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Gregory A. Garrett, CPCM, C.P.M., PMP Chief Compliance Officer U.S. Federal Government Programs Lucent Technologies – Be

Contract Negotiations Skills, Tools, and Best Practices. Gregory A. Garrett, CPCM, C.P.M., PMP Chief Compliance Officer U.S. Federal Government Programs Lucent Technologies – Bell Labs Innovations. An Interactive Adventure into the Art & Science of the Deal!.

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Gregory A. Garrett, CPCM, C.P.M., PMP Chief Compliance Officer U.S. Federal Government Programs Lucent Technologies – Be

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  1. Contract NegotiationsSkills, Tools, and Best Practices Gregory A. Garrett, CPCM, C.P.M., PMP Chief Compliance Officer U.S. Federal Government Programs Lucent Technologies – Bell Labs Innovations An Interactive Adventureinto the Art & Science of the Deal! NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

  2. Contract Negotiations – An NCMA National Education Seminar (NES) & CD-ROM Key Topics of Discussion: • The Need for Contract Negotiation Skills * Q&A - Exercise • Contract Negotiation Competencies – The Skills to Win * Self-Assessment Survey • The Contract Negotiation Process * Buyer & Seller – Checklist of Best Practices NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

  3. CMI Year 2001 Study - Results • "Which metrics do you believe your organization will use in the next 3 to 5 years to evaluate personnel performance?" • The respondents Top 10 choices: • Business Judgment 6. Integrity/ethics • Decision making 7. Education • Problem-solving 8. Interpersonal Relations • Negotiation skills 9. Responsiveness • Customer service 10. Communications Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 10. NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

  4. Contract Negotiation Skills Gap Key Facts • Many of the Master Contract Negotiators in both the public and private business sectors, have retired, or retiring, or are retirement eligible by 2010** • Significant increase in the complexity of contracts and related projects *** ** Survey by Garrett Consulting Services, 2003 *** Center for Business Practices (CBP) study, 2002 NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

  5. Exercise – Q & A • How important are contract negotiation skills to ensure business success? • How well do you negotiate? • Does your organization have the number and level of skilled master contract negotiators needed? Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 12. NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

  6. Contract Negotiations – An NCMA NES & CD-ROM Contract Negotiation CompetenciesThe Skills to Win! NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

  7. The Contract Negotiator’s Competencies Model Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 14. NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

  8. Skills to Win: Self-Assessment Survey • Complete the 20 question – Skills to Win: Self-Assessment Survey (1 = Low Skills to 5 = High Skills) • Summarize and add-up your score on the survey worksheet (pg. 3) • Compare your result to the Self-Assessment Survey Scoring table NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pgs. 15-16.

  9. The Skills to Win: Self-Assessment Survey • I am a person of high integrity. • 1 2 3 4 5 • I always act as a true business professional, especially in contract negotiations. • 1 2 3 4 5 • I ensure all of my business partners and team members act honestly, ethically, and legally, especially when involved in contract negotiations and contract formation. • 1 2 3 4 5  • I verbally communicate clearly and concisely. • 1 2 3 4 5 • I am an effective and persuasive contract negotiator. • 1 2 3 4 5 NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 16.

  10. The Skills to Win: Self-Assessment Survey cont. 6. My written communications are professional, timely, and appropriate. 1 2 3 4 5 7. I am an excellent team leader. 1 2 3 4 5 8. I consistently build high performance teams, which meet or exceed contract requirements. 1 2 3 4 5 9. I am willing to compromise when necessary to solve problems. 1 2 3 4 5 10.  I confront the issues, not the person, in a problem-solving environment. 1 2 3 4 5 NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 16.

  11. The Skills to Win: Self-Assessment Survey cont. 11. I recognize the power of strategies, tactics, and countertactics and use them frequently in contract negotiations. 1 2 3 4 5 12. I am able to achieve my desired financial results in contract negotiations. 1 2 3 4 5  13. I understand various cost estimating techniques, numerous pricing models, and how to apply each when negotiating financial arrangements. 1 2 3 4 5 14. I understand generally accepted accounting practices and how to apply them when negotiating deals. 1 2 3 4 5 15. I am highly computer literate, especially with electronic sales tools, and/or electronic procurement tools. 1 2 3 4 5 NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pgs. 16-17.

  12. The Skills to Win: Self-Assessment Survey cont. 16. I am knowledgeable of e-marketplaces, vertical and horizontal trade exchanges, e-auctions, and how to use them to buy or sell products/services. 1 2 3 4 5 17. I understand the contract management process and have extensive education, experience, and professional training in contract management. 1 2 3 4 5 18. I have extensive education, experience, and training in contract law.   1 2 3 4 5 19. I have extensive education, experience, and training in our organization's products and services. 1 2 3 4 5  20. I am considered a technical expert in one or more areas. 1 2 3 4 5  NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 17.

  13. Skills to Win - Self-Assessment Survey Worksheet Questions # Self-Assessment Score (1-5) 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. Grand Total Score: _______________________________ The Skills to Win: Self-Assessment Survey cont. NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 17.

  14. Skills to WinSelf-Assessment SurveyScoring 90+: You have the knowledge and skills of a master contract negotiator. 80 - 90: You have the potential to become a master contract negotiator, after reviewing the specialized skill areas and determining in which areas you need to improve your skills. You are an intermediate contract negotiator. 65 - 79: You have basic understanding of successful contract negotiation skills. You need to improve numerous skills to reach a higher level of mastery of contract negotiations. You are an apprentice contract negotiator. 0 - 64: You have taken the first step to becoming a master contract negotiator. You have a lot of specialized skills areas you need to improve. With time, dedication, and support (education, experience, and training) you can become a master contract negotiator. The Skills to Win: Self-Assessment Survey cont. NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 18.

  15. Contract Negotiations – A Complex Human Activity Successful contract negotiator must: • Master the art and science, or soft and hard skills, required to become a master negotiator • Possess the intellectual ability to comprehend factors shaping and characterizing the negotiation. • Be able to adapt strategies, tactics, and countertactics in a dynamic environment • Understand their own personalities and personal ethics and values • Know their products and services, desired terms and conditions, and pricing strategy • Be able to lead a diverse multi-functional team to achieve a successful outcome Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pgs. 53-54. NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

  16. Key Inputs Tools & Techniques Desired Outputs • Solicitation (RFP,RFQ, etc.) • Bid or Proposal • Buyer’s sourceselection process • Seller's past performance • ·Previous contracts • ·Competitor Profile • Business Ethics/ Standards of Conduct Guidelines • ·Market and Industry practices Contract Negotiations – Essential Elements • Oral presentations • Highly skilled contract negotiators • Legal Review • ·  Business Case Approval • ·  Contract Negotiation Formation Process • Plan negotiations • Conduct negotiations • Document the negotiation and Form the Contract • Contract or Walk away Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 56. NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

  17. Contract Negotiation Process Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 61. NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

  18. Checklist of Buyer – Contract Negotiation Best Practices • (The Buyer Should: ) • Know what you want – lowest price or best value • State your requirements in performance terms and evaluate accordingly • Conduct market research about potential sources before selection • Evaluate potential sources promptly and dispassionately • Follow the evaluation criteria stated in the solicitation: management, technical, and price • Develop organizational policies to guide and facilitate the source selection process • Use a weighting system to determine which evaluation criteria are most important • Use a screening system to prequalify sources • Obtain independent estimates from consultants or outside experts to assist in source selection • Use past performance as a key aspect of source selection, and verify data accuracy • Conduct price realism analysis • Use oral presentations or proposals by sellers to improve and expedite the source selection process Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 85. NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

  19. Checklist of Contract Negotiation Best Practices • (The Buyer and Seller Should: ) • Understand that contract negotiation is a process, usually involving a team effort • Select and train highly skilled negotiators to lead the contract negotiation process • Know market and industry practices • Prepare yourself and your team • Know the other party • Know the big picture • Identify and prioritize objectives • Create options – be flexible in your planning • Examine alternatives • Select your negotiation strategy, tactics, and countertactics • Develop a solid and approved team negotiation plan • Determine who has the authority to negotiate • Prepare the negotiation facility at your location or at a neutral site • Use an agenda during contract negotiation Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 86. NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

  20. Checklist of Contract Negotiation Best Practices cont’d. • (The Buyer and Seller Should: ) • Set the right tone at the start of the negotiation • Maintain your focus on your objectives • Use interim summaries to keep on track • Do not be too predictable in your tactics • Document your agreement throughout the process • Know when to walk away • Prepare a negotiation results summary • Obtain required reviews and approvals • Provide copies of the contract to all affected parties • Document negotiation lessons learned and best practices • Prepare a transition plan for contract administration • Understand that everything affects price • Understand the Ts and Cs have cost, risk, and value • Know what is negotiable and what is not Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 86. NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

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