Negotiating a Government Contract
Many years ago I attended a seminar/work session on Negotiating. The objective of negotiation was defined as “…a process of discovery that moves toward an agreement that satisfies both parties.” I think this definition holds true on commercial negotiations for sure. In government negotiations, this holds true but there are many more guidelines that govern the process that both sides need to understand to produce a result that will satisfy both parties. The government objective might be “…a process of discovery that moves toward an agreement that will satisfy the Government and it’s requirements and provide a result for the contractor.” To understand this, if the contractor doesn’t understand the rules and guidelines (specifically the Federal Acquisition Regulations or FAR) then they may not be satisfied in having to produce cost and pricing data as part of the negotiations, especially if they were not prepared to do this from the proposal stage on.
As in any negotiation, the more prepared the negotiator is, the better chance they have in reaching an equitable result. For the contractor in the Federal Contract negotiations, this means becoming familiar not only with the position of the other party in the negotiation but knowing the rules and regulations that govern the agreement. There is an entire section of the FAR (Part 15) that covers contracting by negotiation. Certainly a contactor can read the FAR and try to understand the implications of all of these requirements. The other choice is to hire someone that has specific experience in implementing these guidelines and that have actually performed negotiations under these rules. Experience here is a big factor.
The government will negotiate all sole source acquisitions (FAR 15.002). They will negotiate most of the competitive acquisitions as well in order to provide the best value to the government. There are instances where the contract is not negotiated. For instance, commercial commodity items generally are considered to be the “best value” as they are already priced in accordance with market conditions. Also, when a contractor obtains a GSA Schedule, the pricing is negotiated at the time of the issuance of the Schedule, not at the time of order.
The takeaway here is that when negotiating with the Federal Government, it is best to have an experienced negotiator on your side. One that understands how the process works and can prepare a negotiation strategy up front that will result in a win-win result for both parties. I would recommend someone that has not only contract administration training (certification from an organization like the NCMA is best) but also has years of experience in performing these negotiations with the government. ReliAscent can provide assistance from a Certified Professional Contract Manager as a service to our clients.