CPCM 2.4 Negotiation – Flashcards

Large and/or complex acquisitions usually require different people to participate in the negotiations, with each person contributing a special skill. Selection of team members depends on the nature of the acquisition and the experience that each member brings to the team. May include, but is not limited to, contracts professionals, financial analyst, cost analyst, legal counsel, design engineer, production specialist, quality control specialist, and note taker. Negotiation teams for the buyer and seller each designate a lead negotiator for their team, which most often is the contract professional depending on the entity's practice and industry. In federal contracting, the lead negotiator is always the contracting officer.

Purchasing techniques that enable buyers to solicit input from multiple suppliers and create a solicitation document, taking the best from each. Accordingly, sellers are able to develop a compliance matrix that lists all solicitation and functional requirements, along with an assessment of the firm's competitive strengths and weaknesses

Used to break away from formal negotiations to consider a point. When a counteroffer is made, a caucus can be used to confer with your negotiation team to consider all aspects of the counteroffer. A caucus is useful to discuss anything about the on-going negotiations you don't want the other team to hear. A caucus can be used when a team members wants to bring to the negotiator's attention an important fact, or if a fact needs to be checked with a team member, or if management approval is necessary in order to make a concession or counter-offer

A plan of goals and positions, and sometimes the underlying interests, you will be trading with the other party. Before entering into negotiations, at the very least you should have clarity on your and the other party's goals, and a sequence of which goals you want to trade or exchange. Concession strategies vary in detail.

An offer made in response to an original offer that changes the terms of the original

Both parties must document the agreement. Must explain the facts upon which they based the agreement. The purpose is to establish that both parties accepted the final agreement. Summarzies the agreements and concessions (does not include all the documentation that was generated in negotiations). Presents each step from solicitation to proposal to negotiation objectives to concessions to final agreement. Both parties keep this documentation in the contract file to explain the final areement and why it is reasonable. It will allow other personnel who were not involved in the negotiations to track how the negotiations reached the final agreement.

(1) Description of supplies or services to be purchased, quantities, and delivery schedule; (2) solicitation/proposal number; (3) parties involved, including complete names, addresses, and phone numbers; (4) acquisition history, including information gathered; (5) negotiation objectives and their justifications; and (6) negotiation summary.

Includes: (1) concessions made and their impact on negotiation objectives; (2) major items discussed and the parties' position and outcomes; (3) use of and reliance upon data (including, but not limited to price/cost) submitted; and (5) a signed copy of the agreed-to final position.

Process of identifying and obtaining information necessary to complete proposal evaluation.

Determining the issues to be negotiated and the minimum and maximum positions for each issue. Addresses strategies that provide the overall framework that will guide the conduct of negotiation; includes both win-lose and win-win strategies and all tactics and countertactics necessary to achieve the desired result. Facts are different for each negotaition even if the acquisition is for the same item as previously purchased. Both parties need to establish speciifc and realistic negotiation objectives. It is an ongoing process because the negotiation objectives will change as the situation changes. A way to ensure flexibility is to develop three positions in preparing an objective: the minimum objective, most likely objective, and maximum objective. By doing so, a range is established that permits movement one way or another depending on the situation. When the seller's objective overlaps the buyer's objective, both parties are satisfied with the final agreement.

Most important step in the negotiation process. Buyers and sellers have unique advantages going into negotiations. Buyers know how much money is available, the amount and nature of competition. Sellers know the basis for cost estimates and where there is flexibility in their proposal. Nonetheless, both parties must plan for negotiations. Thorough preparations can lead to smooth negotiations, a good contract, fewer changes, and successful performance. First step is to understand the acquisition. Buyer must know what is being bought, why it is needed, and whether it has been bought before. It is important to get to know as much as possible before entering negotiations. Sellers must also understand the acquisition. They should know the purpose of the acquisition; the buyer's objectives; whether the buyer is the end-user; if not the buyer, who is the end-user; and the end-user's needs.

Process for entering into or modifying a contract after soliciting and negotiating with only one source.

Used in competitive negotiations to evaluate a proposal. It includes both the maximum acceptable value and the minimum acceptable value for all selected evaluation criteria

Specific methods used during negotiations to reach agreement. Use and effectiveness of any strategy depends on a number of factors, including nature of the acquisition and each party's long and short term objectives. In addition, the parties must evaluate the nature of their relationship. If long-term, then strategies and tactics are usually cooperative. If short-term, then a more competitive stragey may be effective. Four basic tactics are: (1) cooperative mode; (2) competitive mode; (3) time restrictions; and (4) deadlock

Presumes that reasonable people are needed to achieve reasonable outcomes. Planning before negotiation including developing justifications and explanations for a party's position. Allows compromise and cooperation during negotiations because it allows the other party to understand and recognize the reasonableness and validity of the positions. Each party recognizes that the other party might have a position that meets the objectives of both parties, resulting in a mutually agreeable result. This tactic requires patience as the mutually agreeable result may not be presented immediately.

Used when each party views the other as an adversary and concessions are gained at the expense of the other party. Lack of planning can lead to this approach, such as not having justifiable reasons for a position. The ability to convincingly apply pressure is helpful in this mode. However, one should be careful not to issue threats; the other party may accept the threat rather than concede a point.

Usually present at any negotiation - the contract must be awarded so deliveries can be met or before funds expire. Learning to work under this pressure is important because concessions made due to time limits may not meet negotiation objectives. Extreme deadlines make adequate preparation difficult and may lead unprepared negotiators to make decisions based solely on time constraints. Time restrictions can be worked around by negotiating delivery schedule, inspection requirement, compensated overtime, or a letter contract. Time tactics can range from "my flight's scheduled to leave in an hour" to "the funding will not be avilable unless the contract is awarded today."

The inability to continue negotiations because the parties cannot or will not be flexible in their positions. If negotiatations break down and there is a deadlock, the party with time on its side usually benefits. Patience is also important when a deadlock occurs because new objectives must be established requiring additional management reviews. While objectives are re-established, both parties should consider how to allow the other party a "face-saving" way to concede: give the other party an opening, allowing a concession. After a deadlock happens, one party usually welcomes the other party back into negotiations. If the buyer has begun negotiating with a second seller, the position of the seller is greatly reduced when they enter back into negotiations. A deadlock can sometimes be resolved by introducing new people into the negotiation process to allow another perspective.

Occurs when a buyer helps a seller bring its proposal up to the level of other proposals through successive rounds of discussion

Occurs when technical information pertaining to a proposal is disclosed and results in improvement of a competing proposal