Introduction to Negotiations• Describing Negotiation• Recognizing Possible Negotiation Outcomes and Styles• Describing Attitudes that Lead to Successful Negotiations• Understanding the uniqueness of the Federal
Government
Traits of a Negotiator• Knowledge
• Knowledge of the field• Knowledge of the FAR and the law• Trade practices• Knowledge of yourself
• Skilled Communications• Leadership• Confidence• Patience• Physical Condition• Ethics• Compatibility• Timing• Flexibility
The Ground Rules• Government Contract Arena• Statutes
• Competition In Contracting Act• Federal Acquisition Streamlining Act• Clinger-Cohen Act
• Regulations• Federal Acquisition Regulation ("FAR")
• FAR Supplements
Pre-Award ActionsGovernment
• Market survey• Selection of competitive
procedures• Extent of competition• Type of contract• Preparing Request for Proposal
(RFP)• Best value continuum• Evaluation factors• Past Performance
• Issuing RFP's• Oral presentations
Contractor
• Understanding the RFP• Make-or-buy decisions• Data requirements• Past performance• Protecting your interests• Submitting your proposal
Heading Toward Negotiations• Evaluation Of Proposals
• Technical• Management• Price
• Exchanges With Offerors After Receipt Of Proposals• Clarifications• Clarifications and award without discussions• Communications before establishment of the competitive range• Establishment of the competitive range• Exchanges with offerors after establishment of the competitive range
• Negotiations• Discussions
• Proposal revisions• Source selection (if competitive)• Debriefings
FAR Part 15• 15.405 -- Price Negotiation• The purpose of performing cost or price analysis is to develop a
negotiation position that permits the contracting officer and the offeror an opportunity to reach agreement on a fair and reasonable price.
• The contracting officer’s primary concern is the overall price the Government will actually pay.
• The contracting officer’s objective is to negotiate a contract of a type and with a price providing the contractor the greatest incentive for efficient and economical performance. • Therefore, the contracting officer should not become preoccupied with any
single element and should balance the contract type, cost, and profit or fee negotiated to achieve a total result -- a price that is fair and reasonable to both the Government and the contractor.
Background Research• The opposition• History of similar contracts or claims• Costs• Profit Margin• Price• Statement of work• Terms and conditions• Technical and legal review• Research the opponent's position• Negotiation timing
Negotiation Preparation• Tailoring the Negotiation Team to the Situation• Identifying Negotiation Issues and Objectives• Identifying the Government’s Probable Approach to Negotiation• Assessing Bargaining Strengths and Weaknesses• Identifying Negotiation Priorities and Potential Tradeoffs• Determining an Overall Negotiation Approach• Preparing a Negotiation Plan and Agenda (unless Govt has
agenda)• Practice Negotiation
• Mock Negotiation• Devil's advocate
Representation Format• The sole negotiator• The team
• Contracts• Pricing• Technical• Decision Maker
• Where, when &how to negotiate
Govt Prenegotiation Objective• The prenegotiation objectives establish the Government’s
initial negotiation position and assist in the contracting officer’s determination of fair and reasonable price.
• They should be based on the results of the contracting officer’s analysis of the offeror’s proposal, taking into consideration all pertinent information including field pricing assistance, audit reports and technical analysis, fact-finding results, independent Government cost estimates and price histories.
Informal vs. Formal Negotiations• Informal
• Email or Phone• Single or minor element• Lower dollar• More commercial
• Formal• In person or phone• Structured• Multi-faceted• Longer term• Higher dollar
Starting the Negotiation• Introductions• Negotiation procedures• Initial probe• Blocking techniques• Tone of the negotiations• Recess
Tactics• Good-faith tactics
• Controlled anger• The bluff• The threat• Controlling the pace of negotiations• Good guy/bad guy• Indirect gimmicks• Silence• Limited Authority• The walk-out
• Negotiation Precedent• Stalemate
• Avoidance• Creativity• Mutually respected authority• Walk-out
Bargaining Tactics• Using Win/Win Tactics• Identifying Win/Lose Tactics • Appropriate Countermeasures
Bargaining Techniques• Rule 1: Be Prepared• Rule 2: Aim High• Rule 3: Give Yourself Room to Compromise• Rule 4: Put Pressure on the Other Side• Rule 5: Do Not Volunteer Weaknesses• Rule 6: Use Concessions Wisely• Rule 7: Say It Right• Rule 8: Satisfy Non-Price Issues• Rule 9: Use the Power of Patience• Rule 10: Be Willing to Walk Away from or Back to Negotiations
Conducting Negotiations• Support every argument
• Statutes and regulations• Authority• Statistics• Precedent• Fairness
• Document• Emails follow phone calls• Memos• Tracked Changes in MS Word• Final memos
Wrapping Up• Oral summaries• Meeting minutes• Final company memorandum• Memorandum of understanding• Educating the team • Lessons-learned analysis
Terms and Conditions• Clauses Required by the FAR
• Subpart 52.3 Provisions and Clauses Matrix• Executive Orders and U.S. Code
• Ex) Fair Labor Standards Act and Service Contract Labor Standards• Ex) Minimum Wages Under Executive Order 13658
• Even for Commercial Items• 52.212-5 -- Contract Terms and Conditions Required to Implement
Statutes or Executive Orders -- Commercial Items.• Ex) 52.209-10, Prohibition on Contracting with Inverted Domestic
Corporation
Scope• The contracting officer should request that personnel
having specialized knowledge, skills, experience, or capability in engineering, science, or management perform a technical analysis of the proposal elements
• At a minimum, the technical analysis should examine the types and quantities of material proposed and the need for the types and quantities of labor hours and the labor mix.
Price• Government Budget• Fair and Reasonable Pricing• Profit/Fee Limitations
• 15.404-4 -- Profit.• (i) The contracting officer shall not negotiate a price or fee that exceeds the
following statutory limitations, imposed by 10 U.S.C. 2306(d) and 41 U.S.C. 3905:• (A) For experimental, developmental, or research work performed under a cost-plus-fixed-fee
contract, the fee shall not exceed 15 percent of the contract’s estimated cost, excluding fee.• (B) For architect-engineer services for public works or utilities, the contract price or the estimated
cost and fee for production and delivery of designs, plans, drawings, and specifications shall not exceed 6 percent of the estimated cost of construction of the public work or utility, excluding fees.
• (C) For other cost-plus-fixed-fee contracts, the fee shall not exceed 10 percent of the contract’s estimated cost, excluding fee.
Analyzing Profit• Contractor effort. This factor measures the complexity of the work and the
resources required of the prospective contractor for contract performance.• Contract cost risk.• Federal socioeconomic programs. This factor measures the degree of support
given by the prospective contractor to Federal socioeconomic programs, such as those involving small business concerns
• Capital investments. This factor takes into account the contribution of contractor investments to efficient and economical contract performance.
• Cost-control and other past accomplishments. This factor allows additional profit opportunities to a prospective contractor that has previously demonstrated its ability to perform similar tasks effectively and economically.
• Independent development. Under this factor, the contractor may be provided additional profit opportunities in recognition of independent development efforts relevant to the contract end item without Government assistance.
Mistakes• In a negotiated procurement, you expected the
government would hold discussions and provide you an opportunity to submit a final proposal revision.
• Your proposal contained a material misrepresentation.• You failed to assert a mistake in your proposal.• You think you can walk away from an RFP or IFB.• Not trying to get FOIA info on incumbent contracts.• Not proposing with future negotiation in mind
Summary• Negotiations with Government are similar to any
negotiation• Government’s responsibility is to award at a fair and
reasonable price• Terms and conditions are difficult to negotiate• Cost elements are usually the focus