Originally from Dispute Resolution Journal

There are many challenges to be faced in order to resolve disputes involving public sector parties. The authors identify these challenges and illustrate how they came into play in a construction dispute in which a structural defect discovered early in construction caused significant delay damages.

The authors of standard form construction agreements (e.g., the American Institute of Architects and the Associated General Contractors of America) recognized the well-documented and widely acknowledged benefits of mediation when they added a mediation clause to their dispute resolution provisions. It is challenging enough to mediate a dispute among private sector parties willing to put aside their biases, listen to the arguments of the other side, and seriously consider the strengths and weaknesses of their respective positions. However, when a government employee or entity is a party to construction mediation, additional challenges are presented simply because that party is a public entity.1

One challenge arises out of the government party’s decision-making structure. In the private sector, the ultimate authority to settle a dispute usually is centered in the company’s CEO. But in the public sector, no single individual is likely to have the final word. There are often tiers of individuals and/or public bodies that have to weigh in on the decision. This may be attributable to the separation of powers between the legislative body and the “executive” public agencies. Another feature of public dispute resolution is transparency. In private sector disputes, decisions about the outcome generally are made behind closed doors. Government decisions, by contrast, generally are exposed to media and public scrutiny. Invariably, therefore, some confidentiality is sacrificed. Moreover, the settlement generally does not become final without some form of legislative review.