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Negotiations - an integral part of the RFP process

Negotiations - this sounds simple. You discuss a disagreement, try to understand the other party's perspective and find some common ground.

Procurement people, however, find negotiations difficult, seemingly complex and often intimidating. However, negotiations are an integral part of the RFP process. The simple act of adding a negotiations step to your evaluation process will reduce the risks of failure, improve the quality of the proposals, improve your understanding of the proposal and in many situations, lower the price.

The negotiations process is a four-step process: preparation, fact-finding, bargaining and agreement. It generally fits in to the process after a short list of vendors has been selected and before the contract with any one(s) of these has been signed.

Preparation involves assembling a negotiation team, knowing the details of the proposal being considered and establishing the boundaries of an acceptable agreement. All of this information is typically included in a negotiations plan.

Fact-finding - clarifying and gathering additional information on issues of concern to either party - ensures that each party shares a common understanding of the requirements, the RFP and the offer.

Bargaining is the difficult step. At this point each party will put forward its negotiating position and seek resolution of disagreements. Conducting negotiations is a vast topic, but a few objectives are good to keep in mind: aim for a win-win result for both buyer and supplier; agree on the issues; and behave such that both sides can reach agreement without a "loss of face".

The agreement, reflecting all of the essential terms defined in the negotiations, concludes the negotiations phase of the RFP. Nothing left but the signing!

For a more detailed description of negotiating with respect to public sector procurement practices, consult the RFP Report: the newsletter of ideas, checklists, guidelines and information about the Request for Proposal by Michael Asner.



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