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New procurement ombudsman stresses alternative dispute resolution as key tool

Don Wall
New procurement ombudsman stresses alternative dispute resolution as key tool

New federal Procurement Ombudsman Alexander Jeglic is urging firms that do business with the federal government to embrace the agency’s alternative dispute resolution (ADR) services as a way to minimize the pain of nasty disputes over the procurement process.

Promotion of the ADR process is one of four main priorities for action identified by the Office of the Ombudsman in its recently released annual report, but to Jeglic it’s job one. Currently, he said, there is no process standardization within the 30 federal departments that engage in procuring products and services and it would benefit all parties if they committed to incorporating the ADR mechanism into their contracts.

“Everyone should consider mediation as a tool in their toolkit. It will help them get to a resolution of issues much more rapidly,” he said.

Alexander Jeglic
Alexander Jeglic

“Particularly in a construction contract, it is an incredibly useful tool that we are looking to grow. To the extent that the sector backs mediation particularly with this office, it is incredibly helpful to this office.”

As administered by his office, ADR often results in consensual and relatively informal problem solving, Jeglic said.

“Typically it is a one-day mediation session, and even in advance of the mediation, the mediator serves as an anchor and we try to resolve it in advance of the mediation and that often happens,” he said. “It’s just to have the parties talking again in a non-litigious manner and de-escalating the emotion of the dispute and making sure people are looking at both perspectives and understanding the issues differently. That is when we are able to glean success.”

Legislation gives the procurement ombudsman the mandate to review the procurement practices of federal departments and make recommendations to improve those practices; investigate complaints on the awarding of contracts for the acquisition of goods below $25,300 and services below $101,100; and review complaints relating to the administration of contracts regardless of dollar value.

The agency is 10 years old. Jeglic started on the job in April after a career that saw him gain experience advising suppliers dealing with the federal government.

Last year the ombudsman’s office handled 264 procurement-related complaints. The five most common disputes stemmed from the solicitation phase, the evaluation of bids, the selection of winning bidders, debriefing, and planning and strategy.

Complaints aren’t recorded by sector but Jeglic said often disputes in construction procurement follow typical patterns.

Unrecorded change orders are common sources of friction.

“Because of the nature of the industry, verbal instructions not captured by way of formal amendments often give rise to disputes,” he said. “Work performance is based on formal instructions but the contract does not allow for amendments to be made verbally. So that leads to a significant amount of unease.”

Other typical complaints relate to smaller contractors arguing they are left out when a government department decides to bundle similar smaller projects into one large contract, and subcontractors who find they have no standing in disputes against the government, only against the prime contractor.

In many of these situations the mere call to the ombudsman’s office tends to get parties looking harder to resolve conflicts, said Jeglic. And in the continued absence of federal prompt payment legislation, inquiries by Jeglic’s office on payment flows also spur the parties into action.

“If there are payment-related issues, meaning they are not getting paid in line with contractual obligations, they can file a complaint with my office, and under the contract-administration complaint mechanism we can look into non-payment,” Jeglic said. “Rather than issue a report, the idea is to get them paid as quickly as possible. So a call from my office tends to expedite the issue.”

In another case resolved last year, a supplier submitted an ADR request following delays in the issuance of an interim certificate of completion for a construction contract. The annual report noted the owner was unwilling to issue the certificate, arguing there were deficiencies. By playing a go-between role, the ombudsman’s office was able to informally facilitate a mutual resolution without escalation to a formal ADR process.

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