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Alternative Dispute Resolution (ADR) Under the UCC & FAR


Charles E. Rumbaugh, J.D., C.P.C.M.
Charles E. Rumbaugh, J.D., C.P.C.M., Arbitrator & Mediator, Attorney at Law, P.O. Box 2636, Rolling Hills, CA 90274, 310.373.1981 or FAX 310.373.4182,
Ernest Gabbard, J.D., C.P.M., C.P.C.M.
Ernest Gabbard, J.D., C.P.M., C.P.C.M., Director, Corporate Procurement, Allegheny Teledyne, Inc., Pittsburgh, PA 15222, 412.394.2968 or FAX 412.394.3087,

83rd Annual International Conference Proceedings - 1998 

 Abstract. The increasing use of Alternative Dispute Resolution (ADR) in the commercial contracts/subcontracts and Government contracting environment will be examined as a viable means to resolve the broad spectrum of contractual disputes without resort to litigation and its attendant high cost, delay, and absence of control in the results. An overview of various ADR methods and case examples/studies will provide the participants an appreciation on how post-performance claims and disputes could be mitigated through ADR and thus maximize the contract performance for each party. Special emphasis will be placed on using ADR methods in the resolution of matters/disputes under the Uniform Commercial Code (UCC) and Federal Acquisition Regulation (FAR). The Contracts/Purchasing professional should be aware of the ADR tools and the advantages in having them available in order to be positioned to reap greater contract performance benefits for domestic, international, and Government contracting transactions. This seminar will provide the intermediate and advanced professional with requisite ADR skills in the potentials of ADR.

 ADR Methods. What are the ADR methods which are available to the Contracts/Purchasing professional? The spectrum of ADR methods covers facilitated negotiation, mediation, fact-finding, partnering, non-binding arbitration, and binding arbitration. The definition and scope of each method have been universally defined within the ADR community. However, the focus of ADR at this seminar is on what it can be, namely, an alternative to litigation and the contracting parties are the best persons to "decide" what ADR means to them in the context of their contract! But this can only be done with an appreciation of ADR. Accordingly, these "universal" definitional methods of ADR will be presented, and tailored, for the seminar professional.

The so-called "attributes" of these various ADR methods will be discussed and analyzed. For example, it is usually stated that ADR "preserves relationships," "satisfies the interests of the parties," "cost effective," "timely," "ability to select a knowledgeable/expert neutral," "provides an opportunity for creativity in the development of suitable remedies," and is "less 'legalistic'." What do each of these mean as it relates to ADR v. litigation? Most importantly, though, is which ADR method has some aspect of those attributes including the perception by the ADR user, i.e. the Contracts/Purchasing seminar professional, as being desirable or most appropriate in the selection of a particular ADR method for a particular dispute? Perhaps, it is even a combination of ADR methods that may be best for a particular contract!

 UCC And FAR ADR Coverage. What does the Uniform Commercial Code "say" on the use of ADR? Is ADR permitted under the UCC? What role does state law play in the use of dispute resolution methods or ADR in general? Is there any "state policy" favoring ADR over litigation? To what extent is ADR used in commercial contracting? Case studies will be explored where ADR has been used in commercial contracting. Which major companies use ADR? Why is it important to know the manner in which your customer resolves disputes? If your customer uses ADR in the settlement of its disputes with their customers, why should they use ADR with their suppliers? Is there a way to incentivize a customer to use ADR?

Similarly, what does the Federal Acquisition Regulation "say" on the use of ADR? To what extent is ADR used in Government contracting under the FAR? Is something "required" at the prime contractor and/or at the subcontractor level? What was covered in the proposed ADR Government FAR provision which was published in the Federal Register on October 27, 1997? What is the status of that proposed rule? What impact will it have on ADR in Government contracting? Case studies will be explored where ADR has been used in Government contracting. What impact will this rule have on ADR in commercial contracting with the Government or with other commercial firms? Will this FAR provision "influence" the use of ADR in commercial contracting?

This seminar will explore the answers to these questions-and more!

 Why Is ADR utilized? In addition to the ADR attributes that will be covered, what are the "real" or "hidden" reasons ADR is utilized? Why is ADR not utilized? Is the "Golden Rule" applicable in the use of ADR, i.e. the one with the Gold (Buyer), makes the rules?

 ADR Rules! What ADR Rules? Independent of the above "Buyer Rules," which ADR "Rules" apply? Who said you needed ADR Rules? What Rules are there? Do you have a choice? How do ADR Rules operate? The use/non-use of various ADR forums/tribunals, e.g. Arbitration & Mediation International and American Arbitration Association, and their Rules will be discussed to determine what is best for you!

 Case Studies Where ADR Has Worked! This is where the proof is! Case studies will be discussed on the contracting environment that tends toward an ADR solution. The attending professionals will be able to raise factual scenarios, on an interactive basis, where it has been, or could be, considered and implemented, or "rejected." A "lessons learned" approach is envisioned.


American Arbitration Association "Commercial Arbitration Rules," 1996.

American Arbitration Association "The Code of Ethics for Arbitrators in Commercial Disputes," 1996.

Shapiro, Steven A. and Rumbaugh, Charles E., "Using Alternative Dispute Resolution Methods

to Resolve Government, Prime Contractor, and Subcontractor Disputes." Contract Management, July 1997, 23-25. 

Shapiro, Steven A. and Rumbaugh, Charles E., "Alternative Dispute Resolution: Recent Initiatives and Techniques for the Professional." Contract Management, January 1997, 4-7.

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