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Negotiation Skills and Tactics

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Guest Vern Edwards

Some of you will remember the thread in which our resident agent provocateur, Pepe the Frog, posted many controversial comments about negotiation ethics and tactics. (Said with affection, Pepe.)

Well, I was wandering about in a bookstore yesterday (a Barnes and Noble in southern California) when my eyes fell on the following title: Kissinger the Negotiator: Lessons from Dealmaking at the Highest Level, by Sevenius, Burns, and Mnookin (Harper 2018). Dust jacket blurb:

"In this groundbreaking, definitive guide to the art of negotiation, three Harvard professors---all experienced negotiators---offer a comprehensive examination of one of the most successful dealmakers of all time."

I bought it, of course.

While the book is about diplomatic negotiations, at least some of its points and tactics ought to be applicable or adaptable to contract negotiations. In any case, it appears that it will be a fascinating read. You might want to take a browse in a bookstore near you.

 

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dEcEpTiOn: the boogieman that makes all the church ladies squeal and faint

Do you think Henry "Realpolitik" Kissinger used deception in negotiation? Do you think a car salesman does? Do you think a car buyer does?

Do you think either side of a federal contracts negotiation does? (Oh, no! Never! There's no gambling in these casinos!)

Let's get this party started again! Come back, church ladies! PepeTheFrog wants to hear some virtue-signalling! Show us how naive you are, how morally upright you want others to consider you to be (which is deception), and how little you've thought or read about human psychology, evolution, and language itself!

deceive: cause (someone) to believe something that is not true, typically in order to gain some personal advantage...give a mistaken impression

Say it with me now: "Deception is a fundamental part of negotiation!"

Examples:

Bluffing: deception

Anchoring or setting expectations high (or low): deception

Low-balling: deception 

Keeping your cards close to your chest: deception

Sharing certain information, but not other information, to influence the other side into thinking you're "worse off" than you are: deception

Saying, "I can't take that deal" or "My boss will kill me if I..." or "I can't make a profit at that number": often deception

Not divulging your entire negotiation position (who would do that, unless you're in a supreme position?): deception, because whether you admit it to yourself or not you cause the other side to believe something that is not true to gain a negotiation advantage...you give a mistaken impression, not the full picture

 

For PepeTheFrog's big-brained frogs only:

Which has a higher cost to produce, truth or lies? 

How does science work? Do we learn about the natural world from justification, or from falsification? 

Do we apply the scientific method to all forms of communication? Do we apply it to speech or writing in negotiation? 

Do we warranty all of our communications? Do we warranty all of our communications in negotiations?

What do you think transactional and M&A attorneys are paid to do? What does "due diligence" mean in the world of M&A? 

Did humans evolve language and communication to tell the truth only, or is it also a mechanism to make deception easier?

Do all societies, cultures, civilizations, people value truth-telling equally? Does extension of trust beyond kin-groups play a role in levels of commercial prosperity? 

Are there different group evolutionary strategies for different groups of humans? Could some groups rely more on cooperation and truth-telling than others? Could some groups rely more on predation and deception than others?

 

 

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Interesting topic, but if one takes PepetheFrog's post literally, every negotiation has deception, and I don't think this is bad.  A negotiation is undertaken so that each side gets the best deal they can.  I am not going to lay all my cards on the table at the start of negotiation, and I don't consider this deception.  To me, deception is if I say I am going to use a certain grade of product and know I am going to use a lessor grade.  Deception is to out and out lie like "Of course I can meet that deadline" when you know you can't.

Saying things like "My boss will kill me if I go any lower" is a way of finessing the deal.  Everyone knows it is part of the game and I don't think of this as a deception.  Keeping my cards close to the chest is not deception, it is a business practice.  Am I going to say that it costs me $10 to make the part but I am selling it for $50?  Of course not (unless I am dealing under TINA).  The buyer should try and get a fair and reasonable price, but it is not my job as the seller to do his homework for him/her.

If I make a product that costs me $1 but I can sell it to you for $30 and you will save $100 per unit manufactured, isn't that worth it?

So, I will employ a certain amount of deception in my negotiations based on the criteria mentioned above, but I do not lie or misinform the other person.  There are many "tricks" we employ to try and get the advantage on our opponent during a negotiation, and this is part of the game. As long as your deception is not one of materially misrepresenting the quality of the product, the delivery date, or the workings of the product, almost all else if permitted in negotiations.

As to Henry Kissinger, I remember reading that the Vietnamese negotiations thought little of the American negotiators.  One commented that when they came to Paris for negotiations, the Americans rented hotel rooms by the week.  The Vietnamese  rented a villa by the year.  They were ready to outwait the Americans and win knowing Americans do not like long negotiations and will eventually give in to make the deal at any cost (sort of like Obama and the Iranians).  In the end, I think the Vietnamese got the best of us (my opinion).

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“Am I going to say that it costs me $10 to make the part but I am selling it for $50?  Of course not (unless I am dealing under TINA).  The buyer should try and get a fair and reasonable price, but it is not my job as the seller to do his homework for him/her.”

If you lie about the cost of the part, it is a false statement, may be a false claim, may be fraudulent. It doesn’t matter whether or not you are dealing under “the law formerly known as TINA”. 

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Page 213 of the book from Kissinger:

”What the negotiator has to have, there has to be a channel in which the two sides can tell each other, at a minimum, what their thinking is, because you spend a lot of time in high office on the intentions of other countries.  These other countries tell you accurately what their intentions are, and if you develop enough confidence in that, it facilities that process of decision making.  Of course it’s possible that they fool you and it’s possible that they tell you something, but they can do it only once, and then they’ve destroyed the channel.”

Doesn’t sound like Kissinger considers deception a fundamental part of negotiation...

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Whether it is fundamental or not, failing to acknowledge that deception routinely occurs in sole source negotiations would make me wonder about the individual’s ability to negotiate a good deal. Firms do it rountinely. Instead of wondering if it happens or not, let’s discuss how to ask the right questions that would mitigate any potential deception during negotiations or what you do to handle it during negotiations.

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49 minutes ago, MV2009 said:

failing to acknowledge that deception routinely occurs in sole source negotiations would make me wonder about the individual’s ability to negotiate a good deal. Firms do it rountinely.

Is that so? Can you support your assertion/opinion with something more than either conjecture or anecdotes?

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Guest Vern Edwards
4 hours ago, MV2009 said:

Whether it is fundamental or not, failing to acknowledge that deception routinely occurs in sole source negotiations would make me wonder about the individual’s ability to negotiate a good deal.

Quote

deception 1. The act of deliberately causing someone to believe that something is true when the actor knows it to be false. 2. A trick intended to make a person believe something untrue.

DECEPTION, Black's Law Dictionary (10th ed. 2014)

MV2009's statement is highly problematic in light of the legal definition. I his or her statement to indicate (1) that negotiators routinely engage in deception during sole source negotiations and (2) that deception is necessary in order to make a good deal when contracting on a sole source basis.

The first may be a statement of fact, although the use of "routinely" may be an exaggeration. The second is statement of opinion and is problematic in that deception may entail a criminal act, a civil false claim, or defective pricing.

In U.S. v. Singer, 889 F.2d 1327 (1989), the Fourth Circuit held that failure during sole source negotiations to disclose the padding of cost estimates to cover contingencies gave rise to false claim liability:

Quote

Link Flight failed to disclose certain contingency costs designed to offset price reductions expected to occur during negotiations with the government, in violation of its obligation to bid its “best estimate” of the costs to perform the contract...

The district court stated that the evidence showed that Link Flight padded its best estimate figures by 4% to 17% (usually in the 7% to 10% range) and that the government alleged that at least $77 million could be shown to have been fraudulently included as “management reserves” in the bid figures submitted to the government on the seven contracts. Therefore, it concluded that the total potential liability under the False Claims Act was at least $231 million.

So I suggest that MV2009 either confirm my reading or reject it. If MV2009 literally means that deception is an essential part of dealmaking in government contracting, perhaps he or she would like to explain whether deception includes lying and, if not, what it does include.

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Vern, let’s be clear I’m not asserting the second portion; that deception is necessary or essential in sole source negotiations nor am I saying that I support it. What I’m saying is it occurs and negotiators on both sides may do it. I was asked to provide an example, let’s start with one of the biggest problems - material pricing. If a seller gives the buyer a material price based on a quote knowing it may (in reality, will) buy in bulk or has the material on hand to perform the job and it will use that material via an internal transfer to do the job it’s deception. A historical example (now resolved) that does not meet the definition of deception in every instance is Performance-based payments. The clause was changed to account for the fact that sellers were achieving a significant amount in free cash flow because the costs incurred were significantly below the PBP schedule. Another that has been said several times already is failing to bring someone to the table that can negotiate any change in their position when a change is required. Whether you agree or disagree to which the frequency it occurs, it will continue to occur. Failing to acknowledge it may occur, not taking steps to arm yourself with the ability to ask the right questions, and spot it results in significant risk that you may not be getting a fair deal. So instead of focusing on the utopia state, let’s focus on reality and what to do to identify deception when it occurs.

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4 hours ago, MV2009 said:

So instead of focusing on the utopia state, let’s focus on reality and what to do to identify deception when it occurs.

People who think that the reality is that the other side (government or industry) is out to deceive you are not doing themselves or our profession any favors because it drives overly adversarial behavior.  I’m not advocating naivety, but the default view that the other side is routinely using such tactics is destructive and will influence/bias your own behavior during negotiations (and not for the better).

I don’t subscribe to the notion that deception is necessary. One common example that some on this forum have claimed is deception is this: starting at a lower position than what you’re willing to settle at and when challenged apparently those negotiators know of nothing to say other than “I can’t go any higher” or “my boss won’t let me go any higher” (omg! Deception!). Well, how about a different statement: “Based on the information I have at the moment, I do not believe a higher (or lower) price is warranted.” That’s not even toeing an extremmely broad line of deception that some have offered and it accomplishes the same purpose. Just think and communicate properly.

Deceit is nothing more than a tactic - an unnecessary and dangerous one at that.

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Oops, I didn’t mean to post here. I was reading this when a text popped up and I responded to it. 🤭 Bob, please delete this post. 

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Guest Vern Edwards
3 hours ago, MV2009 said:

Vern, let’s be clear I’m not asserting the second portion; that deception is necessary or essential in sole source negotiations nor am I saying that I support it. What I’m saying is it occurs and negotiators on both sides may do it. 

Thanks, MV2009. That's all I wanted to know.

You all enjoy your discussion.

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Guest Vern Edwards
2 hours ago, Matthew Fleharty said:

Just think and communicate properly.

There it is.

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21 hours ago, Matthew Fleharty said:

Doesn’t sound like Kissinger considers deception a fundamental part of negotiation...

PepeTheFrog knows your position about deception in negotiation, but quoting or using Henry Kissinger to strengthen your side is not a sound strategy. One personality spectrum is agreeableness, or the tendency for cooperation versus competition. A strategist like Kissinger is firmly on one side, and his negotiation style, success, and strategy reflects that. Cooperative, agreeable, "nice guy" negotiators are only successful when the stakes are not high and when there is already a cooperative relationship.

When the stakes or risks are very high, or when it's an extremely competitive environment, or within an adversarial relationship, the competitive, disagreeable, adversarial negotiator will clean the clock of the naive and friendly. They'll also employ deception to do it. 

Some of you make very naive statements about negotiation. Maybe you've been deceived and you didn't even realize it.  

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Guest Vern Edwards

I think some people are making a distinction between what is often true and what should be true, and I don't consider that to be a sign of naiveté. It's one thing to say that people do engage in deception. It is another thing entirely to say that they should.

It seems to me that the question at this point ought not to be what people do, but what they should do in government contract negotiations.

Does anyone think that people should engage in deception in government contract negotiations? Should contractors try to deceive contracting officers in pursuit of a favorable deal? Should contracting officers try to deceive contractors? If so, please explain what you mean by deception and what limits, if any, ought to apply. If you don't do this, the silly, pointless back and forth that you're having will continue ad nauseam. It's pretty much at that point now.

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40 minutes ago, PepeTheFrog said:

PepeTheFrog knows your position about deception in negotiation, but quoting or using Henry Kissinger to strengthen your side is not a sound strategy.

Is that so?

On ‎5‎/‎29‎/‎2018 at 5:50 PM, PepeTheFrog said:

Do you think Henry "Realpolitik" Kissinger used deception in negotiation?

:huh:

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Guest Vern Edwards

From Kissinger the Negotiator, under the heading Genuine Empathy or Duplicity, pp. 219-222:

Quote

Shimon Peres, who twice served as Israel's prime minister, is alleged to have remarked privately to Yitzhak Rabin, "With due respect to Kissinger, he is the most devious man I've ever met." And Egypt's foreign minister Ismail Fahmy, no fan of Kissinger, was  quoted as saying, "[Kissinger] always tried to hide his bias by cursing the Israelis and constantly making funny and unflattering remarks about the Israeli leaders to convince us that he was on our side.... Unfortunately, his rather obvious ruses were fairly effective with Sadat."

*     *     *

According to Walter Isaacson, Shimon Peres said that "If you didn't listen word by word, you could be carried away by what he said.... Bu if you listened word by word he wasn't lying."

But how should that inform us about negotiating government contracts?

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It's quite simple, really: deception is only acceptable to those who approach a negotiation as a transaction, rather than part and parcel of a professional business relationship.  You only get to deceive once, because once you do it, you have destroyed the relationship, and therefore, any potential for future equitable negotiations between the parties is gone.  Deception is short-sighted, destructive to your reputation, and not in the government's best interests because it demonstrates bad faith.

synonyms: deceit, deceitfulness, duplicity, double-dealing, fraud, cheating, trickery, chicanery, deviousness,  lying, pretense, treachery;
informal crookedness, 

Yes, Virginia, there is a difference between a used car lot and a government contract negotiation.  

(For REA'n Maker's small-brained old yellow coots only: If my grandmother has wheels, does that make her a bicycle? 😋)

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On 5/29/2018 at 5:50 PM, PepeTheFrog said:

dEcEpTiOn: the boogieman that makes all the church ladies squeal and faint

Do you think Henry "Realpolitik" Kissinger used deception in negotiation? Do you think a car salesman does? Do you think a car buyer does?

Do you think either side of a federal contracts negotiation does? (Oh, no! Never! There's no gambling in these casinos!)

Let's get this party started again! Come back, church ladies! PepeTheFrog wants to hear some virtue-signalling! Show us how naive you are, how morally upright you want others to consider you to be (which is deception), and how little you've thought or read about human psychology, evolution, and language itself!

deceive: cause (someone) to believe something that is not true, typically in order to gain some personal advantage...give a mistaken impression

Say it with me now: "Deception is a fundamental part of negotiation!"

Examples:

Bluffing: deception

Anchoring or setting expectations high (or low): deception

Low-balling: deception 

Keeping your cards close to your chest: deception

Sharing certain information, but not other information, to influence the other side into thinking you're "worse off" than you are: deception

Saying, "I can't take that deal" or "My boss will kill me if I..." or "I can't make a profit at that number": often deception

Not divulging your entire negotiation position (who would do that, unless you're in a supreme position?): deception, because whether you admit it to yourself or not you cause the other side to believe something that is not true to gain a negotiation advantage...you give a mistaken impression, not the full picture

 

For PepeTheFrog's big-brained frogs only:

Which has a higher cost to produce, truth or lies? 

How does science work? Do we learn about the natural world from justification, or from falsification? 

Do we apply the scientific method to all forms of communication? Do we apply it to speech or writing in negotiation? 

Do we warranty all of our communications? Do we warranty all of our communications in negotiations?

What do you think transactional and M&A attorneys are paid to do? What does "due diligence" mean in the world of M&A? 

Did humans evolve language and communication to tell the truth only, or is it also a mechanism to make deception easier?

Do all societies, cultures, civilizations, people value truth-telling equally? Does extension of trust beyond kin-groups play a role in levels of commercial prosperity? 

Are there different group evolutionary strategies for different groups of humans? Could some groups rely more on cooperation and truth-telling than others? Could some groups rely more on predation and deception than others?

 

 

*Slow Clap* Yarr. brings a tear to me eyes.

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