Negotiations in government contracting can be an interesting subject.  In my years as a CO, almost every contracting officer I knew had a different approach to conducting negotiations.  I grew up in the days before email so most of my first seven years in the government, negotiations were always by phone.   But even in phone negotiations, everyone has a different approach to negotiating a deal.  The one way I won’t ever recommend is negotiation via email.  I will tell you why later in this blog.

Opening negotiations with a contractor usually occurs after a review of the technical approach, price, and terms of the contract.  One thing I had to teach my specialist was to read the whole proposal!  Everyone focuses on the price and many times contractors take exception to clauses or add additional provisions that must be discussed and resolved.  I have had many companies try and change language in a FAR and DFAR clauses and that cannot occur without significant discussion and approval from the government’s legal office of the modified clause language.

So how does one approach the negotiations?  The technical issues that need to be resolved must be completed first because that may impact price. Then you can move to price.  What I really want to talk about is the approach one takes in these negotiations.  When I first started out I had a CO that wanted to defeat the contractor and would look to win on every point regardless of the facts.  She had a predetermined number in her head and the facts where not going to get in the way. Over the years I think the contracting community has moved towards the idea of the object of a negotiation is a win-win with the right balance of risk to profit.  Taking a hardline position that increases risk for the vendor makes the negotiation that much harder to close.

I have found that phone negotiations are easier than face to face negotiations.  If the issues are small and can be easily resolved, then a phone call that can get the deal done. I must admit that millennials want to negotiate through email.  I find that if a company doesn’t like a number they can just ignore your email. I may be old school, but negotiation means talking – and emails, in my experience, just seem to make the negotiations drag on.

However, I never shied away from bringing a contractor to the table to hammer out those final big issues.  The “art” of negotiation is understanding “where is the number that both parties can afford”.  It gets easier when you deal with a vendor over several negotiations, but that number must fit with the budget or goals that the government must meet while providing the right profit level for a vendor.  I remember sitting in the room with a major engine manufacture for three straight hours negotiations over what data would be the basis of their “commercial” price and looking at the numbers and leaning over to my customer and writing down the price they wanted.   Sure enough two weeks later we agreed to a number very close to what I wrote down.   The data and the arguments pointed out what the manufacturer could agree too.  That number wasn’t far off from what the government had in its business case as fair and reasonable.   The negotiations could have dragged on longer had the government wanted that exact business case number, but compromise is part of any deal.

Some other things to remember. I always let my specialist negotiate as much of the deal as possible to allow them to get the experience and to have that fall back of saying “I have to talk to my CO”.  If I had to step in, it was to resolve a contentious issue.  In face to face, don’t be afraid to step out and discuss things among your team.  Tell the people on your team to ask for a break if they feel they need to discuss something, but never in front of the contractor.  Don’t be afraid to break off negotiations and send everyone home.  I have had to do that twice and a cooling off period worked in both cases.  People can get very “vested” in a position and want to “win” the point.  A break can reset everyone’s approach to the deal.

I always liked negotiating and found out I was pretty good at reading the room and closing a deal.  Knowing my industry and understanding the pricing proposal is essential for a CO to be successful in getting a handshake on a deal.