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Chapter 26 - Negotiating IT Contracts

26.1 Contract negotiation steps

26.1.3 Develop the negotiation strategy

Bring the completed risk analysis into the negotiation strategy. Document the final negotiation strategy using the Appendix A spreadsheet, Tab 1, Negotiation Strategy Worksheet. Documentation should include requirements in business, legal, technical/functional and price. Establish positions on each issue: best, likely and least acceptable. Below is a list of negotiation strategy areas to review:

  • Determine final scope/functionality from RFP and selected proposal(s) and/or any "now vs. later" or phased elements.
  • Resolve any internal or VITA-required platform/architecture standards or legacy dependency issues.
  • Confirm maximum budget.
  • Identify those elements of the RFP and selected proposal(s) on which you can afford some degree of negotiation flexibility and those on which you cannot.
  • Define non-negotiable, primary "key," (proposed vs. target), secondary (proposed vs. target) and "walk-away" negotiation factors. Determine how granular you want to go. These factors should include but are not limited to:
    • Price
    • Scope
    • Schedule
    • Milestones/deliverables
    • Performance measurement/service level agreements/remedies or incentives
    • Software license
    • Source code/escrow
    • Business/functional
    • Technical
    • Functional/performance testing
    • Final acceptance criteria
    • Warranty period
    • Warranty
    • Training/documentation
    • Maintenance and support
    • Transition services
    • Change process/administration
    • Project management
    • Key personnel, if any
    • Reporting requirements
    • Security/information technology resource management (VITA ITRM) policy requirements
    • Invoicing/payment
    • Payment withhold schedule, if any
    • Terms and conditions

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