Vendor Engagement and Negotiation Meeting: Enhancing Outcomes
Explore the strategies and best practices for vendor engagement and negotiation to achieve better outcomes in government acquisitions. Learn how to address misconceptions, improve communication with industry partners, and optimize the acquisition process. Gain insights into effective vendor communication plans and the key role of market information in decision-making.
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Vendor Engagement and Negotiation Meeting the Challenge of Better Outcomes February 5, 2014 1pm 3pm Al Mu oz, CFCM, PMP US Department of Agriculture Jeff Birch, Acting Director www.fai.gov www.fai.gov
Agenda oVendor Engagement From Myth-busters to Agency Vendor Communication Plans Most pervasive misconceptions oNegotiation Better vendor engagement for better negotiations Tools & techniques for better negotiations oQ&A 2
Vendor Engagement oOffice of Federal Procurement Policy (OFPP) February 2, 2011 o Myth-Busting : Addressing Misconceptions to Improve Communication with Industry during the Acquisition Process 3
Vendor Engagement Agency Program Managers Define Requirements Contracting Officers Develop Acquisition Strategies Seek Opportunities for Small Business Negotiate Contract Terms Access to current market information is critical! Access to current market information is critical! 4
Vendor Engagement Best source of information Market Current Technology Trends affecting future procurements Industry Partners Clear, consistent direction to the workforce Criteria for identifying which acquisitions must include vendor input in the pre-award phase Agency Vendor Communication Plans 5
Vendor Engagement oProductive interactions between industry and agency officials oGovernment clearly understands the marketplace 6
Vendor Engagement oAward a contract or order for an effective solution at a reasonable price oEspecially important for complex, high-risk procurements 7
Vendor Engagement oOFPP Memo, May 7, 2012 Myth-Busting 2 : Addressing Misconceptions and Further Improving Communication During the Acquisition Process Focused on Industry Misconceptions 8
Vendor Engagement Key take Key take- -away: away: Stop buying from strangers! Stop buying from strangers! 9
Vendor Engagement Are you still buying from strangers? Use your business background and ask some questions: 10
Vendor Engagement Are you still buying from strangers? Use your business background and ask some questions: How well do I know the vendors I buy from? Large or small? Length of time in business? How mature is the industry? How dense or competitive is the industry? How well do I know the products or services I buy? New or mature products or services? Commoditized or highly distinguishable? What s the market like? Is it highly profitable or lower- margin/high-volume? 11
Vendor Engagement oAsking these types of questions will lead to more questions that are dependent on your type of contracting and level of interest. oMust take the time to analyze your sector commensurate with the level of complexity and risk inherent in the products or services that you buy. 12
Vendor Engagement Most pervasive misconceptions 1. Can t meet one-on-one with a potential offeror. A protest is something to be avoided at all costs even if it means the Government limits conversations with industry. 2. 13
Vendor Engagement 1. Can t meet one-on-one with a potential offeror. A protest is something to be avoided at all costs even if it means the Government limits conversations with industry. 2. 14
Vendor Engagement 1. Can t meet one-on-one with a potential offeror. oGenerally, there is no such prohibition. oPrior to solicitation, anyone, including program managers and users may meet with potential offerors to exchange general information and conduct market research related to an acquisition. 15
Vendor Engagement 1. Can t meet one-on-one with a potential offeror. oCommunication is more restricted during solicitation, during which time the CO is the focal point, and ends with receipt of proposals. oAny information directly affecting proposal preparation must be shared with all potential offerors. 16
Vendor Engagement 1. Can t meet one-on-one with a potential offeror. oKeep it fair and be ethical in your engagement. oThere will be some mistakes. oGood judgment comes from experience. oExperience comes from bad judgment. 17
Vendor Engagement 1. Can t meet one-on-one with a potential offeror. A protest is something to be avoided at all costs even if it means the Government limits conversations with industry. 2. 18
Vendor Engagement A protest is something to be avoided at all costs even if it means the Government limits conversations with industry. 2. oProtests are still quite rare and not to be feared. 19
Vendor Engagement A protest is something to be avoided at all costs even if it means the Government limits conversations with industry. 2. oNot communicating won t prevent a protest. What is a protest, really, other than a vendor signifying that they re unhappy with the level of engagement? oThey want answers, they aren t getting them, and one of their only options is to file a protest. 20
Vendor Engagement A protest is something to be avoided at all costs even if it means the Government limits conversations with industry. 2. oA much better option is a debriefing, which should be encouraged, even with the winning proposer. oDebriefs allow vendors to understand the award decision and to submit better proposals next time. Thorough debriefs = better future proposals Thorough debriefs = better future proposals 21
Vendor Engagement oGovernment contracting of the future will be about Government contracting of the future will be about interacting with industry more meaningfully, and interacting with industry more meaningfully, and about designing effective solutions together about designing effective solutions together not about buying from strangers. not about buying from strangers. 22
Vendor Engagement and Negotiation Effective vendor engagement will improve the productivity of your negotiations 23
Vendor Engagement and Negotiation Effective vendor engagement will improve the productivity of your negotiations Know the vendor 24
Vendor Engagement and Negotiation Effective vendor engagement will improve the productivity of your negotiations Know the product/service Know the vendor 25
Vendor Engagement and Negotiation Effective vendor engagement will improve the productivity of your negotiations Know the environment which you are engaged Know the product/service Know the vendor 26
Vendor Engagement and Negotiation Effective vendor engagement will improve the productivity of your negotiations Know the environment which you are engaged Know the product/service Know the vendor Without these, your negotiations will be much more difficult! Without these, your negotiations will be much more difficult! 27
Negotiation Negotiation is a discussion aimed at reaching an agreement oAs a process, negotiation is communication through which two parties attempt to reach a mutually satisfactory result on a matter of common concern. 28
Negotiation not a game or contest oThere are no players and no sides and no one wins a negotiation. oA successful negotiation is one in which the parties achieved a mutually satisfactory result. 29
Negotiation oThinking of negotiations as a contest is detrimental to the goal of achieving better outcomes. oCauses reluctance to enter into negotiations. oAllows for bad outcomes. If you think you won, you didn t. 30
Negotiation oWhat does a vendor do when it loses a negotiation? oIt doesn t. We end up paying for it one way or another. oQuality suffers, employees suffer or the vendor simply doesn t perform. 31
Negotiation oGovernment has a superior bargaining position. oLeveraging that position to the detriment of the vendor will result in poor outcomes. oBecause in contrast, the vendor has superior knowledge. 32
Negotiation oThe cost of poor vendor engagement and negotiations. oThe 30p gourmet burger. oCost of damage repair far exceeded any profit that could have been made. 33
Negotiation Planning for Negotiations oYou re going to negotiate at some point with your vendors. oBe prepared to negotiate on every acquisition. oYou ve probably negotiated at some point today. 34
Negotiation Objective of Negotiations oGet the right price for the level of quality and Get the right price for the level of quality and delivery that the Government requires. delivery that the Government requires. oNot to get the lowest price. 35
Negotiation oNegotiating a position versus negotiating based on interests. oFAR discusses development of a pre-negotiation position and pre-negotiation objectives somewhat interchangeably. 36
Negotiation oA position has a static connotation, suggesting that the Government should only move from its position based on evidence provided by the vendor. oThis is adversarial and distracts the negotiation team from focusing on paying the right price for the Government s requirements. 37
Negotiation oIn contrast, by identifying those mutual interests around which the Government and its industry partners can bargain, the parties can achieve a mutually satisfactory outcome. 38
Negotiation oRemember, the point of negotiations is to achieve a mutually satisfactory result. oDon t become overly focused on achieving the lowest price. oThe lowest price could cost you. 39
Negotiation Focus on Objectives Preparation Flexibility Tools of an Effective Negotiator 40
Negotiation oEffective vendor engagement to understand industry partners and the environment. oThoroughly documented with your customer the Government s requirement and its fair price. 41
Negotiation oUnderstand the objectives of the negotiation and can distinguish those objectives that must be met from those that can be reduced if needed. oNot be tied to a position. 42
Negotiation oUnderstand the limit of your own infallibility. oBe prepared, but be prepared for change. oThere s more than one way to make a burger. 43
Vendor Engagement and Negotiation oRemember that you and your team will make mistakes along the way. We could use more small mistakes to build upon our We could use more small mistakes to build upon our experience so that we ll make fewer large mistakes experience so that we ll make fewer large mistakes in the future! in the future! 44
Vendor Engagement and Negotiation oQuestions 45
