The Need for Negotiation
Public procurement professionals have long had the reputation as knowledgeable bid evaluators. They can analyze the offer to determine responsiveness, conduct a technical evaluation of the bidder’s capabilities, and even perform cost analysis when needed. However, more and more these same professionals are also being called upon for their negotiations skills.
As the profession sees an increased use of the request for proposal (RFP) process, there is a logical need for negotiation. A key phase of these types of procurements is negotiating the final agreement with the selected proposer. This negotiation often includes the specific terms and conditions of the contract, additional services or deliverables to be provided, as well as the final cost to the agency.
Common areas for using a negotiated procurement process include architectural and engineering (AE) services, information technology projects, and software systems. Inherent to the RFP method is the government’s ability to state their problem, invite solutions from an industry, and then negotiate with one or more of the top proposers. It is not unusual for a public agency to use negotiation in their final selection. In fact, many of the firms that submit a proposal are expecting just that.
In a non-competitive or sole source environment, negotiation is also the preferred approach. Even though the supplier has a strong position with their unique expertise or proprietary product, the government is still the one “writing the check”.
In some situations, such as a formal bid invitation, negotiation may be prohibited by statute or regulation. This helps to protect the integrity of the procurement process.
Even if the procurement does not involve negotiation as part of the selection process, it is still surrounded by opportunity. After all, aren’t changes in the work schedule or product substitutions open for discussion? In many cases, the procurement professional can barter a deal between the contractor and the using department. Having strong negotiation skills will help ensure a win-win outcome.
Daily interactions with other business units are often a negotiation. Areas such as agency training, procurement system enhancements, and even administrative support are prime opportunities to sharpen one’s negotiation skills.
Traditionally, other business units have taken the lead in contractor negotiations, with the procurement professional brought in later to formalize the agreement. While being involved with the process is certainly a start, it is ideal when procurement can lead the negotiations.
If public procurement professionals are serious about bringing their “A game” to the table, they should realize the value of negotiation. Participating in professional training and in agency contract negotiations are invaluable.
About the author
Darin Matthews, CPPO, C.P.M., is chief procurement officer for Metro, the regional government of Portland, Ore.
