Negotiation may occur at various stages during the procurement process. However, no negotiation should ever be undertaken unless the expected benefits from the negotiation exceed the anticipated costs associated with it. Typical process stages for negotiation include:
1. After selection of a preferred offeror.
2. Before contract signature.
3. Before any contract variation.
4. Whenever any issue arise during the operation of the contract.
What can be negotiated?
Price is often perceived as a starting point for many procurement negotiations. However, a skilled negotiator first explores the wider opportunities to improve the overall ―value for money‖ package offered to their agency by negotiating better terms and conditions including such matters as:
- Technical support aspects- warranties, lifecycle support, maintenance agreements etc.
- Financial aspects- deposits, payments terms, discounts, payment schedule, travel cost, cancellation penalties etc.
- Risk management aspect- bonds and financial grantees, insurance, warranties type of contract used, service standards, liquidated damages clause etc.
- Management information aspects- access to information, reporting, documentation, attendance at progress meeting etc.
- Government support aspects- government provided facilities and information, access to government staff etc.
- Timeframes- completion dates, delivery dates, milestone achievements, length of contract etc.
- Performance incentives-
- General matters- including packaging and freight, use of specified personnel, subcontracting arrangements etc.
- Price and Quality
