MEMORANDUM FOR SECRETARY WIDNALL

FROM: SAF/GC

SUBJECT: Advances in Alternative Dispute Resolution (ADR)

Shortly after Vice President Gore issued the Report of the National Performance Review (NPR) in September of 1993, you requested that various offices find ways to implement its recommendations. One of the major recommendations of the NPR report is that agencies "expand their use of alternative dispute resolution [ADR] techniques."

I am pleased to report that we have made significant progress in expanding the use of ADR within the Air Force. In a recent report to Congress prepared by the Administrative Conference of the United States, the Air Force=s efforts were featured prominently. Many now consider the Air Force to be one of the leaders in this field. In December of last year, the House Judiciary Committee asked the Air Force to testify about the achievements of its program as an exemplar for the rest of the government. Likewise, the Justice Department featured the Air Force=s experience as a model ADR program at a government-wide ADR conference hosted by Attorney General Reno in September.

In the right circumstances, ADR can achieve fair and reasonable resolutions of disputes in less time, and at lower costs, than traditional means. We have achieved those purposes repeatedly. For example, in FY 92, the Air Force used ADR in 128 EEO complaints. In FY 95, ADR was attempted in over 770 EEO complaints with a full or partial settlement achieved in 78% of the reported cases. Use of ADR also explains, in part, why the time required to settle formal EEO complaints declined from 329 days in FY 92 to 136 days in FY 95.

Equally important, customer satisfaction with ADR use in this area is overwhelmingly positive. For example, a supervisor recently agreed to mediate a civilian workplace dispute involving an employee whose performance, in the eyes of the supervisor, was sub-standard. During the mediation process, the supervisor learned for the first time about a number of significant misperceptions he and the employee had about one another. As a direct result of the mediation process, this employee is now, in the words of his supervisor, "one of my top performers." This anecdote underscores an important fact -- because ADR techniques can serve as a non-adversarial, confidential management tool, the intangible benefits of ADR can be as significant as the tangible benefits.

ADR has also enjoyed great success in the contracts area. It has been used in almost 64 litigated cases with a 90% settlement rate. In each of these cases, the Air Force saved time and costs in resolving these disputes. In addition, because ADR is typically less adversarial than traditional litigation, ADR has helped to minimize negative impact on the long-term relationships between the Air Force and its contractors. In short, we believe ADR use requently permits us to provide quality dispute resolution services in less time than normally required by formal dispute resolution systems.

A. Background

The Air Force Alternative Dispute Resolution Program promotes common sense resolution in a wide variety of disputes. ADR is the term used to describe an array of voluntary conflict management techniques designed to resolve disputes in a faster, less expensive, and more amicable manner. As previously noted, an important value of the ADR processes is the ability to preserve, and sometimes strengthen, the working relationships of all Air Force stakeholders.

On January 12, 1993, the Secretary of the Air Force issued an Air Force-wide memorandum about ADR. The Secretary designated the Deputy General Counsel to be responsible for implementing ADR within the Air Force and required specific Assistant Secretaries and Air Staff personnel to assist in the development and implementation of the Air Force=s ADR Program. The Secretary=s memorandum ensured there would be senior civilian and military officials= input, guidance, and support as well as funding for the program.

Our initial challenge was to seek to change the mindset of those within and without the Air Force who did not view ADR as a realistic alternative to litigation. To address this problem, we first embarked on an intensive research effort. We canvassed the private and public-sector legal communities for organizations that developed and implemented ADR programs. This effort yielded the twin benefits of educating us about the best practices in the field and providing us concrete examples of ADR success stories. Next, we synthesized this information to brief Air Force personnel and organizations about the proven benefits of ADR use. As a result, key Air Force officials agreed to dedicate personnel and resources to implementing the Air Force ADR Program. We also met with the private sector, and senior representatives of the major aerospace contractors in particular, to solicit their participation in the program and commitment to the use of ADR in lieu of litigation.

In response to the Secretary=s direction, we next convened an ADR Working Group (the Group) of senior officials to establish initial ADR priorities. The Group concluded that the ADR program should initially focus on contract and personnel disputes and stressed the need to educate Air Force personnel about ADR. In addition, the Group determined that the ADR Program should emphasize stakeholder education and awareness about ADR by briefing those most affected by these types of disputes, i.e., contracting officers, contractors, EEO personnel, and senior civilian and military members of the Air Force.

B. Civilian Personnel Disputes

A survey conducted last year by the Air Force Personnel Operations Agency (AFPOA) showed

significant increases in ADR use in civilian personnel disputes in the Air Force. Between FY 92 and FY 95, the reported use of ADR to resolve EEO complaints increased five-fold; the average number of days required to settle formal EEO complaints decreased by 60%; significant time savings wee also reported for the resolution of informal EEO complaints.

To put these statistics in perspective, the transaction costs of processing a formal EEO complaint through the traditional process is estimated to be as low as $2,000, if the case is resolved early, and as high as $60,000, if the dispute is resolved by the EEOC. There are also significant intangible costs associated with resolving an EEO complaint: e.g., loss of productivity, diversion of resources from mission accomplishment, and problems in morale. Using ADR to resolve EEO disputes at the earliest possible time and at the lowest organizational level helps keep tangible and intangible costs at the lower end of the range.

It would be an overstatement to attribute these results to ADR use alone. As in many processes, there are a number of important variables. Nevertheless, ADR training and use provided much needed skills and methods for improving our management of civilian personnel disputes.

To further facilitate use of ADR to resolve civilian personnel disputes, our office is working with AFPOA to develop a system to provide mediation of formal and informal EEO complaints within four weeks of a request for its use. Part of this effort involves identifying the most experienced and successful mediators among the 1,000 who have been trained and certified thus far. This group will serve as mediation mentors for trained, but less experienced, Air Force mediators. If the mediation is successful, the Air Force receives the twin benefits of resolution and apprenticeship training. If the mediation is unsuccessful, the inexperienced Air Force mediator still receives an excellent training opportunity.

We are also working with the Navy and the Army to collect our "best practices" and compile them into a mediation handbook. Because of our progress in this area, the Air Force is now recognized as one of the leading federal agencies in the field, and our methods and mediation handbook are likely to be widely imitated.

C. Contract Disputes

As we began to try to foster ADR use in contract disputes, we found that the biggest obstacle to ADR use was the lack of knowledge about ADR techniques. In response to this, we worked with SAF/AQ and AF/JA to develop a two-pronged approach. First, we identified the Air Force Trial Team within the law Office at HQ AFMC as a target for special ADR attention. The Trial Team routinely provides a legal review of contract matters that will likely result in claims by or against the Air Force. Because of the Trial Team=s unique role, we proposed they begin screening contract disputes for ADR potential. After providing intensive ADR training to most of the Trial Team=s attorneys, the Trial Team began its ADR case screening effort.

Second, SAF/GCQ undertook an Air Force-wide initiative to identify and train 200 acquisition

professionals and attorneys as ADR Specialists. Once trained, these Specialists helped to educate field-level personnel about ADR and also promote its use throughout the major commands. More than 90% of the students who have attended this training rated it "excellent" or "very good." Because of this, other agencies have asked us to train their personnel as well. This track record explains why the Air Force is asked more than any other DoD component to brief industry on ADR.

Since FY 92, the Air Force has attempted ADR in 64 litigated cases and successfully resolved 60. In addition, 217 contract disputes not yet in litigation have been reviewed, and ADR use was recommended in 51. The following is an example of the notable ADR successes the Air Force has achieved in this area. The case involved 10 contract claims worth $500,000. After some initial discovery was completed, the parties entered into an ADR process that resolved all 10 contract claims in two days. Had the parties proceeded to litigate this same dispute, we estimate resolution would have involved a trial of more than two weeks, not to mention months of trial preparation, and as much as a year for the judge to issue an opinion. Equally important, the result reached was acceptable to all parties and resolved all problems then existing between the parties, rather than just the narrow legal disputes. The contracting officers found that they had a better working relationship with the contractor after use of the ADR technique.

The Air Force has also had some notable success using innovative methods to avoid contract disputes. Once such process is known as "Partnering," which is normally employed shortly after contract award and before any disputes arise out of contract performance. Partnering is designed to increase communications between the parties and to identify common interests and goals in completing the project. In addition, the parties anticipate problem areas and establish proposed solutions and processes to resolve anticipated difficulties. Partnering was used in a $228 million complex construction project at Arnold Engineering and Development Center. This project was completed under budget, ahead of schedule, and without generating a single lawsuit. While a good contract structure and sound management practices obviously played a central part, key participants credit the use of Partnering as one of the most significant reasons for their achievement.

D. Selected MAJCOM Initiatives

1. Air Mobility Command

In 1994, Brigadier General Hemingway, Staff Judge Advocate for the Air Mobility Command (AMC), directed that each of the Command=s legal offices appoint an ADR advocate within their offices, and he subsequently established use of ADR as one of the criteria for measuring the quality of services being provided by AMC legal offices. In FY 95, AMC reported successfully resolving 96% (73 of 76 cases) of the civilian disputes in which ADR use was attempted. In addition, AMC reports that a number of complex, long-running or contentious contract, labor, and environmental disputes were successfully resolved using ADR techniques.

2. Joint Direct Attack Munition Program (JDAM)

In the Fall of 1995, the Air Force awarded the Joint Direct Attack Munition (JDAM) production

contract to McDonnell Douglas. Among other things, the JDAM program has initiated a number of innovative cost-cutting measures to reduce the unit cost from an estimated $40,000 to $18,000. To ensure that potential contract disputes do not drive up the program=s costs, the JDAM contract contains an ADR clause. This clause commits the Air Force and McDonnell Douglas to: (1) establish a partnering process; (2) negotiate contract disputes expeditiously; and (3) establish a dispute resolution board to render non-binding decisions on any dispute the parties are unable to settle through negotiations. This ADR clause demonstrates the commitment of the Air Force to fostering the use of ADR in major system acquisitions and, we believe, represents the most sophisticated ADR clause yet included in a major system acquisition. Other programs are emulating this approach.

3. Air Force Materiel Command and the Kirtland Air Force Base Mediation Center

Kirtland AFB in New Mexico encountered a mounting caseload of personnel complaints starting

around 1990. As the situation worsened, the Commander of the 377th Air Base Wing took several actions, including the creation of an independent Mediation Center (KMC). KMC opened its doors in December of 1993, and the Commander soon thereafter designated it as the sole provider of mediation services for disputes of this kind at Kirtland. To date, KMC has mediated 72 matters and settled 51 for a resolution rate of 71%. AFMC is currently awaiting the results of a study to determine whether the KMC concept should be exported to other Air Force installations.

E. Current Initiatives

We plan to expand the scope of the Program beyond civilian personnel and contract disputes.

Environmental controversies and tort claims, in particular, have enjoyed notable ADR successes in other federal agencies and the private-sector. Next Fiscal Year we plan to focus on these areas in our continuing efforts to foster ADR use Air Force-wide.

Access to ADR information remains one of our biggest challenges. To address this problem, we are developing a site on the World-Wide-Web. This site will contain information needed to match Air Force ADR needs with existing resources. We plan to include all relevant Air Force ADR materials, statistics, and training opportunities as well as the best such products and services from other federal agencies. In addition, our site will permit users to download useful documents and forms and provide links to similar sites around the world. Beyond that, we are designing an ADR newsletter to be sent by e-mail to appropriate private and public-sector personnel.

Improvements to our training program are also underway. We have provided multi-media ADR

briefings to approximately 5,000 government personnel. While the content of these presentations

consistently receives exceptionally positive feedback, more needs to be done to leverage our ability to reach large audiences. We believe that distance learning will greatly assist us in this effort. Accordingly, we have, in cooperation with AFMC, provided several two-hour ADR awareness briefings to some 600 Air Force personnel at more than 20 Air Force installations via satellite broadcasts. Our experiences have convinced us that increased use of distance learning will provide a cost-effective method to deliver ADR training and education.

We also plan to brief the commanders and key staff of all MAJCOMs to ensure they are familiar with the benefits of ADR and the resources the Air Force ADR Program can provide for appropriate innovative or pilot programs.

F. Conclusion

The Air Force ADR program has achieved important results in a relatively short period of time. Our success stems from:

Strong support from senior management;

At least one employee working full-time on implementing ADR initiatives as well as matching agency ADR needs with appropriate government and private-sector resources;

Extensive ADR training and awareness briefings; and

Financial support for ADR initiatives.

Sheila C. Cheston

General Counsel

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