-decision? • DOJ controls, not real party in interest • Prime/sub disputes? • Control over selection of judges? • Private mediators • Complete control over selection • Specialized knowledge – non-lawyers may be selected • Expense • AAA and other available resources NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

8. When to Agree to ADR • In the original contract • After the disagreement arises and before a final decision • After a final decision • On the eve of trial • Advantages of engaging the neutral in the drafting of the ADR agreement NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

9. Selecting the Neutral • ASBCA • Special expertise • Temperament • Luck of the draw • Court of Federal Claims • Private mediators • Expertise • Reputation • Location • Expense NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

10. Selecting the Principals • Business decisions need business judgment • Avoid those personally involved in the dispute • No jerks • Be prepared • Authority to settle NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

11. Types of ADR • Minitrial or summary trial • Mediation • Arbitration • Baseball arbitration • Structured negotiation • Limited only by the imagination NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

12. Binding or Non-binding • In the contract or as issues arise • The risk of the rogue neutral • Generally no appeal and no record if binding • Negotiated agreements almost always better • Bridging the final gap NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

13. Why not summary judgment? • ASBCA rarely grants motions for summary judgment • Risk that the judge will not understand and will make a mistake • Virtually no deference on appeal • Might make sense where you would win on the law and lose on equity NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

14. Limiting the Chatter • Page limits on briefs • Time limits on presentations • Witnesses, experts, and lawyers • Time limits on length of the process NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

15. Making a Record • Do you want a record of the proceeding? • Testimony under oath? • Do you want a written decision? • Protecting confidentiality • Do you need the neutral to endorse the negotiated settlement? NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

16. The Precedent Problem • Government may need policy issues resolved • Government may need “cover” • Contractor may need something authoritative to avoid future disputes • Advance agreements as part of the settlement agreement • Development of the law may suffer NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

17. When ADR Fails • ASBCA success rate exceed 90 percent • If ADR fails, the cost of the process has increased • Risk of “leakage” to other judges • Restricting use of ADR materials • Does partial settlement make sense? NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

18. Conclusions • When ADR works, it is a great process • It works almost all the time • The neutral is important, but no neutral can make it work unless both parties want it to work NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”