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    What is the least expensive method used to resolve a dispute?


    Assuming the dispute is coming from a procurement contract under the FAR/DFARS, then having the Contracting Officer negotiate the “issue in controversy” with the contractor would be the least expensive method, effectively no additional cost to the government, and avoiding a claim/dispute entirely.
    The next best thing (cost wise) would be ADR, or Alternate Disputes Resolution.  ADR can take many different forms; however it is always preferred over litigation, which is the least preferred and most costly form of settling disputes.  Even when in litigation the option of reaching a negotiated settlement is still available to the parties throughout the disputes process.  Also with litigation, in addition to the expense (to both parties), the parties may find the decision of the court makes no one happy.  The courts use strict rules of contract interpretation in making a decision and the outcome can surprise both contractor and the contracting officer.
    The policy on disputes in the FAR says almost exactly the same thing; however it isn’t solely focused on cost: 
    FAR 33.204 Policy.
    The Government’s policy is to try to resolve all contractual issues in controversy by mutual agreement at the contracting officer’s level. Reasonable efforts should be made to resolve controversies prior to the submission of a claim. Agencies are encouraged to use ADR procedures to the maximum extent practicable. Certain factors, however, may make the use of ADR inappropriate (see 5 U.S.C. 572(b)). Except for arbitration conducted pursuant to the Administrative Dispute Resolution Act (ADRA), (5 U.S.C. 571, et seq.) agencies have authority which is separate from that provided by the ADRA to use ADR procedures to resolve issues in controversy. Agencies may also elect to proceed under the authority and requirements of the ADRA.

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