Kelman: The art of negotiation

Many contracting officials are using business savvy on behalf of the government







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I recently spoke at a small informal meeting with a group of marketing people for a large information technology company that sells to the government. As we began the event, my host apologized to me because attendance was somewhat smaller than it normally would have been. He said the sales team was in its last few days of the company’s fiscal quarter, and the team members were desperately trying to make last-minute sales to meet or beat quotas.

In response to the apology, I began my remarks by telling the group members something they didn’t want to hear. When I was in the government, I repeatedly urged the General Services Administration to develop a list of the dates when the fiscal quarters and fiscal years of publicly traded companies on the GSA schedules ended. That would allow agencies to use this information to negotiate better deals because salespeople — like the group I was speaking to — are often anxious to make sales at the end of a quarter.

In 1996, former GSA Administrator Roger Johnson eliminated the requirement that GSA vendors must offer any better prices afforded to one customer to all government customers. The older requirement appeared to protect the government, but it was the single greatest inhibitor to the government getting better prices and service under the schedules. Lifting that regulation set in motion the practice of temporary or quantity discounts off the schedules, which was one of the greatest developments in government procurement. In 1997, some vendors actually offered discount coupons, such as those in a weekend insert, for purchases before the end of the government’s fiscal year. Johnson’s change allowed the government to take advantage of company reporting periods to negotiate better prices or terms. I thought a GSA-published guide could inform contracting officers about this opportunity.

GSA ignored my suggestions at the time, although it promised it would act. This was unfortunately typical of GSA’s attitude while it was riding high, feeling it didn’t need to do anything special to serve its customers.

The response from my vendor host was fascinating. Many of their agency customers had no need for such a guide, the vendor told me. Agency procurement and acquisition employees were aware of when the company’s fiscal quarters ended, and they already took advantage of that in negotiating.

The only problem, my host said, was that some contracting officers tried to ask for the same prices negotiated during these especially favorable times for the government during other times, too. That’s not something the sales people can do. Those special deals are just that — special.

So score one point for our contracting officers. Many of them are apparently proactively showing business savvy on behalf of the government. Finally, here’s an open memo to Jim Williams, GSA’s Federal Acquisition Service commissioner: It’s not too late to publish a guide such as the one I suggested a decade ago. This is exactly the kind of service that helps justify GSA’s role on behalf of the government.

Kelman is professor of public management at Harvard University’s Kennedy School of Government and former administrator of the Office of Federal Procurement Policy. He can be reached at : steve_kelman@harvard.edu.

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