Did you know?
The Federal Acquisition Regulation (FAR) states that any contract awarded using a method other than sealed bidding procedures is considered a negotiated contract.
Note: Federal contracting officials are required to follow the FAR for all purchases. State and local agencies will also use it to guide their procurement policies in many cases, although they may also leverage other “localized” regulations. Make sure you confirm each agency’s sourcing and contract award processes before responding to solicitations.–
That means that, if you submit even a single proposal to a Federal, State or even Local Government entity, you need to be prepared to engage in a bargaining exchange. While many contracts are awarded based on the price you offer in your original RFP response – and Simplified Acquisitions rarely require sit-down, face-to-face negotiations – public sector agencies will frequently initiate contract negotiation proceedings in either…
This is where a short list of candidates is initially selected based on past performance records and other “tradeoff” advantages detailed in the written proposal. The agencies then reconvene with each vendor within this “competitive range” to negotiate pricing terms based on the scope of work and identify the lowest cost/best value option.
This is where there is only one approved vendor (i.e. AbilityOne designated contracts at the Federal and DoD levels) or one qualified vendor (i.e. only one company with the equipment or expertise to fully satisfy project requirements). Since there is no price competition in these scenarios, Government agencies rely on negotiations to meet best price/best value standards.
Heads up The NASCIO-NASPO joint task force is currently recommending these changes, among others, to improve states’ IT procurements: 1. Remove unlimited liability clauses in state terms and conditions As of 2016, 38 states have eliminated unlimited liability. 2. Introduce more flexible terms and conditions As technology options continue to evolve, states must adopt flexible and agile terms and conditions. 3. Don’t require performance bonds from vendors In order for states to lower costs and create a competitive procurement pool, states need to consider finding ways of leveraging existing protections and adjusting performance bond requirements if necessary.–
That being said, we’re also likely to see an increase in negotiations for IT solicitations at the state level. A NASCIO-NASPO joint task force convened in early 2017 is currently reviewing ways that state agencies can introduce and/or improve negotiation processes for contract awards that would have otherwise been reliant solely on suppliers’ initially proposed pricing terms. They are specifically focusing on IT procurements that will become reliant on agile project structures versus the traditional “waterfall” project implementation framework. However, such actions to evolve negotiation practices are not new.
Government agencies are constantly seeking ways to improve their return on investment (ROI), which means they strive to extract the most value from their vendors, starting with contract negotiations when warranted. If you want to ensure a mutually beneficial outcome the next time you’re invited to negotiate a contract with a Government agency, take heed of this advice:
Final tip: Be flexible. Don’t get upset or offended if you feel that the procurement official, or the customer, is trying to drive a hard bargain. The goal of negotiations is to achieve mutually acceptable contract terms and equally valuable outcomes. For you, that may be profitability on this project; for the Government, that may be achieving project requirements for the lowest cost possible. So, ask for a break if you feel that you’re hitting a wall (before you lose your cool and the opportunity).
Once you take a step back from the table, it will be easier to re-evaluate the pros and cons of the current contract terms and weigh your options with a clear head. Unfortunately, that may result in you stepping away from this particular contract opportunity completely. However, passing on this contract could open up the door – and free your resources – for a better opportunity in the near future; an opportunity whose contract terms align with both your goals and the Government’s.