Steve Hagar Deputy Director Central Purchasing Division Office of Management and Enterprise Services 1

Daniele Vare

Andrew Urich

 You will not exceed your expectations  Persons with higher aspirations will win higher awards  High aspirants beat low aspirants without regard to power or skill  Avoid the “winners” curse Andrew Urich

 Plan carefully  Gain management support  Effectively apply bargaining techniques  Communicate effectively, listen carefully  Tolerate conflict while searching for agreement  Project honesty  Be willing to compromise  Foster team cooperation  Apply good business judgment

 Win/Lose (distributive) ◦ Participants Adversarial ◦ Objective is victory ◦ Distrust ◦ Demand concessions  Win/Win (principled negotiations) ◦ Participants work cooperatively ◦ Maximizes value to all parties ◦ Focus on problems not people ◦ Fosters long term relationships ◦ Options for Mutual Gain *

 Rely on power to force the other party  Use deceptive tactics  Focus on positions rather than long-term satisfaction  Be argumentative  Show reluctance to make meaningful concessions  Be highly competitive and mistrustful  Not expect additional business

 Suppliers may be forced out of business  High quality suppliers may not want to do business in the future  As suppliers exit, risk of poor quality and high prices increase

 Winning is more perception than result, never gloat  A negotiator’s behavior is the primary influence  Exhibit a win/win behavior before, during and after negotiations

 Strive for win / win but….  Understand there is a wide spectrum between win / win and win / lose  Win / lose traits may be justified  You will likely fall somewhere in between  Try to solve problems mutually  Foster cooperation and trust  Every move made establishes the negotiation process

Win/Win StyleCharacteristicWin/Lose style Principled Distributive Obtain result that is satisfactory to both sides, including fair and reasonable price- AGREEMENTNegotiation goal Obtain the best possible deal for your side regardless of consequences to other side - VICTORY Solve mutual problems, focus on Focus Defeat the other party Issues not EgosFocus on positions, not issues Cooperation and TrustEnvironmentMistrust and gamesmanship Negotiators attack the problem, not each otherNegotiation Process Tactics designed to increase relative power Focus on long-term satisfaction, improves or maintains relationships Short term gain valued over long term satisfaction, strains relationships Positive tactics to resolve issues Reluctance to make concessions Available alternatives considered Highly competitive Style Spectrum

 People: separate people from the problem  Interests: Focus on interests, not positions  Options: Generate variety before deciding  Criteria: Tie the result to objective standard

Preparation Influencing Techniques Stages of Negotiation *

 Assemble a team  Identify issues for negotiation  Prioritize issues  Research  Establish minimum, target, and maximum positions  Determine agenda order *

 Team Leader ◦ Who? Contracting Officer ◦ What? Leads negotiations, coordinates activities  Technical Analyst ◦ Who? Engineer, End User, Technical Specialist ◦ What? Supports with relevant facts, affected by outcome  Pricing Analyst ◦ Who? Strategic Sourcing, Contracting Officer ◦ What? Determines pricing objectives  Business Term Analyst ◦ Who? Contracting Officer, Legal Council ◦ What? Assure compliance  Inventor ◦ Who? Any team member ◦ What? Develops creative solutions *

 Cost (total cost)  Emergency response time (2 or 8 hours)  Delivery frequency (daily or weekly)  Freight (minimum order size)  Availability (fill rate)  Quality (75/25 to 90/10)  Payment and other terms (2% net 10 days)

 Producer Price Index (PPI) commodities:    Vehicles:    Companies:   *

PriorityIssueAcceptableTargetBest 1Cost$1.75 / lb$1.50 / lb$1.25 / lb 2Quality75 / 2580 /2090 / 10 3 Emergency response time 8 hour4 hour2 hour 4Freightfree / $100 min.free / $50 min.free / no min. 5Availability90% guaranteed95% guaranteedno backorders 6Delivery frequencyweekly2 x weeklydaily

 Budget  Disclaimer  Professor  Quid Pro Quo  Offer / Counteroffer  Split the Difference *

 Blame the Third Party (statutes)  Limited Authority / Missing Person  Carrot  Surprise  Nonnegotiable  Uproar *

 Conformity: ◦ Associates ◦ Disassociates ◦ Visiting  Disarmament: ◦ Flattery ◦ Ingratiation  Sympathy: ◦ Little Partner ◦ Poor Me ◦ Sentimental Journey *

 Create an Agenda  Identify Time and Location  Identify Participants  Request Decision Maker

 Make Introductions  Manage Tension (use humor)  Achieve Comfort Level / Common Ground  Establish / Maintain Relationships ◦ Make a connection ◦ Listen carefully ◦ Take notes ◦ Convey fairness / honesty ◦ Be respectful *

 Emphasize purpose (discovery not negotiation) ◦ Complete analysis, get the facts first ◦ Once negotiation begins, fact finding ends  Ask questions (open ended, clarifying) ◦ “What if or would you consider?”  Active listening (paraphrase) ◦ Increase value  Share information ◦ Identify new options  Establish opening needs and positions ◦ Zone of Possible Agreement / Conflict Range

Seller wants at least $1,000Buyer will spend no more than $2,000 Car Seller wants at least $2,000Buyer will spend no more than $1,000

 Exert Influence ◦ Don’t underestimate your power (you have more than you think)  Show assertiveness  Use silence  Employ negotiation techniques  Resolve conflict range ◦ Pay attention to their concerns  Settle disagreements ◦ Look for win / win opportunities *

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 Summarize and document results  States expectations  Defines roles and responsibilities  Reduces implied agreements

1.Negotiating with the Wrong People 2.Poor Preparation or Lacking Information 3.Not Providing Advanced Topics for Negotiations 4.Not Preparing the Team 5.Not Setting High Enough Goals and Targets 6.Focusing on Price 7.Not Uncovering the Other Side's Real Needs 8.Getting Emotional 9.No Closing or Concession Strategy 10.No Documentation / Agreement of Conversation