The Business Negotiation Principles - Essay Example

Negotiation Principles In order to bid, the contactor should know if the procurement actually exists, that is if it is real. The contract must know if the government has a real schedule to support its program. The schedule should be one that can be followed to meet the objectives of the project in question without extreme difficulties. Also considered is if there is enough and available funding to see through the life cycle of the project. This is verified by the past experiences of the government on such projects. In his biding decision the contractor considers the likelihood of him being awarded the contract so that venture is not made into contracts he is not qualified for or sure he will not stand a chance. Top on contractors’ mission is if there is good communication between him and the government section offering the contract (Emmett 139-144). A successful proposal must have precise objectives and goals the project intends to achieve. The proposal therefore is represented with clear questions and answer in the performance work statement in order for the government to monitor and evaluate the projects final results and progress effectively. A statement of objectives is also required to enable the government to provide a list of the outcomes it expects. The proposal has the goal measure ascertaining when the project is complete and contractors’ payments justification period. A plan assuring quality work is also include. This covers procedures for establishing and handling services not done or is Incomplete and when to involve performance motivations. It should also provide the cost of every activity, that is, cost for every phase, summery and all tasks of the project. Finally the proposal should develop performance requirements which are measurable (Emmett 139-144). The pricing techniques used include: lump sum, unit price and cost plus fee. Lump sum pricing is where the government gives the contractor a specified amount for completed work. Payment is made in monthly installments of up to twelve months without requiring breaking down of costs. The government applies this technique so as to avoid unexpected risks like replacement and also for surety of appropriate use of money on every phase of the project. Unit pricing is where amount is only paid for completed phases of the project. The government may opt to use this technique when the risks involved depend on the efficiency of the contractor handling the project. Cost plus fee is a pricing technique where the principal (government) reimburses contractor for the cost and therefore pays a fee for profit from the project and also pays a percentage of general overhead costs. Government applies where contractor has longtime reputation and has earned trust and confidence (Emmett 150-154). Cost estimation systems are systems that are used to approximate cost of products, project or program when undertaking a project. These cost estimation systems include: (1) planning estimate system that gives a rough estimate of costs within a range of reasonable value. (2) Budget estimate system which estimates data cost that is well-defined and also designs ground rules. (3) Firm estimate system that approximates figures of data cost which can be used in a binding contract. (4) Not more/less estimate system which approximates the minimum and maximum cost of accomplishing a task. The system makes proper approximation of costs of various sections of the project life cycle. Government uses grants and cooperative agreements to oversee the project when it is not involved programmatically. Cooperative agreement is a signed understanding between two parties and it contains rules and statement of work to be undertaken (Emmett 153-161). Large contracts in government need clarification of issues noted by the parties drafting proposals for submissions. When an offeror realizes some ambiguities with the proposal, he is required to notify the relevant commission in writing. This notification should be submitted within a period of 5 working days and should be done prior to the set date for the receipt of these proposals. The offeror might raise any issues that he feels are not well addressed, errors, ambiguity or discrepancy found in these documents. Much as this process is of necessity, it might amount to some form of coercion between the parties. It is normally fair that the procuring entity does not meet the offeror until the opening date of the proposal in order to prevent any form of backdoor solicitation. The conversation process may evoke corrupt practices if not professionally handled (Emmett 176-181). Main objective of source selection process is to select the presented proposal which represents the best value and thereby seeing it awarded to the right contractor. The contracting officer is the authority during the process. The source selection team must be well disciplined to ensure efficient continuity of contracting process. This calls for them to have better skills in logistics, contracting, technical and legal and administration to ensure a comprehensive evaluation of the presented proposals by the contractors. The team considers certain areas in their selection to base on while undergoing the selection activity. These include using evaluation principles while examining cost, management and technical proposals and making effect on contract giving strategy. It also contacts or involves the suppliers so as to get the right information of the market trends (Emmett 163-176). The most risky point in any acquisition process is during contract execution. In most cases, there abounds the risk of the contractor not fulfilling his obligations as outlined in the proposal and during contract signing. It is therefore; very important for the contract management officer to be strict in enforcing the terms and conditions outlined in the contract agreement. If the contractor fails to honor his word, then the process of acquisition becomes stalled. There are various techniques that could be used to mitigate against such risks. One is a thorough evaluation of the contractor in terms of his capacity to deliver as promised. Constant monitoring and reporting any form of deviation should be noted and addressed. In cases of purchases, the procurement professionals should counter check the goods so as to verify they are in conformity with what was promised in the contract (Emmett 631-9-11, 631-9-15). Government normally does combine most of its ownership processes into one contract of acquisition thereby reducing the costs associated with the purchase and ownership process. For instance, a government could come up with contracts for the sole ownership of some unique items which are known to have low supply to mitigate huge price fluctuations in future. Purchase of other government items such as vehicles is done once within budget to have a single procurement process done after a long period of time. These practices are meant to reduce costs of contracting, transportation and all other acquisition expenses. Also, if a program is to be implemented by the government, reduction or doing away with partnerships normally mean the government controls the process and is able to make independent decisions (Emmett 183-186). Regulations and rules that govern cost in government contracting depend on the entity that is in question for example commercial entities or educational institutes. It is a requirement that individual deviations from the set rules and procedures get an advance approval from the head of the agency. The pricing models are based on the nature of the contract i.e. whether fixed-price or non-fixed. While applying these principles to fixed contracts and the other subcontracts, it is not a requirement to impose negotiation agreements onto the cost’s individual elements to arrive at the total price. The contracting officer has the duty of incorporating the procedures and principles relevant to cost in circumstances appropriate to them and shall have to make reference to the facilities contracts. This will be applied on the basis of determining the relevant reimbursable costs, the negotiation of indirect rates of cost and costs of contracts terminated if at all the contractor decided to voucher out such costs (Emmett 187-194). Allocable cost are costs for a given objective when commodities involved can be charged or assigned to that particular cost objective in harmony with benefits that are received. The cost should be incurred alone when advancing the project that has been sponsored and accepted in the agreement existing. Also a cost is said to be allocable when the cost set aside for the sponsored agreement benefits both the work of the institution and the contractor of which can reasonable be approximated. Allowable costs are costs that can be charged to the contract. The cost is reasonable in the sense that they are essential part of the business. Allowable and allocable costs are not interchangeable. Only the principals governing them are related in their mode of operation (Emmett 187-192). Government follows a given standard format while drafting contracts. This format is meant to ease the process of contracting in government since there are different levels at which government contracts yet the process is meant to be the same and is standardized through policies of procurement advocated for by the government. In FAR 14.2, there is a contract package that is in standard form 1442 of solicitation, offer and award. This form has entry blocks where the parties to a government contract can enter their information. These blocks are found under various headings. The process that is followed is the project title; contract number; followed by appropriation data; time for the receipt for the requested bids; the period needed for contract performance; this is followed by acknowledgement of the amendments to the contract; the contract price; and then the signatures of the given contractor as well as the officer that is contracting. The contract form is normally part of the solicitation and eventually it is made the first page of any government contract awarded when it is being executed by the officer that is contracting (Emmett 213-220). Works Cited Emmett E., Hearn, Federal Acquisition and Contract Management - 7th Edition, Hearn Associates Read More