Report Of The Interagency ADR Working Group To The President (2001)

Memorandum From Attorney General Janet Reno-January 2001
Civil Enforcement Section
Claims Against The Government Section
Contracts And Procurement Section
Workplace Section

I. INTRODUCTION

Disputes are inevitable. They arise in the course of doing our jobs as public servants and are part of life itself. Unfortunately, existing administrative systems to handle conflict are often overburdened and ineffective. They are clogged with delay, which often exacerbates the disputes, making negative feelings fester and grow. The formalistic procedures used tend to divide people rather than unite them. The parties involved in the dispute are often silenced by the process and rarely meet with each other directly. When a court or administrative body makes the final decision, parties have given up control over their own dispute. Even if the government wins a case, the relationship involved may be destroyed, and this can be far more costly in the long run.

The goal of Alternative Dispute Resolution (ADR), is to ensure that communication comes first and litigation comes last, if at all. Parties meet with a neutral third party who is trained and experienced in handling disputes, and they seek a resolution of their problem directly. Participants report that the opportunity to talk with each other, under the guidance of a dispute resolution professional, is often far more satisfying and effective than having their lawyers fight against each other before a tribunal.

The Interagency Alternative Dispute Resolution Working Group was created by Presidential Memorandum dated May 1, 1998, to assist agencies in utilizing these more effective ways to handle conflict. This Report sets forth the activities and successes of the Working Group thus far.

II. BENEFITS OF ADR

In the Memorandum directing all Federal agencies to promote greater use of ADR, the President recognized that ADR can "make the Federal Government operate in a more efficient and effective manner." Indeed, the Working Group has found numerous examples of advantages that ADR provides. The following chart sets forth the ten most common benefits of ADR that agencies reported to us:

These benefits are demonstrated in the following specific examples from agencies that have participated in the Working Group.

United States Postal Service

The U.S. Postal Service has one of the nation's leading ADR programs in the workplace area. The average mediation takes just four hours, and the parties successfully resolve 61 percent of the cases at the mediation table. Overall, 81 percent of mediated cases are eventually closed without a formal complaint being filed. Satisfaction with the program is extremely high. Exit surveys completed anonymously by 26,000 participants show that 88 percent of employees are highly satisfied or satisfied with the amount of control, respect, and fairness in the ADR process. This figure is very significant because the satisfaction rate for the Postal Service's traditional adversarial workplace process is only 44 percent. Moreover, both employees and supervisors are equally satisfied with ADR.

Another benefit of the Postal Service program has been that mediation seems to be changing the behavior of people in the workplace. With the increased communication that mediation provides, employees and supervisors appear to be learning to get along better. In the first year after full implementation of the program, the number of complaints dropped by 24 percent as compared to the previous year. Formal complaints have continued to drop in FY2000, by an additional 20 percent. In an agency as large as the Postal Service, this reduction of several thousand complaints per year leads to huge cost savings. Processing a simple workplace case can cost the government $5,000 in administrative expenses alone, and a more complicated case that reaches a formal adjudication can cost up to $77,000. Thus the Postal Service program saves millions of dollars each year, in addition to improving morale and productivity.

Department of the Air Force

The Air Force has found ADR very effective in the government contracts area, where it has used ADR in more than 100 cases, and more than 93 percent have settled. Of particular note is the agency's recent successful use of ADR to resolve a $785 million contract claim with the Boeing company that had been unresolved, prior to the use of ADR, for more than ten years. This is one of the largest contract claims ever settled through an alternative dispute resolution process. In another recent major case with the Northrop Grumman Corporation, the agency settled a $195 million contract claim. Litigating either of these extremely large and complex cases through trial would have been enormously expensive and uncertain in outcome. Litigation could also have damaged relationships with some of the military's most important suppliers. The Secretary of the Air Force has recognized the success of these programs and codified them in formal agency procedures. It is now official Air Force policy to use ADR "to the maximum extent practicable."

The Air Force has also used ADR in more than 7,000 workplace disputes in the last three years, with a successful resolution rate exceeding 70 percent. This ADR program has helped make the agency's EEO process one of the most efficient in the Federal government. While Federal agencies require an average of 404 days to settle an EEO complaint, Air Force settlements require an average of only 258 days, a 37 percent difference.

Another measure of the impact of ADR at the Air Force is its EEO complaint flow-through rate, which is the rate at which employees who receive counseling (including ADR) nevertheless file formal complaints. In a recent typical year, this figure was only 23 percent, which is approximately half the Federal government average. The Air Force believes its aggressive use of ADR is a major component of this success.

Department of Health and Human Services

Before using ADR, the Provider Reimbursement Review Board at the Department of Health and Human Services (HHS) had a backlog of 10,000 pending cases. Although HHS had been able to settle 90 percent of its cases without assistance, most of these settlements occurred on the eve of the hearing, after three years of delay. HHS instituted an ADR program that has saved all parties both time and money. ADR resulted in settlements of 44 of the first 48 cases where it was used. Since then, use of ADR has increased. In 1999, the Office of Hearings and Appeals completed mediation of 81 cases and had mediation underway in an additional 53 cases. ADR has also reduced the time required to resolve these disputes from three years to six months.

HHS has also used ADR successfully to resolve state government challenges involving Food Stamp and Medicaid claim adjustments. All of the forty-one states that elected mediation under the Departmental Appeals Board's mediation program have successfully negotiated settlements. ADR has resolved more than $500 million in disputed funds in each of the past five years, and HHS estimates that it has saved the Federal government $600,000 in potential adjudication costs. In addition, the process saved considerable time, because administrative appeals could have taken two years, while mediation took an average of nine months. Finally, by the parties' own assessment, mediation allowed for a fairer and less acrimonious settlement of differences, preserving ongoing relationships between state and Federal officials involved.

Department of Energy

Ombuds staff at the Sandia National Laboratories assisted employees in more than 400 cases during FY 1999. Ombuds personnel counseled employees on available options for handling their disputes and advised them on how to proceed. Most of the work was with agency employees, but agency suppliers and technology transfer partners also used the ombuds services in some cases. Benefits of the program included improved productivity, lower turnover, and higher decision quality. The agency believes that a conservative estimate of the program's savings last year is $600,000 (50% more than the program cost). The program also generated considerable improvements in morale. Litigation and EEOC charges against Sandia have dropped well below the levels experienced prior to the creation of the program.

Federal Emergency Management Agency

After Hurricane Georges wreaked havoc on the Island of Puerto Rico in September 1998, a local community had disputes regarding a debris removal contract, including disagreements as to which company actually performed the work, the total amount of debris, and the amounts of money owed to the companies. This difficult situation was further complicated by an FBI criminal investigation, the incarceration of the community mayor, litigation filed against the community by a subcontractor, allegations of fraud and conspiracy by all parties, death threats, and bankruptcy petitions. Without a consensual resolution, expensive and time consuming litigation involving all parties to the seven relevant contracts was virtually inevitable.

FEMA suggested mediation. The Governor, the local community, and the three contractors agreed. The mediation was very difficult, but the mediators were able to craft an acceptable agreement. The principal contractor later wrote a letter to FEMA saying the following: "I write this letter to praise certain individuals who have gone above and beyond the call of duty in representing FEMA and the people of the United States.... Through [FEMA's] initiative and good judgment, mediation was arranged.... Had [FEMA] not pursued the matter with uncommon vigor, it would probably be wrapped up in court for many years."

Federal Labor Relations Authority

The FLRA has instituted an ADR program that encourages agencies and unions to resolve their problems before an unfair labor practice charge is filed. Following implementation of this program, the number of charges filed has fallen sharply, from 8,764 in 1993 to 5,686 in 1999. Even in instances where charges are not resolved and complaints are issued, these disputes as well are settling through the use of ADR. For example, 12.4 percent of all complaints went to trial in 1993. In 1999, only 9.2 percent of complaints went to trial. Significantly, cases are settling more quickly as well. The number of expensive, last-minute "courthouse steps" settlements (settlements reached immediately prior to hearing) have declined to just 1.9 percent of all settlements as parties have used ADR to settle their cases earlier in the process. In earlier years, these costly late settlements comprised as many as 15 percent of all settled matters.

Environmental Protection Agency

The Environmental Protection Agency (EPA) used a variety of ADR processes to facilitate settlement of the GE Pittsfield case, involving the cleanup of widespread contamination of the Housatonic River in Massachusetts. The agency used mediation to facilitate settlement discussions between eleven parties including EPA, GE, and other state and Federal regulatory agencies. The team of mediators assisted the parties in reaching agreement on a wide range of difficult issues including the cleanup of contaminated sediments and restoration of natural resources. EPA values the work to be accomplished by GE pursuant to this settlement at upwards of $200 million. Without the use of ADR, according to the EPA, negotiations among this large group of parties would have been very difficult. ADR has also permitted the parties to fashion their own remedy, including elements that a court would not have been able to order on its own. For example, in order to ensure meaningful public input, a neutral facilitator organized and is facilitating meetings of a Citizens Coordinating Council. The Council is composed of representatives of local communities affected by the cleanup. Finally, the parties established a neutral peer review process to resolve conflicts regarding technical aspects of the required remedial activities.

The EPA has also used three different types of ADR to resolve the Helen Kramer Landfill Federal and state litigation, concerning contamination at a hazardous waste site in New Jersey. EPA provided an internal convening professional to help the parties organize settlement efforts and retain a mediator. The efforts of the convener enabled a large group of defendants to coalesce and enter into a mediation agreement. Two experienced mediators then assisted the parties in reaching an agreement on the allocation of costs associated with remedial activities at the site. Finally, the parties entered into mediated discussions with EPA to resolve their liability for site contamination. The complex convening and mediations involved more than 200 parties and third-party defendants, including forty-four municipalities. The resulting settlement totaled more than $95 million. The agency believes that this case would have been enormously time-consuming and expensive to litigate if ADR had not been used.

III. ACCOMPLISHMENTS OF THE WORKING GROUP

The Working Group expects that success stories such as those described above will continue across the government as more agencies use ADR in the future. Our major goal for this first year was to assist every agency in creating at least one new ADR program or substantially enhancing an existing program. We are pleased to report that every cabinet agency and most administrative agencies met this goal.

The Working Group has built upon earlier government initiatives to increase the use of ADR. In 1996, Congress permanently enacted the Administrative Dispute Resolution Act, 5 U.S.C. §§ 571-584, which requires all executive agencies to promote the use of ADR. Specifically, this Act directs each agency to do the following:

• Adopt a policy that addresses the use of alternative means of dispute resolution;
• Designate a senior official to be the dispute resolution specialist of the agency;
• Provide ADR training on a regular basis; and
• Review each of its standard agreements for contracts, grants, and other assistance to encourage the use of alternative means of dispute resolution.

All agencies now have a senior official designated as their dispute resolution specialist. All cabinet agencies and most administrative agencies now have adopted ADR policy statements. Most agencies provide ADR training, and many have been taking advantage of the resources of the Working Group in this regard. With the assistance of the Contracts Section of the Working Group, agencies are increasing their use of ADR in the contracting arena as well.

In preparing this report, we conducted the first government-wide tabulation of Federal ADR resources. We learned that some 410 employees now work full time on ADR in the Federal government. Agency ADR programs now receive $36 million annually in dedicated budgets. Moreover, many agencies staff ADR programs through the use of collateral duty employees and fund these operations from their general budgets. Counting these resources, the government's total commitment is even higher than the figures mentioned above.

Working Group Activities

The Working Group began on September 14, 1998, with an initial organizing meeting hosted by the Attorney General and the Deputy Director for Management at the Office of Management and Budget. More than one hundred high-level representatives from nearly sixty Federal agencies attended this meeting. At this meeting, the Attorney General gave all agencies the goal of creating at least one new ADR program or substantially increasing an existing program by the end of 1999.

To assist agencies in developing specific programs to meet this goal, the Working Group created four Sections, organized by subject matter, to provide technical assistance and guidance on best practices in ADR program development. Sections have operated simultaneously to cover disputes in the following areas: civil enforcement, claims against the government, contracts and procurement, and workplace.

The Sections have conducted more than fifty training sessions, meetings, and colloquia on all aspects of ADR. Representatives from across the government have been participating. Topics have included incentives for Federal employees to use ADR, finding quality neutrals, designing an ADR training program, dispute systems design, evaluation of ADR programs, obtaining resources for ADR programs, overcoming barriers to ADR, ethics, confidentiality, and conflict assessment/case selection.

Materials Created by the Working Group

The Working Group has produced substantial materials to assist agencies in developing ADR programs. Most noteworthy are two resource books covering best practices in ADR. The Federal ADR Program Manager's Resource Manual is more than 200 pages long, and it is a comprehensive guide to creating and operating an ADR program in the Federal government. It includes relevant laws and regulations, links to Federal and private websites, and an extensive bibliography. The Electronic Guide to Federal Procurement ADR is an exhaustive manual covering procurement ADR programs, managing the process, training, neutrals, and resources. The guide includes hyperlinks to ADR-related materials, a listing of Federal ADR mentors, detailed profiles of existing procurement ADR programs, success stories, and sample ADR agreements. Both of these manuals are available on the website for all Federal employees and interested members of the public.

The Group created a website at www.financenet.gov/iadrwg that has had tens of thousands of requests for information in the year it has been in existence. The website includes agendas and minutes from Working Group meetings. A number of key ADR-related documents are available on the site, including the Administrative Dispute Resolution Act, the Presidential Memorandum creating the Working Group, a model Policy Statement on ADR, and a statement of key elements of a successful ADR program. The site includes additional links to other Federal agency ADR programs and private sector ADR organizations.

The Forums section of the website provides an opportunity for users to exchange information electronically (via e-mail) and to tap into the ADR-related expertise of hundreds of others around the country who are involved in government ADR programs. This feature of the website has facilitated productive discussions on such topics as recommendations of qualified neutrals, the availability and development of ADR training courses, and establishment of ADR policy.

To capture the current state of ADR in the Federal government, the Working Group asked each participating agency to complete an ADR survey on its activities. These surveys include contact information for each agency's dispute resolution specialist and ADR staff, data on its dedicated ADR budget and employees, a description of its ADR programs, success stories from these programs, and a statement of its ADR goals for the future. All of these surveys are available on the Working Group website.

Accomplishments of the Sections

The Civil Enforcement Section has provided participating agencies with information, training, and support to enable them to develop ADR programs in enforcement and compliance activities. Twenty-six agencies with unique statutory and regulatory missions, requirements, and regulated communities have participated in Section activities. Section consultation teams provided personalized assistance to agencies in a wide variety of areas, from dispute system design to training. Robert Ward of the EPA served as chair of the Section, with the assistance of David Batson and Lee Scharf of the EPA.

The Claims Against the Government Section has worked with agencies to use dispute resolution techniques to supplement traditional administrative adjudication of claims for money that are filed against the government. More than forty representatives from twenty different agencies have participated in the work of the Section, which was chaired by Peter Steenland of the Justice Department, with the assistance of Jeff Senger of the Justice Department.

The Contracts and Procurement Section has focused on assisting agencies with developing and operating ADR programs in the contracting arena. More than thirty agencies participated in the work of the Section. In addition to holding meetings on program design, ADR process, training, and neutrals, the Section produced the Electronic Guide to Federal Procurement ADR described above. The Section was chaired by Brigadier General Frank Anderson of the Air Force, with the assistance of Joseph McDade and Major Becky Weirick of the Air Force, as well as Tony Palladino and Rich Walters of the Federal Aviation Administration.

The Workplace Section, which was the largest in the Working Group, covered a broad range of workplace issues, including Equal Employment Opportunity, Federal Labor Relations Act, and Merit Systems Protection Board cases as well as grievances. Total attendance at the twenty-six programs the Section sponsored totaled more than 1000 participants. Section mentoring programs resulted in the formation of the Small Agency Caucus, an organization devoted to addressing the unique ADR program and resource needs of small Federal agencies. The Workplace Section was chaired by Erica Cooper of the Federal Deposit Insurance Corporation (FDIC) and Mary Elcano of the United States Postal Service (USPS), with the assistance of Cathy Costantino and Martha McClellan of the FDIC, and Cindy Hallberlin and Kim Brown of the USPS.

Further information about these accomplishments is provided in the Reports from the Sections to the Attorney General attached at the end of this report.

Plans for the Future

During the second year of its existence, the Working Group plans to offer additional seminars and discussions that are open to all government employees. We also plan to focus on mentoring agencies that desire to create new programs or improve existing ones. We will continue to offer consultation teams of experienced ADR professionals to assist agencies with their ADR efforts on an individualized basis.

The Working Group will also coordinate with the newly created ADR Council, a group of senior executives who will develop ADR policy guidance for the executive branch. This Council will focus on issues that cut across ADR programs at all agencies, such as confidentiality, best practices, and procedures for the use of arbitration.

IV. CONCLUSION

Congress effectively summarized the problems with traditional administrative approaches to conflict and the benefits of ADR when it passed the Administrative Dispute Resolution Act of 1990:

[A]dministrative proceedings have become increasingly formal, costly, and lengthy resulting in unnecessary expenditures of time and in a decreased likelihood of achieving consensual resolution of disputes; alternative means of dispute resolution . . . in appropriate circumstances, have yielded decisions that are faster, less expensive, and less contentious; such alternative means can lead to more creative, efficient, and sensible outcomes.

With the continued assistance and support of the President, the Office of Management and Budget, and all participating agencies, we look forward to working together to use these processes to enhance the operation of the Government and better serve the public.

Biography

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