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Negotiation Techniques

ACON 047

DAU GLOSSARY DEFINITION

General Information

Many books have been written on negotiation techniques. This brief article can only scratch the surface of what’s involved in contract negotiations. The Federal Acquisition Regulation (FAR) contains relatively little information on the topic. FAR 15.306(d) addresses exchanges with offerors after establishment of the competitive range, referred to as discussions in a competitive environment. The FAR goes on to say that these negotiations can include bargaining, which involves persuasion, alteration of assumptions and positions, and give-and-take. The specific methods to engage in these elements of negotiations are generally referred to as negotiation techniques. Bargaining and the associated negotiation techniques can apply to price, schedule, technical requirements, type of contract, or other terms of a proposed contract. FAR 15.405 covers price negotiations and addresses the individuals involved in developing a negotiation position. FAR 15.405(b) states: “The contracting officer’s primary concern is the overall price the Government will actually pay. The contracting officer’s objective is to negotiate a contract of a type and with a price providing the contractor the greatest incentive for efficient and economical performance.” The contracting officer can use negotiation techniques to achieve that objective.

In Government contracting you will often hear about the importance of “win/win” negotiations. The FAR requires Government contracting officials to obtain a price that is fair and reasonable to both the contractor and the government. The Government has a vested interest in the long-term success and survival of government contractors. Win/win negotiations enhance competition by encouraging more firms to do business with the Government, thus increasing competition and quality while reducing contract costs.

Below are important points for the various considerations associated with win/win contract negotiations and their associated techniques.

Negotiation Characteristics of Win/Win Outcomes

Fact Finding1

  • Obtain information on contractor position
  • Identify assumptions
  • Clarify matters affecting costs
  • Resolve inconsistencies

Negotiation Preparation

  • Be prepared. Know the strengths and weaknesses of both sides; there is no substitute for good preparation
  • Organize the negotiation team
  • Identify issues and objectives
  • Research contractor’s probable approach
  • Assess each sides’ bargaining power
  • Establish priorities and positions
  • Establish a price range
  • Develop the negotiation approach
  • Develop the overall plan

Negotiation Characteristics of Win/Win Outcomes

  • Resolve conflicts
  • Obtain both short and long term satisfaction
  • Establish cordial relations
  • Combine sincere efforts to satisfy the other side and solve problems
  • Display win/win attitudes
  • Avoid deception
  • Be persuasive
  • Be respectful and polite
  • Win agreements instead of arguments
  • Use common sense and be open to negotiate all issues

Bargaining techniques

  • Aim high to produce better outcomes
  • Give yourself room to compromise. Concessions are always necessary. Open with a low (but justifiable) offer; you can always raise it later
  • Do not volunteer weaknesses
  • Satisfy the other side’s non-price issues. Price is never the only issue
  • Use concessions wisely. When giving, ask for something in return. Concede slowly, and in small amounts
  • Put pressure on the other side. Believe in the unknown pressures facing the other side. Resist artificial pressures, fancy offices, and credentials
  • Use the power of patience
  • Be willing to walk away from or back to negotiations. Some parties are unfair and unreasonable; deadlocks cannot always be avoided
  • Say it right. Be cordial and business-like. State things in a win/win manner

1Oral or written communications prior to negotiations.