Resolve disputes

Learn how to manage a disagreement between the Agency and the service provider over an element of the contract.

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What is a dispute?

A dispute is a disagreement between the Agency and the service provider over an element of the contract.

Disputes may occur over:

  • how the contract is implemented
  • performance of either party, such as:
    • the quality of a deliverable
    • not paying an invoice
  • the level of service provided
  • timeliness of service delivery
  • quality of service delivery
  • the effects of events beyond the control of the parties

Stop disputes before they start

Sometimes:

  • relationships deteriorate, or
  • disagreements occur about what the parties expect of each other

These disagreements are almost always caused by poor communication or misunderstanding, rather than deliberate intent.

Contract managers can prevent most disputes by:

  • using open and respectful communication
  • regularly meeting with the service provider to discuss:
    • what’s going well with the contract
    • any problems and agree on solutions

How to resolve disputes

Step 1: Identify the dispute

Identify the dispute. To the extent possible, determine:

  • the cause of issue under dispute
  • when the issue under dispute arose
  • mitigating circumstances, if any

Step 2: Review contract documents

Review the contracts documents to confirm if the dispute:

  • is a contractual dispute - may be handled under the contract, or
  • may be handled by some other mechanism, such as referral to a regulator

Step 3: Specific dispute resolution procedures

Are there specific dispute resolution procedures set out in the contract?

  • If yes:
    • follow contract specific processes
    • ensure Steps 4, 6, 8 and 9 are followed
  • If no, go to Step 4.

Step 4: Develop strategy to address dispute

Consult with the project sponsor and develop a strategy to manage the dispute. The strategy should define the:

  • time within which the Agency would like to resolve the dispute
  • team to support the contract manager
  • zone of negotiation
  • the best alternative to a negotiated position, or the walk-away position
  • budget implications of the dispute

Step 5: Negotiate with service provider

Negotiate with the service provider using the agreed strategy.

Can the dispute be resolved by negotiation?

  • If yes, go to Step 8.
  • If no, go to Step 6.

Seek legal advice from the Agency’s legal team.

Consult the Agency’s procurement team, as needed.

Determine if dispute resolution techniques are required. Common dispute resolution techniques include:

  • Senior officer meeting
  • Negotiation – discussion between the parties
  • Mediation – a neutral third party helps the parties agree on a solution
  • Expert determination – an independent expert is appointed to find a solution to a dispute that is technical in nature
  • Arbitration – an arbitrator is selected by the parties, who makes a decision that the parties agree will be binding. It is used as an alternative to going to court.

Step 7: Notice of dispute and resolution

Issue a written notice of dispute.

Develop and document a resolution plan.

Monitor implementation of the resolution plan.

Step 8: Manage probity and conflicts of interest

Manage probity – consider issues raised at Probity issues by stage and task.

Conflicts of interest can arise during this task. Identify, declare and manage these.

Step 9: Address Agency rules

Consult Agency procurement team for advice on meeting:

Follow Agency specific rules on when to seek an approval and who can give the approval.

Follow Agency specific rules for recording decisions and storing records.

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