More agencies, vendors turn to ADR to solve contract disputes

By Jason Miller
Executive Editor

More agencies and vendors are using the alternative dispute resolution process to solve contract protests with the Government Accountability Office.

Mike Golden, GAO’s managing associate general counsel, says agencies and vendors are turning to ADR to solve disagreements instead of letting a GAO attorney decide the case.

Golden says the number of cases going to ADR is up by 25 percent so far in 2009.

ADR lets GAO predict the outcome of a protest before writing a formal decision based on the facts presented by both parties.

“ADR’s are conducted earlier in the process after we get a complete record and if we can predict the outcome, we can advise the parties,” he says.

“It’s a fairly significant increase. The use of ADR has gone down over the last several years, but it is now trending up.”

He says the use of ADR reflects a change in culture by agencies and vendors to avoid or minimize litigation.

“If an ADR process will work where it doesn’t result in a formal decision, the parties like that and it is a positive to the process,” Golden adds.

“It’s an opportunity to resolve the protests more quickly.”

Golden says while it is easy to understand the reasons for using the ADR process more, it is more difficult to spot the trends in the number of protests the Defense Department is facing.

DoD in 2008 saw almost a 24 percent increase in bid protests, GAO finds in new report. But Golden warns not to read too much into the increase to 611 in 2008 from 493 in 2007.

He says every agency is facing more bid protests because Congress expanded GAO’s jurisdiction last summer to include task orders worth more than $10 million.

Golden says this accounted about 8 percent of the increase at DoD.

“You cannot take one year as a snapshot and say it has some significance,” he says.

“We took a five snapshot and we found that for four years, the numbers were fairly low. Then we had the one year bump up last year. What we learned is from year-to-year there doesn’t seem to be trends.”

Golden says DoD faced many more protests from 1989 to 1997, which in most years vendors filed more than 1,000 complaints.

After Congress passed acquisition reform in the late 1990s, the number of protests dropped significantly and has been consistently between 400 to 600 a year.

Golden also points out that while the number protests has remained flat, DoD’s spending increased to $395 billion from $262 billion in 2004.

GAO found that the number of protests per $1 billion spent by DoD dropped to 1.5 last year from 1.8 in 2004.

“One of the things I found interesting too was DoD Secretary [Robert] Gates testified last month and noted that DoD did 3.5 million contract actions in 2008 and GAO sustained 13 protests,” Golden says.

“So if you take our report, the 611 protests is really a small number as compared to 3.5 million contract actions.”

Golden adds that the report also gave GAO some insight into its processes.

He says GAO resolves more than 50 percent of the protests in 30 days and the rest within the 100 day limit set by Congress.

Congress also wanted to know how often vendors submit protests to that could be considered frivolous or meritless.

GAO did not address that issue. Golden says they have no basis to determine if a protest is frivolous.

“We are able to deal with those cases where protests are untimely or not in our jurisdiction very quickly,” he says.

“We screen them out and dismiss them because the most important thing is to get them off the books as soon as possible. We’ve done that very well.”

On the Web:

FederalNewsRadio — DoD facing fewer bid protests

FederalNewsRadio — More federal contracts protested in 2008

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