Chapter 7 Developing the Negotiation Plan

Your negotiation plan is how you are going to go about achieving your prenegotiation objectives—your blueprint for the actual negotiation event. When written down, it’s the document that pulls together all the things we’ve discussed so far into a logical process that can be implemented. The quality of your negotiation plan is always directly related to how successful you’ll be during negotiations. Of course, you, as the government lead negotiator, are responsible (with the help of your team) for developing the plan, so how do you do it and what does it include?

Many government agencies have their own excellent template negotiation plans for you to use. There are also quite a few good plan templates created by authors and available to you through books or the Internet. Although these plans vary in details, most good ones will, at a minimum, cover the following areas:

• Objective statement

• Background information

• Team members

• Negotiation objectives

• Major issues

• Negotiation strategy

• Schedule and logistics considerations.

OBJECTIVE STATEMENT

The plan should start off by describing the overall objective of the negotiation. Why are you taking all this time? What end are you seeking? Just as an organization needs a clear, concise vision statement, the negotiation plan needs a similar objective statement to add focus to the plan, to provide a rally point for the team, and to provide a road map for the negotiation.

FAR Part 15 tells us that the primary objective of negotiations is to obtain the best value for the government, price and other factors considered, based on the requirement and the evaluation factors set forth in the solicitation. You’ll want to be a bit more specific when you formulate your negotiation plan objective statement, homing in on your particular requirement. But don’t get carried away; this should be a summary, at a high level, of your overall negotiation objective.

The objective statement is where you should discuss broad goals like overall dollar objectives, preferred contract type, contract financing terms, GFP, and other preferred business terms and conditions. Please remember your objective is to get best value at a fair and reasonable price to both parties. Your objective is not to try to “hammer” the contractor in negotiations so you can brag about how much you got them down or how clever a negotiator you are.

BACKGROUND INFORMATION

Next, your plan will include some brief background information related to the proposed acquisition, the contractor, and the overall negotiating environment or situation. Most of this information will come from work you have already done: the acquisition plan, the solicitation documents, your market research, forming your prenegotiation objectives, and your research into the other party.

The background information should make the rest of the negotiation plan (why you are doing what you are doing and why you are doing it a certain way) make sense. Talk about the general market environment. Discuss the level and amount of competition. Here’s where I’d also put things like who the negotiators will be for the contractor, their job titles, the contractor’s previous history with you, and the like. Again, you don’t have to write a book here. A good, brief summary will do.

TEAM MEMBERS

Next, the plan should indicate the names, positions, and roles and responsibilities of the members of your negotiation team. Remember, your team may include people who will not actually be with you during the negotiation meeting. What we’re talking about here is the people who will actually be in the room with you. Here’s where you determine who will be your technical experts for issues, your “technocrats,” your “good cop” and “bad cop,” your “sweeper,” and the like. These will be your actors to carry out your strategy and tactics. We’ll talk about assigning negotiating roles later in the book.

One team member that must be included in this plan, and is often overlooked, is the meeting minutes keeper or note taker. Do you think it’s a good idea to have detailed notes taken as discussions progress and agreements are reached, changed, renegotiated, modified, and finally reached again? Do you think you, or any other member of your negotiation team, can carry out their assigned roles and take official, detailed notes of the whole negotiation at the same time—and do a good job at both? Folks, don’t do this to your people or yourself! Think ahead and have someone not involved in the negotiations there to take notes.

Many people ask me if it’s OK to bring a tape recorder and tape the negotiation session. You can do this if you get written permission from everyone who will be in the room. Check the particulars with your legal folks, but I don’t recommend it. Knowing you’re being taped has, in my opinion, a certain intimidating effect on people, even if it’s on a subconscious level. I believe it inhibits the free flow of information and can mask verbal clues that can be important to you during negotiations. In my opinion, it’s more of a detriment than a plus.

By the way, every good plan has backups. I suggest you include possible alternate team members in your plan to cover contingencies such as absences. I also use this section of the plan to state that all team members have been properly briefed on procurement integrity, limits on exchanges, limits on authority, nondisclosure of proprietary and source selection information, and ethics.

NEGOTIATION OBJECTIVES

Next, the plan will include your specific negotiation objectives for each issue. Here you’ll lay out your prenegotiation positions (MIN, MAX, and TGT) in priority order, issue by issue. For example, issue 1 will be your most important issue and you will discuss it completely before moving to issue 2, and so forth. Remember to include both your “must” and “give” points. Obviously, your “give” points will be last on the list. Now, this doesn’t mean you have to discuss the issues in this order during the negotiation. The strategy you pick—and we’ll discuss this later—will set the discussion priority.

Remember that MIN, MAX, and TGT are your government positions on each issue. You’ll also want to include the contractor’s anticipated positions on these issues. Most of this information will come from your assessment of the contractor’s proposal and your research into the contractor’s likely strategy based on their interests. It’s a guess, but if you’ve done your homework, it can be a very educated guess.

Then lay out the results of the government’s technical evaluation of the contractor’s proposal for that issue. You can take them right out of the technical evaluation report or simply reference the report. These are your strengths, deficiencies, weaknesses, and so forth. Personally, I briefly summarize these in my plan and then refer the reader to the technical evaluation report for more detailed information.

Next you’ll want to write down your assessment of each side’s relative bargaining power for that issue. Examples of bargaining power are things like level of competition, expertise and knowledge, time constraints, quality and skills of the negotiators, risks, and so forth. This helps you get a grip on just how strong you are on each issue.

You’ve got, if you planned correctly, several “give” points on the bottom of your list that you can use as potential tradeoffs. I suggest going a step further and identifying, for each issue, potential items within the issue that can be traded off. Obviously, the most common one subject to tradeoff is price. This is why you have MIN and MAX stances in the first place. You expect, and the other side will expect, some leeway on price. But also look at other things as potential tradeoffs, like delivery dates, FOB points, warranties, financing, as well as technical considerations.

Naturally flowing from things you’ve identified as potential tradeoffs for each issue are some preplanned counteroffers in this section for each issue. Now, you already have three objectives (MIN, MAX, and TGT) for these issues, but I’m not talking about them. You never want to go straight to your TGT, for example, if the other side initially rejects your going-in position. These planned counters should be small tradeoffs you have already considered and discussed with your team that do not take away from your overall position, and usually should be comfortably under your TGT. For instance, providing financing or receiving some technical benefit for a gizmo may not be all that important to you (your “give” points), but it may be very important to the other side. Having the ability to “give up” these things may allow you to receive concessions in return in areas you care more about.

As stated earlier, every issue has a MIN, MAX, and TGT position. Every issue probably has “must” and “give” points. When you think of all the possible combinations and possible counters for them, you may start to feel overwhelmed. To keep your sanity and make your plan simple and executable, don’t even try to come up with all the possible permutations of possible counteroffers. It’s simply too difficult and the course of negotiations will be too unpredictable and dynamic to make this level of detailed planning of much use anyway. So keep your preplanned counters simple and keep them issue-specific, at least for your written negotiation plan.

The last item you should address in the negotiation objectives portion of your plan is which team member to assign to lead the discussion on each issue. Although you are the team leader and should initiate discussion on each issue to keep control of the pace and order of the negotiation, you won’t be an expert on all the issues. You’ll have to turn the technical issues over to your technical experts to discuss. For most of the business issues, you’ll be the expert and will lead the discussion, but feel free to delegate technical issues to your technical folks and management issues to the program manager, for example. Make sure to assign these roles in writing and make sure that everyone understands which issues they are expected to take the lead on. After opening the issue, you will then call on that team member to take over. Just remember to keep overall control of the discussions so things don’t get out of control. We’ll talk about some techniques to do this when we talk about conducting negotiations later in the book.

MAJOR ISSUES

Let’s see where we are. In developing our negotiation plan, we have written our objective statement, included our background information, listed our team members and their roles, and formulated our negotiation objectives for each issue we plan to discuss. The next section of the plan—major issues—will contain important factors that affect the entire negotiation, not just any one specific issue.

Because you have prepared the plan essentially issue by issue up to this point, this section of the plan should identify those things that cut across boundaries. Examples could be major terms and conditions proposed by the contractor that are different from what the government requested in the solicitation. Another example could be when the government has encouraged the contractor to propose alternative ways of solving a particular problem (like lease vs. purchase). How these are resolved could affect the entire negotiation and are not issue-specific.

In this section, also discuss any unique aspects of your requirement, such as quality assurance requirements or higher level quality control requirements. I frequently include avoidance points in this section too. Avoidance points are things you don’t want anyone on your team to mention. You don’t want the subject to come up because you already know you are weak in that position, or you know it is a “must” point for the government that could be a potential deal-breaker. Put major points of disagreement between the government and the contractor in this section, including how far apart the two sides are on the issue.

I always use the major issues section to link my negotiation plan to the source selection plan. Your source selection plan is done prior to releasing the solicitation in competitive acquisitions. Each agency has certain dollar levels that will trigger writing one of these plans. This plan lists things such as your evaluation factors for award, how important they were, and how you were going to trade off price to achieve superior results on the non-price factors that were important to you. Obviously, these price and non-price factors can shift dramatically as a result of negotiations, so you want to make sure the direction of the movement is consistent with your source selection plan.

After discussions, you will ask the contractor to submit a revised final proposal, based on what went on in discussions, and the give-and-take on issues that resulted accordingly. You then have to conduct a completely new technical and business review and analysis of that revised proposal. Linking your negotiation plan to your source selection plan will keep your team on track and make this second round of reviews easier.

NEGOTIATION STRATEGY

The next step is to develop your negotiating strategy. Formulating your strategy simply builds on all you’ve done up to this point. Strategy is the vehicle that you will use to achieve your negotiation objectives. It is your overall plan to address the issues, conduct the negotiations, and control the negotiation process. To choose an effective strategy and then use tactics to achieve it, you have to have a clear understanding about your strengths as opposed to the strengths of the other side. No strategy can be correctly chosen or successfully carried out without understanding this concept of bargaining power.

Assess Bargaining Power

Before you can properly choose an overall strategy for the negotiation, you must know where you stand in comparison with who you’ll be dealing with. Which side has the most power (the most negotiation leverage) going in to the negotiation? Your answer to this question will guide you toward a negotiation strategy. Here’s a list of the major categories of bargaining power that can affect negotiations:

• The power of legitimacy

• The power of competition

• The power of time

• The power of expertise

• The power of risk tolerance

• The power of precedent

• The power of options.

Some authors have suggested more categories, but these are the main ones you will have to consider in government negotiations.

The first is the power of legitimacy. Which side is perceived to be more legitimate? Here, you’ll have most of the power simply because you represent the government. What could be more legitimate than that? This simple fact gives you an immense advantage in negotiations: You’re on the side that made the rules. If contractors want to play, they must play your way and by your rules. The FAR is the rule book, and you represent that rule book.

Legitimacy can also be established by official titles and positions. For instance, “Contracting Officer for the United States of America” can be very intimidating to contractors first doing business with the government. I once dealt with a new contractor who actually thought I had deputized arrest power and could throw him in jail on the spot if he did something I considered wrong. To him, contracting officer meant contracting officer, as in police officer. Now that’s bargaining power! By the way folks, don’t overuse or abuse your legitimate power in situations like that. Remember: fair and reasonable to both parties!

Legitimate power in the form of titles and positions can work against you too. If you were a new negotiator, don’t you think you’d be a little intimidated if your counterpart is president, CEO, or senior fellow, or has some series of important-looking letters after his or her name? But don’t be overawed by titles and other trappings of legitimate corporate power; they can be deceiving.

When I started my first consulting partnership, we had a very impressive address in a major corporate high-rise building in a major city. We had a secretary to answer our calls and let only the important ones through. Everyone who dealt with us got the impression we were a multimillion dollar company because we had all the trappings.

Actually, we didn’t have any office space in that impressive building. We simply paid a small fee for a “virtual office,” complete with an answering service that “played secretary” for us. Of course, this service did the same for many other small businesses with virtual offices in that building. Our company was identified simply by a light on a console, so the secretary would use the correct business name when he or she answered. But, hey, our business cards were impressive, and people thought we must be really busy and important if we had to have a secretary screen our calls. Everything is not always as it seems, and power is effective only if the other side perceives it as power.

Another form of legitimate power—and this one is uncannily effective—is the power of the printed word. Most people tend to believe anything they see in writing, especially standard forms or signs, even if they would question the information if they just heard about it. For some reason, we are conditioned to assume printed words have authority, or legitimacy.

Here’s an example I read about that illustrates this point. Back in the 1980s, illegal drug smuggling by car up Interstate 95 out of Florida was reaching epidemic proportions. To stem the tide, Florida state troopers put to use the unquestioned legitimacy of the written word. They posted a sign along I-95 that said: PREPARE TO STOP. RANDOM DRUG SEARCH. ROADBLOCK 2 MILES AHEAD. Now, there really was no roadblock two miles ahead. Stopping cars for random drug searches was illegal in Florida at that time.

What was also illegal, however, was making a U-turn across the median of the interstate. Cars running drugs would see the sign, panic, and make an illegal U-turn. Craftily posted patrol cars would then pull over the cars for the illegal turn and subsequently “find” the drugs. Hundreds of drug runners were caught this way before the courts made Florida stop the practice.

Here’s another example I heard of during my Air Force days. I can’t vouch for its veracity, but it does illustrate the point. Have you ever seen, at airports, those trucks with the big FOLLOW ME signs on the back? They’re used to escort arriving planes to their proper parking places. An Air Force officer had instructed an airman to take the base’s FOLLOW ME truck into the local town for some minor maintenance. The airman didn’t take the FOLLOW ME sign off the back of the truck. As the airman drove through town toward the garage, he picked up a string of cars that dutifully stayed right with him through every turn he made. When he arrived at the garage, he had a string of cars behind him lined up like ducks. One driver actually got out of his car and asked, “Hey, what are we supposed to do now?”

The lesson here is: Use your legitimate power. Put things in writing. Look at the mind-boggling number and variety of standard government forms you can whip out. Use your title, but don’t be intimidated by the contractor’s titles or written “standard procedures.”

Another power you’ll have to assess is the power of competition. If you have other offerors competing for the contract, the power of competition is on your side. If you have little competition or are in a sole-source situation, the other side has more power. The government, of course, has enshrined this power of competition into its acquisition policies and procedures. Simply following the already established rules gives you significant power when you strive for “full and open competition.”

Time is another power that can work either for or against you. Who is up against the shorter deadline? The contractor may be under intense pressure to capture a certain amount of business by a certain date. They may have other important projects to which they need to divert their top negotiation team members by a certain time or lose that business.

You, of course, may be under time pressures too, which gives the other side bargaining power. What’s your customer’s delivery date requirement? How critical is it? Are you getting pressure from “on high” to get something contracted quickly for some reason or another? And an all too common pressure: When do your funds expire?

If one side feels the other side has more technical knowledge, experience (both technical and in negotiating), or superior information, that other side now has considerable expert power. Who knows the business better? Your technical experts or theirs?

The side that can afford to take more risk accrues risk tolerance power. Now, there are a lot of ways to mitigate risks to both sides—contract type, price and cost ceilings, and so forth—but neither side can totally eliminate contract risk. Your willingness to accept risk and uncertainty versus the contractor’s risk tolerance will affect the balance of power.

You have already done most of the work to assess precedent power. Unless conditions have changed dramatically, a contractor will be hard pressed to justify huge price increases not in line with previous contract award amounts. They have established a pattern, a precedent. Remember, though, you have too, by agreeing to those contracts.

Finally, there is power in having options. If the government has an alternative source or method for the contractor’s product or service, or if they can do it in-house, you have power. If the contractor doesn’t really need the government’s business (for example, they have a robust commercial market to which they can turn), then they have power. In their book Getting to Yes (Penguin Books, 1981), Roger Fisher and William Ury used the term BATNA (“best alternative to a negotiated agreement”) to describe these options. We’ll discuss BATNAs and how they are useful next.

Bottom line: You’ll choose your negotiation strategy based on your assessment of the power you have versus the power the contractor has (in other words, relative power). You’ll then adjust it if necessary to take into account the contractor’s likely strategy and your BATNA. So, what’s a BATNA anyway and why do you need one?

Establish Your BATNA

Simply put, your BATNA is your walk-away point. It’s your next best alternative if you cannot reach an acceptable agreement during negotiations. To develop your BATNA, simply ask yourself: At what point is it no longer worthwhile to continue negotiating? Your BATNA is usually somewhere near your bottom line, but it doesn’t have to necessarily be your bottom line.

In competitive negotiations, your BATNA could simply be to go with another offeror’s proposal. Or it could be to cancel the solicitation and resolicit with changes or modifications to your requirement. In noncompetitive negotiations, your BATNA could be to do the work in-house. To establish your BATNA, you simply list all your choices short of reaching an agreement with the contractor and pick the best one. Now you have a BATNA.

If you think about it, a BATNA is really a measure of how much power one side has over the other—relative power. This power, as we have seen, is created through alternatives, or options. If you have more choices than I do, your BATNA will be stronger than mine.

The contractors will also have alternatives, so, if they’re smart, they will come into the negotiation with a BATNA too. Examples of a contractor’s BATNA could be the point at which their money, time, and effort could yield a better return elsewhere, rather than agreeing to your negotiated price. They may have commercial customers they can substitute for you. Remember, part of researching the other party we went over earlier dealt with trying to figure out the contractor’s alternatives—identifying their BATNA.

During the give-and-take of negotiations, information is shared that might not have been available or easily gathered during your negotiation preparation. Any time additional information is presented, it may affect each side’s BATNA. You may learn, for instance, that the contractor has fewer options than you thought they had. Conversely, you may learn that an alternative source for the goods or services you are seeking has dried up. So keep in mind that BATNAs are dynamic; you may have to shift yours during negotiations.

How do BATNAs help you? What purpose do they serve? Well, first of all, your BATNA serves as a standard against which to measure any proposed agreement. It prevents you from accepting an agreement with unfavorable terms. The very process of negotiations, especially the time and effort you have put in, may make you too committed to reaching some kind of agreement, even if it’s not favorable. Having a BATNA protects you against this trend. Remember, every award you make must, according to the FAR, be fair and reasonable. Having a BATNA helps prevent you from making an award that is not fair and reasonable.

Comparing the other side’s proposed solution with your BATNA can also give you clues on what to counter with to improve the terms of agreement. Finally, going into a negotiation already knowing what you will do if you fail to reach agreement can make you a more confident negotiator. You have less fear of the unknown, and you can settle down and concentrate on getting what’s right for your customer and the taxpayers.

Only now—now that you’ve assessed the relative power of both sides, considered the contractor’s likely strategy, and developed your BATNA—are you ready to choose a strategy. After you choose a strategy, the choice of tactics to support that strategy falls out pretty simply. The choice of strategy is simple. You’ve already done most of the work. All you need to do is to choose the one that’s right for the situation.

Choose a Strategy

In my opinion, there are four basic strategies from which you can choose:

1. WIN–LOSE strategy

2. Loss prevention strategy (also known as defensive strategy)

3. WIN–WIN strategy

4. WIN–win strategy (that’s big win–little win)

Again, many authors and negotiation experts have come up with many different permutations of these over the years, but they pretty much all boil down to these four.

WIN–LOSE Strategy

This classic strategy sets you up to win at the expense of the other side. Now, notice we don’t talk about LOSE–LOSE as a possible strategy. Unfortunately, that’s one of the probable outcomes of a negotiation, but we aren’t going to discuss it as a strategy you should choose to pursue. It indicates that both parties essentially “lose” potential gains by compromising. Nobody walks away satisfied.

WIN–LOSE, also known (depending on the author) as the offensive strategy, the distributive strategy, positional bargaining, zero-sum, or the traditional strategy, has gotten a lot of bad press over the years since the book Getting to Yes came out. Actually, in certain cases, the WIN–LOSE strategy might be the best strategy to pick to give you a practical and efficient agreement. It really does have its uses and place as a strategy to consider. It has been slammed in books by authors equating it to a very negative approach to negotiating. However, if you consider that most people perceive negotiation as being an exercise of getting the most gain for the least expense, it fairly defines WIN–LOSE.

If, after your assessment of relative power, you feel you have the preponderance of power, WIN–LOSE might be appropriate as a strategy. It allows you to make maximum use of your power edge in crafting an agreement that meets most, or all, of your “must” points, and even many of your “give” points—at close to your minimum objective for price. As long as you can find the price fair and reasonable to both sides, you’re free to use WIN–LOSE as a strategy. This is particularly true if you perceive the contractor’s going-in position to be unreasonable. In this case, you want them to lose on that point!

The WIN–LOSE strategy is also highly effective if your analysis reveals that the negotiation objectives of the parties are pretty much mutually exclusive. You are able to realize your negotiation objectives, but almost entirely at the other party’s expense. Despite all the press WIN–WIN has gotten during the past few years, you’ll find WIN–LOSE is still pretty prevalent in government negotiations, especially when you are in a competitive situation. You want to pay less; the contractor wants to charge more. Your objectives and the contractor’s, in a competitive environment, tend to be more mutually exclusive simply by virtue of the government source selection process. You can’t make major changes in your objectives to address deeper interests (more about that when we talk about WIN–WIN), because you then have to give all offerors a chance to propose on the revised requirements to keep a level competitive playing field.

With the WIN–LOSE approach, both sides will assess strengths and weaknesses, and will set objectives for each negotiation point. They’ll have a firm “going-in” position, and a limit beyond which they won’t go. Both parties usually open with extreme positions, knowing that, through the give-and-take of negotiations, an agreement will likely be reached relatively close to their desired outcome. The negotiation, then, is about the tactics used by each party to maximize power to attain their goals. Reaching an agreement usually comes down to whether the negotiation range of both parties overlaps somewhere. That’s the zone of potential agreement.

In WIN–LOSE, you will do your best to learn the other side’s true objective, or position, while at the same time doing your best to conceal your own. You’ll use the information flow during the negotiation, both to you and from you, to strengthen your own BATNA while trying to weaken theirs.

So, WIN–LOSE can be used when you have most of the bargaining power, objectives are mutually exclusive, the contractor is being unreasonable, and the short-term results of the negotiation are more important than a long-term relationship with that particular contractor.

Loss Prevention Strategy

Loss prevention is a defensive strategy you’ll use only if you perceive the other side has the predominant balance of power. You may find yourself, for instance, in a sole-source environment and you must have what the contractor is offering. In this case, the balance of power is definitely in favor of the other side and your objectives, as opposed to their objectives, will usually be at odds. If you find yourself in this position, try the following strategic points.

First, arrange your issues in the order of least to greatest importance to you. You can also arrange them by your perception of ease of agreement. The things you think will be easy to agree to should come first. Both of these strategies get the other side used to saying “yes.” The more “yeses” you have, the least likely (hopefully) it will be for the other side to want to break the synergy with a “no.” The more “yeses” you can get the other side to say, the more tension is eased. Something about saying the word yes out loud works on the mind. Even if you are simply getting the other side to agree to their own position by saying yes, something magical starts to happen. The more “yeses” you get them to say, the softer they become. Simply getting them to agree to your draft agenda for negotiations can be your first yes. You’re already starting to condition them to say yes!

Next, try to create options. Don’t immediately sacrifice your goals; try to expand them or explore other ways to get to them. Use “what if” when you present your suggestions. This is know as a trial balloon and we’ll talk more about it when we discuss strategies in depth. If you don’t think you can win on one point, bring in several points that may set up both of you as winners. But be careful! Because of the nature of government acquisition, this may be hard to do without breaking competition rules. You might want to run the strategy by your legal counsel. In any case, your goal is to keep the other side negotiating. This may shift the power of time (as we discussed earlier) more to your side. It also allows you to use the tactic of time investment effectively, which is something we’ll talk about in a little bit.

Finally, don’t forget your BATNA. We’ve talked about how to create one and what it can do for you, so use it if you have to! Remember, your BATNA protects you from making an agreement you should reject. It’s the standard you have created and against which you will measure any agreement. When you use the loss prevention strategy, you sometimes may have to walk away. As a matter of fact, in government contracting, you must never agree to a price or arrangement that you, as a CO, cannot find fair and reasonable.

You want to also consider the other side’s BATNA. If they are in such a strong negotiation position, why are they negotiating at all? Maybe you are not in as bad a position as you think. They could have been overly optimistic when they weighed their own alternatives for reaching an agreement. So try to learn as much as possible about their alternatives. If you think their BATNA is overly optimistic or too simplistic, use any additional information you pick up to lower their BATNA expectations and strengthen yours.

So, the approach you should use when you’re in a weak bargaining position should maximize the strengths you do have and should attempt to lower, in the other side’s eyes, the desirability of the alternatives they are relying on as their BATNA. Remember these additional loss prevention approaches:

1. Never act weak, unless it’s a part of your tactics (we’ll discuss this later).

2. Consult outside experts. They may come up with a creative solution you haven’t thought of.

3. Consider adding to your team. Bring in new strengths and talent.

4. Use your weakness as a strength; learn to say “help me.” With this approach you will tap in to a natural tendency for humans to want, even subconsciously, to help people they consider worse off than they are. It makes them feel good, and in their act of kindness, pity (call it what you will), they usually will help you out more than they really planned. Spouses use this approach on each other all the time!

Lastly, use the tools that are uniquely available to you as a government negotiator to limit your liability and risk, and to encourage the possibility of competition. Here’s some examples:

• Require cost or pricing data, or information other than cost or pricing data. On certain contracts, cost or pricing data are required (sometimes even certified cost or pricing data). Most contracts and modifications, however, are exempt from you asking for cost or pricing data. However, you can always ask for information other than cost or pricing data if you need it to determine a price to be fair and reasonable. This can force the contractor to show you what cards they’re playing! See FAR Part 15 for more information on this.

• Select the appropriate contract type. You have more than 20 different contract types and variations from which to choose, and you can mix and match them to create an almost endless array of contract types. Each contract type defines a unique risk-sharing relationship between both parties. For example, you’ll want to push for a cost reimbursement-type contract if the work can’t be defined clearly.

• In sole-source situations, remind the other party you have to complete a justification for other than full and open competition. Make sure they know that part of that justification is a section that discusses the steps you will take to foster competition in the future. Sometimes just mentioning this will change attitudes.

• Remind the other side you must prepare a past performance report at the end of the contract. Make sure they understand the contents of this report are subjective and can include things such as “willingness to cooperate.”

• Inform the other side that you cannot, under law, ever award a contract at prices or terms you do not consider to be fair and reasonable. And who determines fair and reasonable? You do!

WIN–WIN Strategy

This is the negotiation strategy that’s gotten all the press during the last few years. And it just sounds good. WIN–WIN. Everybody wins! But not so fast …

As mentioned earlier, in 1981, a 200-page paperback book written by Fisher and Ury—Getting to Yes—quickly became a national bestseller. It immediately had a huge impact on how negotiations were conducted in the commercial marketplace and, if I remember correctly, made the crossover to affect government negotiations around the 1987–1988 time frame. All of you, if you don’t already, need to own a copy of that book.

In Getting to Yes, the authors pointed out that the predominant style of negotiating (they called it the confrontational method or positional bargaining) was not the best way for either party to get what they wanted. Their book recommended replacing positional bargaining with a new method of negotiation they called principled negotiation or negotiating on the merits. If done correctly, they argued, principled negotiation could result in both sides getting what they wanted—a true WIN–WIN situation. Hence, we had the birth of the WIN–WIN, or problem-solving, strategy.

In classic WIN–WIN, you focus on interests, not on positions. Both sides work together to satisfy each other’s needs. You also use open communication to share your needs with each other. Instead of splitting up the “pie” (the thing you’re negotiating for) between the sides, resulting in no one side getting all they want, you collaborate to make the pie bigger, so everybody can get all they want.

The example the authors use is one I’m sure most of you have heard: Two children are quarreling over an orange. Using the old art of positional bargaining, they decided to divide the orange in half (splitting the “pie”). But who gets to cut? Finally they come up with this solution: The one who does not cut gets to pick the first half. Pretty smart, huh? Well, the orange is halved. The first child takes his half and immediately eats the fruit and throws the peel away. The second child takes his half, throws away the fruit and uses the peel for a recipe. As Fisher and Ury say: “Too many negotiators end up with half an orange for each side instead of the whole fruit for one and the whole peel for the other” (Penguin Press, 1981, p. 57). Had the children collaborated, they could have expanded the pie instead of splitting it, and both sides would have been better off.

So, in WIN–WIN, power is not that big of a player because you don’t try to use it against each other. Instead, both parties realize that they have shared objectives, not mutually exclusive positions. The strategic points that naturally follow are:

• A focus on mutual interests, not mutually exclusive and conflicting positions

• Effective listening to determine the interests behind the positions

• Working together, not against each other, to come up with creative solutions.

But—and this is crucial—for the WIN–WIN strategy to work, both parties need to agree to use it. Both parties have to play by the WIN–WIN rules. Here’s a tip. If you are all sunshine and lollipops about WIN–WIN and the other side is pumping WIN–WIN right back at you, but secretly planning a WIN–LOSE strategy, you’re going to get hammered in negotiations. So, for WIN–WIN to work, both sides have to trust each other. You’ve got to focus on interests, not positions. And you’ve got to be committed to seek out creative solutions actively that are best for both sides.

Now, although I hear government negotiators talking about WIN–WIN all the time, please realize Fisher and Ury didn’t write Getting to Yes for a government audience. There are serious obstacles to putting the WIN–WIN strategy to use in the government contracting arena.

First, there’s the history of government/industry relations. It used to be horrible. We had a very adversarial relationship with our contractor base. That’s the reason we came up with things like cost accounting standards, cost or pricing data, and all those certification requirements. They didn’t like us and we didn’t trust them. It’s gotten a whole lot better now, but some hard cases on both sides will always remain wary of WIN–WIN because of history.

Next, contractors are trained on WIN–LOSE gamesmanship. They’re taught all the “tricks of the trade” to maximize that shareholder wealth we talked about earlier. To make matters worse, the government side lacks truly effective training on WIN–WIN. Have any of you received any training on this before you had to negotiate? Probably not. Government training, when it exists, is still heavy on positions and positional bargaining, not what Fisher and Ury would call principled negotiation.

Another obstacle to WIN–WIN is sometimes your own bureaucracy and upper management. You may want to try a WIN–WIN approach, but your upper management (who were around in the dinosaur days when we had an adversarial relationship with our contractor base) may veto that approach. “You can never trust those cheating, nasty, blankety-blank contractors!” You’ve probably heard something like that or close to it.

Finally, federal law itself often precludes truly innovative WIN–WIN solutions like the ones outlined it Getting to Yes. Without going into any great detail, there are laws, applicable only to government acquisitions, that effectively restrict long-term investment, restrict multiple-contract deals, and restrict innovative cash flow solutions such as contract financing and advance payment. These are all-important tools that allow the negotiation flexibility that WIN–WIN requires. So, WIN–WIN is an ideal, but in reality it’s a rarity in its pure form in government contract negotiations.

WIN–Win Strategy

A variant of the WIN–WIN strategy was brought up by Ron Shapiro and Mark Jankowski in their book The Power of Nice (Wiley & Sons, 2001). By the way, don’t let the title fool you; this is another must-have book for serious negotiators. In fact, here’s a quote from their book that they call “the myth of WIN–WIN”:

Negotiation experts (and amateurs) have been preaching WIN–WIN for some time. The trouble is, it’s unrealistic. The expression WIN–WIN has become more of a pop cliché than a negotiating philosophy. It’s either a winner’s rationalization for lopsided triumph, a loser’s excuse for surrender, or both sides’ phrase for when everybody is equally unhappy. There’s no such thing as both parties winning identically, that is, both getting all of what they want. One party is bound to get more and one less, even if both sides are content with the outcome. The latter is possible. Both parties can be satisfied, but both cannot win to the same degree. (p. 45)

Folks, does this make sense, even at the expense of throwing some cold water on the WIN–WIN negotiation philosophy? What Shapiro and Jankowski are talking about is another form of negotiation strategy. It’s called WIN–win (big win for you, little win for them; or, simply, big win–little win). With this strategy, either side may have the predominant position of power. Relative power is a player, but it is not the overriding factor. The same goes for interests. They may overlap, intertwine, or be totally mutually exclusive.

With WIN–win, we achieve all or most of our goals while letting the other side achieve some of their goals. Now, all the same strategic points of WIN–LOSE can be used, but you also take action to satisfy the other party’s interests. You probe the other side’s position to determine what the other side really wants. Once you figure it out, you satisfy your interests well and their interests acceptably. Because you have allowed their side to achieve interests that are important to them, they walk away feeling as if they have won! Now do you see why it is so dangerous to attempt WIN–WIN if the other side is secretly planning WIN–win or WIN–LOSE?

The WIN–win negotiation approach includes the following:

1. Never make the first offer. It’s a negotiating axiom that the person who puts the first number on the table loses. The other side, if they’re smart, will immediately use the tactic of bracketing your number. We’ll discuss bracketing when we get to tactics.

2. Never accept their first offer. We’ll teach you how when we describe the vise tactic a little later.

3. Ferret out their true interests, and satisfy them, but not at the expense of your goals.

So, to recap, there are four basic negotiation strategies: WIN–LOSE, loss prevention, WIN–WIN, and WIN–win. Now in reality, most negotiations are a complex combination of these four strategies, and yours has to be able to change quickly to adapt to new situations or information. Because of this, you have to know how to apply all four strategies equally well.

Let’s take a quick look at where we are. In developing the negotiation plan, we’ve covered the four types of strategies you can use and when to use which one. In a little while, we’ll go over some tactics to back up your strategies, but first let’s finish our negotiation plan by talking about schedule and logistics considerations.

SCHEDULE AND LOGISTICS CONSIDERATIONS

In this last section of your negotiation plan, you’ll draw up your anticipated schedule of events leading up to and ending in the completed negotiation, with anticipated times for major milestones along the way. You’ll also address logistics issues—those little details that can create or frustrate a smooth negotiation event.

More than likely, your agency’s FAR Supplement will require you to get some kind of higher level approval of your prenegotiation objectives and your negotiation plan, so prepare for it and build that time into your schedule. The approval process may be done orally or in writing. You need to make sure your management understands and approves of your objectives, issues, selection of team members, roles, schedules, and planned concessions. Some of your agencies already have templates they want you to use for this approval process to make sure you cover all the bases they want you to cover.

Folks, use this approval process to catch errors and to get a feel for how much negotiation room, or leeway, you have been given by your upper management. This, in turn, will strengthen your confidence at the negotiation table—and confidence is a key ingredient to a successful outcome. During my career, I’ve heard some COs grumble at the thought that someone else has to review their work—“micro-manage them,” they say—especially if the action to be negotiated is within their warrant level. Please don’t take this attitude.

When you’re preparing for negotiations, you want to use every extra set of eyes and every additional brain possible to make sure you’re truly ready, haven’t missed anything, and are thinking clearly. Even the experts mess up. And the other side is doing the same thing. Most likely they’ve already subjected their negotiation plan to several reviews, including what’s called a red team review of disinterested third parties. They’re going to be ready. You should be happy to accept any additional help you can to get ready too.

As far as the location of the negotiation site, you will usually have home court advantage because you are the government and the buyer. Don’t let the other side talk you into conducting the negotiation at their place or even a neutral location unless it absolutely can’t be helped. You want home court advantage. With home court advantage, you’ll be more comfortable and confident. You also are surrounded by your trappings of power as a government negotiator (remember, legitimate power). You have better control over time, quicker access to information, and, more important, you have control over your physical surroundings. We’ll talk more about what an advantage that can be when we discuss tactics.

Make sure to line up your supporting cast prior to the meeting. I’m not talking here about your negotiating team. You want to have people available to take minutes, make copies, facilitate lunch, do quickly needed research or confirm data, and keep the room clean. Try not to delegate any of these functions to one of your negotiation team members. They’ll be too busy to be distracted by these things. Plan ahead.

By the way, you always want to be the side that takes the official minutes. That won’t usually be an issue because you are the government team and are expected to take the official minutes, but don’t let the other side talk you into letting them “be nice” and take that “burden” away from you. Simple word choice or word placement or tiny word omissions can totally alter what you thought the agreement meant. You want to keep the “power of the pen.”

Now, as far as the physical site, remember you usually will be the host, so act like a host. Make sure:

• The room is large enough.

• Lighting is adequate.

• There are enough chairs and they are comfortable.

• Table space is adequate.

• Audio/visual equipment is set up and working if it is needed.

• A second room is available for private caucuses.

• There is easy access to phones, computer lines, and so forth.

• Paper, pencils, and pens are available for each attendee, and extras are available.

• Essentials like coffee, snacks, restrooms, and so on, are available.

• Water, ice, and drinking glasses are available in the room.

• A large wall clock is available and can be seen by everyone in the room.

• Parking spaces and passes, if required, are prearranged for the other side’s team members.

• Escorts are available for negotiations in secure or classified areas, and are available for the other side during breaks. Preferably, escorts should not be members of your own negotiation team. (You’ll see why this is important later when we talk about the caucus tactic, the walk-in-the-woods tactic, and the concept of dividing and conquering.)

Who knows? Your graciousness may be rewarded by an unexpected concession from a contractor who feels obligated to reciprocate in some way. Don’t laugh; it happens! We’ll talk more about setting the stage for the negotiation later. After you’ve made all these arrangements, make sure they’re reflected in your negotiation plan and all your team members have a copy so everybody knows what’s going on.

Obviously, you won’t send the other side a copy of your negotiation plan. You’ll tell them what they need to know—and only what they need to know—when you send them a copy of your draft agenda, which we’ll talk about a little later.

We’ve now finished our negotiation plan (whew!), except for identifying the preplanned tactics (which we’ll discuss later). After you rehearse the plan and develop your agenda, which we’ll talk about in the next chapter, you’ll be ready—finally—to negotiate.