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Chapter 26 - Negotiating IT Contracts

26.5 Basic negotiation guidance

Below is a list of best negotiation practices:

  • Know that anything in the contract can be discussed. Just because something is in print does not make it non-negotiable. Be well prepared and know the agency’s position on each item of negotiation.
  • The agency’s procurement lead; i.e., single-point-of contact, should host and lead the negotiation sessions.
  • Identify each point to be negotiated, using a written agenda.
  • Establish parameters of discussion for each point.
  • Identify important issues first and consider appropriate points in time for their negotiation.
  • Try to settle one point before moving to the next.
  • Discuss budget limitations, policy and restrictions related to the program or the procurement.
  • Be prepared to discuss alternatives.
  • Negotiate on an even basis. If the supplier has legal or technical support, bring the agency’s qualified counterparts or vice versa.
  • Avoid arguments, interruptions and quick deals.
  • Be ethical, fair and firm.
  • Attempt WIN-WIN results so that both parties realize a satisfactory contract at the conclusion of negotiations and share balanced risks and responsibilities.
  • Never underestimate the ability or knowledge of the other party as they have probably done their homework too.
  • Avoid narrowing the field to one supplier.
  • Never neglect the other side’s problems or issues.
  • Do not let price bulldoze other interests or issues. A cheap price will not compensate an agency for a system or product that does not meet all of its requirements.
  • Search for common ground without spending an irrational amount of time.
  • Always have a fall back position.
  • Never disclose contents of other proposals to suppliers.
  • Do not negotiate areas beyond the scope of the solicitation; i.e., scope creep.
  • It’s fairer to trade by making a concession and obtaining a concession.
  • Try not to accept the first “no.” Express concern, make a counter-offer and/or invite alternatives for discussion.
  • Be persistent when it comes to pricing and agency budgetary restrictions.
  • Be patient, reasonable, fair and respectful.
  • Never compromise your business needs or compliance requirements.

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