Alternative Dispute Resolution
"Resolution would not have been possible without the awesome work of OPO's Team. Thank you all, I felt very well supported".
– Bill Merklinger, Assistant Deputy Minister and Chief Financial Officer, Natural Resources Canada
In any contractual relationship, there may be disagreement over the application of the terms and conditions of a contract. Parties to a contract may have different interpretations of the same words, phrases or paragraphs. To assist both suppliers and government departments to resolve contractual disputes, the Office of the Procurement Ombudsman offers Alternative Dispute Resolution (ADR) services.
Range of Services Provided
In the first year of operations, a significant amount of time was spent developing which services and how our Office would provide these services. Ultimately, we decided on three types of services:
- Facilitation. Facilitation is meant to be an opportunity for parties to come together in a neutral setting to set out points of view about a contract dispute. The facilitator is responsible for keeping the discussion on track and trying to minimize differences to resolve the dispute. We have also developed a set of ground rules, as well as a facilitation agreement, which the parties are required to sign prior to commencement of the facilitation. There is no charge to either the supplier or the department to participate in a facilitated session. We provide the facilitation services in-house
- Mediation. Mediation is a process intended to identify the interests at play and determine if there is a way to ensure those interests are protected, yet resolve the dispute. Mediation services are provided by qualified mediators. We are currently working with the ADR Institute of Canada to identify mediators who would be interested in being on the Office's roster. As our services are available across the country, we intend to have several geographically based rosters and a roster of bilingual mediators. Fees associated with mediation are to be borne by both parties on an agreed-upon basis. The parties are required to sign a mediation agreement
- Neutral evaluation. Neutral evaluation is a process that results in a written opinion about the legal merits of each party's position. This type of process is best suited to either a supplier or a government department that wants to proceed on a right-based analysis. Often, this type of assessment will be a catalyst in moving a party from an entrenched position to either facilitation or mediation. Neutral evaluation services are provided by individuals outside the office with legal training. For example, this type of service could be provided by a retired judge.
Commencing in late summer of 2009, we made deliberate and concerted efforts to ensure that government departments and agencies covered by our mandate were aware of the services available to them. We made over 35 presentations to various departments and agencies with a specific focus on how ADR could help them when they are faced with contractual disputes. Through our outreach program, we also reiterated the availability of ADR services to suppliers.
We typically receive feedback from the parties indicating they appreciate the respectful environment we create and the effect this has on their ability to deal with an unfavourable situation and move forward. The following testimony is illustrative of the sentiments of the parties.
"This past year, I had occasion to solicit the aid of the OPO to facilitate a dispute between my company and [a department] over the termination of a contract…. Throughout the process, [the Deputy Ombudsman] displayed humaneness, compassion, integrity, transparency, forthrightness, openness, and a genuine desire to be of service."
The outreach is starting to show results as several new cases were initiated and completed in 2009-2010, an increase over 2008-2009. Here are a few examples of ADR cases:
CASE No. 1
A supplier contacted our Office because its contract to provide training services had been terminated. The department had offered the supplier negligible compensation and was holding firm on its position. The contractor felt strongly that the way the department had treated him was unfair and he wanted to provide the services his firm had been contracted for or else obtain more reasonable compensation for the termination.
We brought both parties together and asked them to present their side of the story. We facilitated a better understanding of each other's position. This led them to arrive at an acceptable settlement. Both parties expressed their appreciation for our assistance.
CASE No. 2
A scientist was contracted to provide research in three separate phases. The first phase was successfully completed and the contractor was paid. During phase 2, the contractor and the department disagreed on a number of contractual issues. The contractor felt that her efforts to complete deliverable 2 had been affected by the department's inability to provide equipment necessary to complete the task. Secondly, the contractor felt that she had received conflicting instructions from multiple departmental representatives as to how to proceed with delivering on the contract, which required that she expend more time and effort than originally anticipated and for which she sought compensation. After several attempts by the contractor and the department to come to an agreement, the parties reached an impasse and the contractor sought our assistance to resolve the dispute.
In our initial discussions with the department it became apparent that communications was an issue. We brought the parties together and facilitated a discussion of the many issues. The department subsequently made an offer to acknowledge that they had contributed to the creation of the dispute, which the contractor accepted. Both parties agreed to treat the contract as ended.
A significant feature of OPO's process for conducting ADR is its ability to bring the parties together in a timely manner so that unnecessary costs and aggravation can be avoided. However, the success of this is based upon receiving full co-operation and timely responses from both parties. In some cases, there have been long delays by Public Works and Government Services Canada in responding to requests for ADR. Two examples are described below:
- In August 2009, the Office received a complaint alleging a company had been removed from a National Master Standing Offer (NMSO) without proper notification and due process. The complainant claimed that this decision was based on hearsay and without any formal inquiry into his removal. The department was contacted and attempts were made to assist in resolving this issue. Over the past nine months, OPO has attempted, by letter, by phone and in person, to engage the department and there were numerous discussions on this situation. On April 27, 2010, nine months after the commencement of the process, the department provided OPO with the result of some work it had done. Because of the lateness of the receipt of the information from the department, we have been unable to review its content prior to the finalization of this report.
- In October 2009, the Office received a request for alternative dispute resolution from a party to a contract who believed his contract had been unjustly terminated. We called the department and made a request to participate in an ADR process. The department requested some additional time to obtain more information relating to the complainant's concerns. We received repeated calls from the supplier who was anxious to resolve this situation. The department was continuously made aware of the supplier's concerns by us. Four months after the department's request for additional time, the department declined the offer to engage in an ADR process.
The department has advised that these two cases involved particularly complex situations and significant research and consultation had to be undertaken before arriving at a final decision. The need to ensure all relevant facts were exposed and explored, coupled with the need to consider the legal implications of the cases resulted in lengthy, thorough processes.
While we accept that departments are entitled to decide whether or not to participate in ADR, making that decision in a timely manner would go a long way to improving communication and fostering confidence among the parties in the process.
Looking Ahead
OPO will continue to promote its ADR services. Keeping disputes out of the courts and resolving disputes in less litigious ways has tremendous benefits for both the government and the supplier communities. Costs can be kept down and disputes can be dealt with expeditiously. Relationships can be preserved.
Where appropriate, OPO is also prepared to assist other entities and levels of government with the creation of dispute resolution bodies through the provision of information and lessons learned.
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