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Fee on Negotiated Changes


Zag2009

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Guest Vern Edwards
6 hours ago, PepeTheFrog said:

Negotiation almost always involves some deception or "misrepresenting facts." PepeTheFrog thought this was a forum for contracting professionals, not naive Puritans. PepeTheFrog smells some (exclusively) federal employees who have never been subjected to reality. 

@PepeTheFrog

Anyone who tells a deliberate lie during contract negotiations is making a serious mistake. If I were a CO, and if I caught you in a deliberate, substantive lie during price negotiations, you would pay dearly. Dearly. You cannot imagine the price that I would exact from you, and perhaps from your employer, for that transgression. At a minimum, my  program manager would be on the phone to your program manager before the day was out, reading from my script, and my lawyer would be on the phone to yours.

My goal would be to ensure that you did not survive the drama.

I like you, Pepe, but that was bad. The "reality," as you call it, that some people lie during negotiations, does not make it a permissible practice.

Some thoughts for you:

  • Bluffing, while not necessarily lying, is a very dangerous tactic and can be self-destructive. If you say or indicate that you'll walk if the other side does not make a concession, you'd better go through with it. If you don't, you're done for.
  • As for hiding information, someone might call it defective pricing.
  • Don't say you that don't have authority unless you've made sure that you don't. (A smart negotiator does not want authority to settle at other than the approved negotiation objective.) And don't say "That's the best I can do" unless you've made sure that that's the best that you can do. 

Government contract negotiators are not Soviet SALT negotiators and shouldn't act like they are.

As a contract negotiator, your integrity is your most powerful tool.

 

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Guest Vern Edwards
7 hours ago, Zag2009 said:

The contract is cost-reimbursement (thankfully...now I can sleep at night).  The dollar figure associated with the fee proposed and the fee countered by the government is in the millions.  Therefore, as you can imagine, we don't want to concede without a fight.  We asked for what we believed was a reasonable fee based on risk, in line with previous modifications for similarly scoped work.  The government's argument isn't that the fee is too high for the work being performed, just that since the work is complete, the risk no longer exists.  In other words, had this been negotiated prior to completion of the work, I presume the fee rate proposed and that countered by the government would be much closer.   

I was hoping for past precedence that would support our argument that the fee should be based on the risk of the originally proposed work, but it appears we will just have use our best negotiation skills to justify the higher fee.  As always, thank you for your input.

@Zag2009

Do not negotiate on the basis of risk. Not only has the work been done, but there was never much risk to your company under an undefinitized change to a cost-reimbursement contract, except, perhaps, the risk of a poor past performance rating. And by the way, under an undefinitized change to a cost-reimbursement contract, the delay in settlement has hurt the government, not your company.

The key to the negotiation is the effect of the change on the amount and quality of the effort your company had to make.

Do this:

  • Baseline your negotiation strategy on the rate of fee in the contract as originally awarded. Say it was 6 percent. It is unlikely that a board or court would give you a higher rate of fee than that.
  • Compare the complexity and difficulty of the work under the original contract with the complexity and difficulty of the contract work as changed. If the work was more complex and difficult after the change, requiring more intensive management, more or more highly skilled supervisors and workers, or more or better facilities or equipment, then aim for a modestly higher rate of fee in the equitable adjustment--say 7 or 8 percent. Be prepared to describe how the work as changed was more complex and difficult and how it affected the effort that your employer was required to make. Provide ample substantive documentation of the effect of the change. Overwhelm them with good, verifiable information. Pour it on. If you can't get any rate increase, then you'll have to decide whether to settle or litigate. Talk to your lawyers.
  • If the work was the same in terms of complexity and difficulty after the change, and did not require more and better effort, then argue for a slightly higher rate of fee in the equitable adjustment to compensate you for change integration planning. Say, 6.5 percent. Aim to get no less than the same rate of fee as in the original contract.
  • If the work was less complex and difficult, then still argue for the same rate of fee for the equitable adjustment as in the original contract, but be prepared to settle for a modest fee rate reduction, say 5.5 to 5 percent.
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5 hours ago, PepeTheFrog said:

@here_2_help is getting heat for making an accurate observation and holding a realistic, sober viewpoint that reflects reality and human nature (and human evolutionary psychology). Language helps us communicate. Language also helps us deceive. Don't shoot the messenger.

Negotiation almost always involves some deception or "misrepresenting facts." PepeTheFrog thought this was a forum for contracting professionals, not naive Puritans. PepeTheFrog smells some (exclusively) federal employees who have never been subjected to reality. 

If it doesn't, why are some people better at negotiating than others? Think about what makes someone a strong negotiator. Here are some:

*bluffing (lying, misrepresentation) 

*knowing what to say (hiding information)

*knowing what not to say (hiding information)

*appealing to the interests of the other party (deceiving someone to think their interests coincide with yours)

*using emotions, psychological weaknesses, cognitive biases, to persuade (Cialdini's Influence has a solid list of these short-circuits)

*"I don't have the authority" (misrepresentation)

*"That's the best I can do" (misrepresentation if not an outright lie)

*"That's too steep" (misrepresentation if not an outright lie)

Those are just a few. They all involve "misrepresenting the facts" or deception. 

Sure, laws (e.g. fraud, False Claims Act) proscribe going "too far" in misrepresenting the facts, and that's vital to having efficient and transparent markets. But misrepresentation is a fundamental part of negotiation. It's best to minimize misrepresentation and deception through (a) habituation by institutions like juries, common law, rule of law, insurance markets, (b) cultural and therefore genetic reinforcement through making truth-telling a heroic act that is rewarded by material goods (e.g. science and technology), and (c) steep penalties for "crossing the red line" of misrepresentation or deception (e.g. the common law of fraud). But up to that red line... 

Is PepeTheFrog incorrect? (Spare PepeTheFrog nonsense about morality.)

 

Honestly, I don’t even know what your position is because you’re constantly hedging in your remarks...at one point you advocate for misrepresentation based on some realist view of negotiations, then you pivot to arguing that some forms of misrepresentation are improper by referring to a red line and stating “it’s best to minimize misrepresentation and deception.”  So which is it?  Apparently I don’t even need to write a response because you’re effectively arguing against yourself!

When I tried to inquire about a specific instance of misrepresentation to discuss, you were unwilling to take a position...but you persisted in asking if you are incorrect.  Well, if your position is misrepresentation is an effective and permissible practice in negotiations, then I say yes, you are absolutely incorrect (see next paragraph).  As for your final remark to “spare PepeTheFrog nonsense about morality,” that makes it near impossible to properly have a discussion about the concept of “negotiating in good faith” which is as much a moral/ethical issue as it is a practical one.

But since you only want to address this concept in terms of real world applicability, I’ll bite.  What is actually “naive” is to think that there are no negative real world implications to the strategy or tactics/practices you advocate.  Apparently frogs are only concerned with the short term (which isn’t surprising since your life expectancy is only 10-12 years), but I approach negotiations with the long term in mind (as should others negotiating Government contracts because these are often 5+ year deals).  Unless the negotiation is a one time transaction with no future interaction (aka buying a car could be an example) the resulting deal is only one outcome of the negotiation, another outcome, arguably a more important one, is the relationship between the negotiating parties.  At some point, your “misrepresentation” scheme is going to fail (it’s a matter of basic probabilities that with each subsequent misrepresentation you will inevitably be caught - surely you’ve read NNT’s latest book so you should know this - moreover, with an experienced, well prepared negotiator it’s highly likely misrepresentation will fail sooner rather than later).  So when you do get caught, then what?  You’ve lost all credibility, you’ve damaged the relationship with the other party, and you’ve potentially exposed yourself to penalties or litigatation depending on the severity of the misrepresentation.  Those aren’t risks worth taking, particularly when there are equally (I’d even argue more) effective ways to negotiate.  Ultimately, good contract management requires a good relationship between the parties and your tactics risk poisoning the ultimate outcome (remember, the contract is not the ultimate outcome, it merely embodies the promises of the parties to reach some defined outcome(s)...they still have to work with one another for some period of time to reach that end state).

Vern’s right: any competent party should/would make you pay a heavy price if you’re caught employing these tactics you think are better and stronger.  Do yourself a favor and stop assuming those you disagree with are incompetent, soy milk drinking, non-deadlifting, unprofessional federal employees (after reading NNT’s books I now know where you get most of your jibes from...maybe you should change your moniker to PepeTheParrot).  This pessimism disguised as realism may sound cute when written on these forums, but this isn’t effective or good advice for contracting professionals.

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Examples of negotiation tactics where short term goals overcome long term objectives:

1. Government CO says DCAA audit report supports the position that contractor is ineligible for contract award. The DCAA audit report expressly disclaimed an opinion--i.e., stated in writing that the CO could not rely on it. (GAO B-403214; B-403214.2, Oct, 2010) Did the CO misrepresent the DCAA audit report? Yes.

2. Contractor says CDA statute of limitations prevents government from asserting a claim. The facts are cloudy and may not support the contractor's assertion. In litigation, motion for summary judgment denied. (Many cases.) Did the contractor misrepresent the application of the SoL? Perhaps.

3. COFD issued based on "plainly invalid legal theory" originated by an auditor, despite contractor's attempts to negotiate resolution. (LMIS, ASBCA No. 59508) Did the CO misrepresent the validity of the government's position? Perhaps.

4. USAF refuses to accept contractor's information and insists on holding its PNM goals, unilaterally definitizes UCA when negotiations stalemate. (L-3, COFC). Did the USAF misrepresent the reasonableness of the contractor's pricing? Or did the contractor misrepresent the reasonableness of its own pricing? To be determined.

To my knowledge, nobody paid any price for such tactics.

Thesis, antithesis. Synthesis. It's how the world works.

 

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@here_2_help

(I’m going to call it what it is now instead of this “misrepresentation of facts” because you’re using my kindness with language to pivot) Yesterday you advocated for outright misrepresenting facts lying about paying loan interest costs in order to win a negotiation on fee.  This behavior you cite (and probably plenty you don’t cite) has clearly jaded you to the point where you think such behavior is permissible (others think it is strategically valuable).  If that isn’t a case in point I don’t know what is.

As for your examples, maybe #1 fits the bill of this discussion (and if #1 happened without any price paid for such a tactic then maybe these non-government officials aren’t as amazing as you allege); however, you’re stretching quite far on #2-4 (situations where we may not be dealing with facts or the facts are in dispute).  Moreover, you’re not responding to the specific argument at hand. I never said all short term interests are outweighed by long term interests; my argument is specifically in regards to knowingly misrepresenting facts lying.  You don’t seem inclined to engage in that discussion nor recant your previous recommendation and I won’t persist any further.  I think such behavior by anyone, the Government or the contractor, is unethical, counter productive, and inexcusable.

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Guest Vern Edwards

 

@here_2_help

All of your examples are ambiguous or vague and prove nothing about misrepresentation.

9 hours ago, here_2_help said:

1. Government CO says DCAA audit report supports the position that contractor is ineligible for contract award. The DCAA audit report expressly disclaimed an opinion--i.e., stated in writing that the CO could not rely on it. (GAO B-403214; B-403214.2, Oct, 2010) Did the CO misrepresent the DCAA audit report? Yes.

Do you mean that the CO lied about the content of the DCAA audit report or that he argued that statements actually in the report support an inference that the contractor is ineligible?

9 hours ago, here_2_help said:

2. Contractor says CDA statute of limitations prevents government from asserting a claim. The facts are cloudy and may not support the contractor's assertion. In litigation, motion for summary judgment denied. (Many cases.) Did the contractor misrepresent the application of the SoL? Perhaps.

What do you mean when you say that the facts are "cloudy"? A fact is something that is true. (Look it up.) If evidence or the lack thereof supports more than one assertion of what the facts are, then the facts are unknown. Based on its own beliefs about the facts, the contractor might legitimately argue that the statute of limitations bars a government claim, although that conclusion might turn out to be false. Does the contractor know what the facts really are? Does it know that the government's claim is, in fact, timely? Is it withholding that knowledge? Is it knowingly making a false assertion? Is it lying?

9 hours ago, here_2_help said:

3. COFD issued based on "plainly invalid legal theory" originated by an auditor, despite contractor's attempts to negotiate resolution. (LMIS, ASBCA No. 59508) Did the CO misrepresent the validity of the government's position? Perhaps.

Did the CO believe that the legal theory was sound, or did he or she know that it was not, and thus that the final decision was not sound?

9 hours ago, here_2_help said:

4. USAF refuses to accept contractor's information and insists on holding its PNM goals, unilaterally definitizes UCA when negotiations stalemate. (L-3, COFC). Did the USAF misrepresent the reasonableness of the contractor's pricing? Or did the contractor misrepresent the reasonableness of its own pricing? To be determined.

I don't understand "refuses to accept the contractor's information." Are you saying that the USAF refused "to accept the contractor's information" are you saying that the USAF knew what the information was, that the information was true and that it supported the contractor's arguments, and yet, despite that knowledge, rejected the information as false or irrelevant?

Look---anyone can come up with examples of people doing the wrong thing. No one is saying that no one ever lies (although your assertion that Government negotiators "routinely" misrepresent the facts is not only vague, but is unprovable no matter what you mean by "routinely").

The point is that doing the wrong thing is wrong. It is not acceptable. Lying to a prospective business partner is wrong, and there should be consequences when a person intentionally lies about substantive matters during a contract negotiation.

Finally:

9 hours ago, here_2_help said:

Thesis, antithesis. Synthesis. It's how the world works.

Huh? I hope you're not referring to the Marxist theory of history as expounded in his The Poverty of Philosophy? Man, I'm impressed if you have read that. I'm really impressed if you understood it.

Quote

If we had M. Proudhon's intrepidity in the matter of Hegelianism we should say: it is distinguished in itself from itself. What does this mean? Impersonal reason, having outside itself neither a base on which it can pose itself, nor an object to which it can oppose itself, nor a subject with which it can compose itself, is forced to turn head over heels, in posing itself, opposing itself and composing itself – position, opposition, composition. Or, to speak Greek – we have thesis, antithesis and synthesis. For those who do not know the Hegelian language, we shall give the ritual formula: affirmation, negation and negation of the negation. That is what language means. It is certainly not Hebrew (with due apologies to M. Proudhon); but it is the language of this pure reason, separate from the individual. Instead of the ordinary individual with his ordinary manner of speaking and thinking we have nothing but this ordinary manner purely and simply – without the individual.

Quote

All things being reduced to a logical category, and every movement, every act of production, to method, it follows naturally that every aggregate of products and production, of objects and of movement, can be reduced to a form of applied metaphysics. What Hegel has done for religion, law, etc., M. Proudhon seeks to do for political economy.

So what is this absolute method? The abstraction of movement. What is the abstraction of movement? Movement in abstract condition. What is movement in abstract condition? The purely logical formula of movement or the movement of pure reason. Wherein does the movement of pure reason consist? In posing itself, opposing itself, composing itself; in formulating itself as thesis, antithesis, synthesis; or, yet, in affirming itself, negating itself, and negating its negation.

:blink:

Do you own your own copy or did you check it out of the library?

Dude! I'm impressed! Did you read Hegel, too? Phenomenology of Mind? (aka, Phenomenology of Spirit) Nearly killed me in my 19th Century Philosophy class at UCLA. I actually broke down and cried when I tried to understand Hegel. Really. At the Powell Library. At 2 a.m. It's a fact.

Give us a break. 

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Guest PepeTheFrog
3 hours ago, Vern Edwards said:

The point is that doing the wrong thing is wrong. It is not acceptable. Lying to a prospective business partner is wrong, and there should be consequences when a person intentionally lies about substantive matters during a contract negotiation.

Vern, PepeTheFrog appreciates your feedback on the costs of using the negotiation tactics that involve misrepresentation. PepeTheFrog agrees. The best cultures, institutions, organizations cultivate a very high price for lying. 

 

16 hours ago, Vern Edwards said:

you would pay dearly. Dearly. You cannot imagine the price that I would exact from you, and perhaps from your employer, for that transgression. At a minimum, my  program manager would be on the phone to your program manager before the day was out, reading from my script, and my lawyer would be on the phone to yours.

PepeTheFrog believes that Vern Edwards has done or would do this. However, PepeTheFrog wants to point out that Vern Edwards is likely very low on the agreeableness personality scale (which is most definitely not an insult), has a very high degree of competitiveness, and an even higher degree of conscientiousness and industriousness which leads him to value truth-telling much, much higher than the average negotiator, or the average government contracts negotiator, on either side of the table. Vern, this is a complement to you. Therefore, Vern creates one the highest prices for lying in the market. Vern raises the stakes and make any form of misrepresentation or lying have an extremely high cost. This is a good thing to have for a negotiator, an arbiter, a judge, a lawyer, a leader, a manager. 

However, that's Vern Edwards, not the rest of the market.  

 

16 hours ago, Vern Edwards said:

Anyone who tells a deliberate lie during contract negotiations is making a serious mistake.

If so, serious mistakes occur thousands, if not millions, of times every day on Earth. Don't ever buy a rug from a bazaar!

13 hours ago, Matthew Fleharty said:

misrepresentation is an effective and permissible [PepeTheFrog: widespread] practice in negotiations

Fixed it to reflect PepeTheFrog's position, rather than your various straw men to burn at the stake. 

13 hours ago, Matthew Fleharty said:

incompetent, soy milk drinking, non-deadlifting, unprofessional federal employees (after reading NNT’s books I now know where you get most of your jibes from...maybe you should change your moniker to PepeTheParrot).  This pessimism disguised as realism may sound cute when written on these forums, but this isn’t effective or good advice for contracting professionals

PepeTheFrog read the first NNT (Nassim Nicholas Taleb, for the other frogs out there) book very recently, years after being able to spot soy boys and using similar jibs. You should consider that NNT is not the only source for any of the jibes you listed. There's a big, wide world out there.

PepeTheFrog's main criticism of your argument style is that you rally and shame, and are quick to argue the person. You also throw around morality when others might be more interested in the truth or reality. Who are you rallying? Fellow Internet forum members? Who are you shaming? It's kind of silly.

13 hours ago, Matthew Fleharty said:

Apparently frogs are only concerned with the short term (which isn’t surprising since your life expectancy is only 10-12 years), but I approach negotiations with the long term in mind

PepeTheFrog agrees with your analysis following this intro. It's all accurate. Let PepeTheFrog translate: Negotiators vary their level of deception, lying, misrepresentation, depending on the circumstances and relations of the parties. Many future negotiations, ongoing relationship between the parties = higher cost of deception. One-time transactions between strangers = low cost of deception. Matthew, you're spot-on.

Matthew, professionals understand their profession, including the beautiful and the ugly parts. PepeTheFrog, like here_2_help, is pointing out the ugly parts.

PepeTheFrog maintains his defense of @here_2_help as getting criticized for speaking frankly about reality, instead of spinning into a moral fervor. 

Wake up, frogs! People lie, misrepresent, bluff, and do all sorts of shady things during negotiations. Worst of all: Lying works sometimes! That doesn't mean it's morally good. Stop clutching pearls. 

This is one of the most interesting Wifcon discussion threads PepeTheFrog has seen in years. PepeTheFrog wonders if some are talking past each other, perhaps staying on different sides of the "is-ought" distinction. 

PepeTheFrog greatly appreciates all the discussion, especially from Matthew and Vern. 

***edited because PepeTheFrog had an incoherent comment about "permissible" 

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Pepe the Frog:

I've been reading this discussion and I agree.  I think it is interesting and I've been reading it for content.  As the administrator, I try to keep my opinions to myself.  This fascinating and persuasive discussion began as the 4-line question below:

Quote

We are a government contractor in negotiations for a change to our contract.  We originally proposed a set fee at X%.  Negotiations have taken well over a year.  Now the agency wants to reduce the fee to Y% claiming that since the work is complete, the risk is now lower than originally proposed, therefore justifying a lower few percentage.  Has anyone have any experience with a similar situation and if so, what counter arguments have you proposed against reduced fee? 

That is why I try to stay out of the Members' way.  You all are what makes this forum work--not me nor my wishes.

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30 minutes ago, PepeTheFrog said:

Fixed it to reflect PepeTheFrog's position, rather than your various straw men to burn at the stake. 

Strawman? Please - if anyone is guilty of using strawmen here it's you by (a) re-characterizing @here_2_help's clear statement that one should lie during negotiations and (b) trying to lump in issues like withholding information into my initial objection.  If I mis-characterized your argument, I apologize, but as I stated in my previous post, yours was all over the place to begin with (clearly a slippery frog like yourself doesn't like being pinned down and was able to wiggle out).

30 minutes ago, PepeTheFrog said:

Matthew, professionals understand their profession, including the beautiful and the ugly parts. PepeTheFrog, like here_2_help, is pointing out the ugly parts.

PepeTheFrog maintains his defense of @here_2_help as getting criticized for speaking frankly about reality, instead of spinning into a moral fervor. 

Wake up, frogs! People lie, misrepresent, bluff, and do all sorts of shady things during negotiations. Worst of all: Lying works sometimes! That doesn't mean it's morally good. Stop clutching pearls. 

@here_2_helpdidn't point out that lies happen - he said he would willing do so and advised a member of this forum to make the argument regardless of whether or not it was true.  Take a moment and re-read his post:

23 hours ago, here_2_help said:

1. It doesn't matter whether my argument holds water since we are negotiating. Any argument that gets the other side to hesitate, to blink, to lose confidence, is a valid argument.

That's not a case of "this is what happens in the real world so watch out."  That's clearly "this is what I would do."  So yes, this becomes a moral issue when a member of the forum is advising others to engage in outright deception.

If you truly believe those that deceive others should pay a high price, so should those that encourage others to do it.  So Pepe, show us you actually believe what you say and condemn what @here_2_help actually said...not what you mistranslated it into.

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I am with Vern on this and am abhorred at the idea that other than honesty and good faith is necessary or acceptable for successful negotiations.

That doesn’t mean that one can’t open with other than your bottom line position, offer or counteroffer. 

I was a very successful contract, claims and modifications negotiator during my career and didn’t have to lie.  

And I did not tolerate anyone working for me lying either

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Guest PepeTheFrog
45 minutes ago, Matthew Fleharty said:

That's not a case of "this is what happens in the real world so watch out."  That's clearly "this is what I would do."  So yes, this becomes a moral issue when a member of the forum is advising others to engage in outright deception.

PepeTheFrog thinks you have identified the crux of our disagreement and discussion. 

PepeTheFrog sees it as the former "this is what happens in the real world." Matthew sees it as the latter: "this is what I would do" and "this becomes a moral issue." 

PepeTheFrog can't help but complement everyone in this thread for recreating a bastardized version of the ancient discussion between Thrasymachus and Socrates based on the contracting profession and negotiation!

Or maybe Thucycides! Maybe "justice" and "morality" are merely constructs created by the strong (dominant elites) who form a militia, a band, a tribe, a society, a civilization that has certain rules, morals, and justice systems as a means to minimize conflict and maximize cooperation, and these constructs of "justice" and "morality" are a gift from the superior nation-builders and conquerors to the inferior free-riders. Or maybe it's all just hot air!

"right, as the world goes, is only in question between equals in power, while the strong do what they can and the weak suffer what they must" 

31 minutes ago, joel hoffman said:

abhorred at the idea that other than honesty and good faith is necessary or acceptable for successful negotiations.

That doesn’t mean that one can’t open with other than your bottom line position, offer or counteroffer

Hmm...honesty includes opening with other than your bottom line position. Yes, joel hoffman, yes...come to the Dark Side! Let it consume you!

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Pepe, If you don’t know what I meant then you appear not to understand how to develop pre-negotiation objectives; that there can be a range of reasonable objectives for various items or issues that can affect the bottom-line; that there is room for negotiations; how to expect the other party to justify the reasonableness of soft or questionable areas in its proposal or position;   or how to effectively negotiate without making up something or lying. 

Or you might offer an alternative approach for the other party to consider that would be less expensive and/or faster.

Etc.., etc. 

bruther... or sister...

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By the way, only a fool would open a negotiation at their bottom line...unlessYou are not willing to negotiate.

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Guest Vern Edwards
15 hours ago, Matthew Fleharty said:

I approach negotiations with the long term in mind (as should others negotiating Government contracts because these are often 5+ year deals).  Unless the negotiation is a one time transaction with no future interaction (aka buying a car could be an example) the resulting deal is only one outcome of the negotiation, another outcome, arguably a more important one, is the relationship between the negotiating parties.  At some point, your “misrepresentation” scheme is going to fail (it’s a matter of basic probabilities that with each subsequent misrepresentation you will inevitably be caught - surely you’ve read NNT’s latest book so you should know this - moreover, with an experienced, well prepared negotiator it’s highly likely misrepresentation will fail sooner rather than later).  So when you do get caught, then what?  You’ve lost all credibility, you’ve damaged the relationship with the other party, and you’ve potentially exposed yourself to penalties or litigatation depending on the severity of the misrepresentation.  Those aren’t risks worth taking, particularly when there are equally (I’d even argue more) effective ways to negotiate.  Ultimately, good contract management requires a good relationship between the parties and your tactics risk poisoning the ultimate outcome (remember, the contract is not the ultimate outcome, it merely embodies the promises of the parties to reach some defined outcome(s)...they still have to work with one another for some period of time to reach that end state).

I think that what Matthew said is the key to this thing. Of course human beings lie and misrepresent during negotiations. But that is not a justification for following suit. We're talking government contracting here. We're not rug merchants in the Istanbul Grand Bazaar. Let's set morals aside for the moment. You simply cannot lie during contract negotiations to people that you will have to work with on a regular basis on important projects and expect to earn and keep their respect and cooperation.

It's perfectly okay to be tough and argumentative, to make them work for it, especially when there is no "correct" settlement and things have gotten down to hard bargaining. And I don't mind the other negotiator using whatever leverage she legitimately has to her advantage. But as for shady tactics, well, people you negotiate with regularly will figure you out after a while, and it will cost you.

H2H wrote:

Quote

Any argument that gets the other side to hesitate, to blink, to lose confidence, is a valid argument.

According to the principles of deductive logic, that is not true. But if you are arguing a point, I don't mind if you choose your premises in order to construct an argument that supports the conclusion you want me to accept. That's an acceptable tactic. I do mind if you knowingly use false premises and assert that they're true. That's lying.

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Guest PepeTheFrog

That's a big leap, joel hoffman. 

3 minutes ago, joel hoffman said:

justify the reasonableness

Justifying, huh? That sounds much better than misrepresenting. It sounds way better than lying.

3 minutes ago, joel hoffman said:

soft or questionable areas

What makes these areas soft or questionable? When you examine them, PepeTheFrog wonders if you can find something that resembles a (gasp) lie or misrepresentation...

PepeTheFrog isn't calling anyone a habitual liar or attacking anyone's morality.

PepeTheFrog is saying that deception and misrepresentation is a part of negotiation, and anyone who says otherwise is engaging in a form of deception and misrepresentation. 

If there is 100% transparency, there is no need for deception or misrepresentation. At that level, you only need fully reciprocal exchanges of information and fully reciprocal agreements to cooperate. But asymmetry of information is the fact of life in almost all cases, which breeds the need for "negotiation."

2 minutes ago, joel hoffman said:

only a fool would open a negotiation at their bottom line...unlessYou are not willing to negotiate.

You got it. "Negotiate" unless you are willing to be 100% transparent...

If you're not 100% transparent, then you have an incentive to negotiate, to deceive, to lie, to misrepresent, to get a better deal than you would otherwise get with 100% transparency and fully symmetric information exchange. 

 

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Guest Vern Edwards
24 minutes ago, PepeTheFrog said:

Hmm...honesty includes opening with other than your bottom line position. Yes, joel hoffman, yes...come to the Dark Side! Let it consume you!

Pepe: That reflects a fundamental lack of understanding of the art of negotiation. Fundamental. Slow down, Pepe. Think about what you're saying.

Opening at other than your bottom line is not dishonesty.

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Guest Vern Edwards
32 minutes ago, PepeTheFrog said:

PepeTheFrog is saying that deception and misrepresentation is a part of negotiation, and anyone who says otherwise is engaging in a form of deception and misrepresentation. 

I think you're going too far, Pepe, my friend.

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Morality aside, the distinction between principled negotiation and positional bargaining should be noted. I see arguments here that seem to treat them interchangeably. 

Both forms of negotiating have their place. The former is more appropriate for a government contract negotiation setting.

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Principled Negotiation: Not about negotiating “hard” or “soft.” It’s about deciding issues on the merits by seeking mutual gains and resolving conflicts by applying objectively fair standards. Better for sustaining long-term relationships.

Positional Bargaining: How negotiating is traditionally thought of. Entering a negotiation with your idea of a "win" and fighting for it. Because it can often lead to conflict and a win-lose outcome, it's better left for one-off transactions.

Edited by FrankJon
Clarified use of "win-lose outcome."
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3 minutes ago, FrankJon said:

Positional Bargaining: How negotiating is traditionally thought of. Entering a negotiation with your idea of a "win" and fighting for it. Because it can often lead to conflict, and the objective is a win-lose outcome, it's better left for one-off transactions.

Emphasis added: what is this "win-lose outcome" you speak of?  Why would a party willingly enter into an exchange in which they lose (absent something coercing or compelling them to do so)?

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Win - lose means you must win and they must lose.  

Rather, the objective should be for “win-win or no deal”  (Stephen Covey).

And morals should NOT be put aside...

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Guest PepeTheFrog
1 hour ago, Matthew Fleharty said:

Why would a party willingly enter into an exchange in which they lose

Great question! It happens all the time. It could be sheer foolishness, or it could be asymmetry of information. The other side hid information! 

The other party "won" by deception or misrepresentation due to asymmetry of information. The other party "won" by negotiation!

How and why did the "losing" party sign the deal? 

They were persuaded, deceived, to enter into an exchange which they thought was more beneficial than it actually was...they were out-negotiated. Deceived.

If the "winning" party was 100% transparent, and eliminated the asymmetry of information (was completely honest, told the truth, the whole truth, and nothing but the truth), the "losing" party would get a better deal! But that wouldn't be good negotiating, would it? 

What kind of poker player plays with the cards face up on the table? What kind of a negotiator willingly provides 100% transparency and gives away asymmetric information advantages? (Well, the Truth in Negotiation Act was Congress' attempt...)

Deception and misrepresentation is a part of negotiation.

If there is 100% transparency, full symmetry of information, there is no need for deception because it would be useless. The info is there. It's available. Can't hide it. Can't spin it. 

If there is anything less than 100% transparency, full symmetry of information, there is a demand for deception. Deception pays off. Negotiation, including deception, pays off! 

 

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