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October 1718, 2005


Renaissance Atlanta Downtown
Atlanta, GA
NCMA 5th Annual Commercial Contract Management Conference
Make the Connection: Your Customers, Suppliers, and Partners 2

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

Contract Negotiations
Skills, Tools, and Best
Practices
An Interactive Adventure
into the Art & Science of the Deal!
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October 1718, 2005
Renaissance Atlanta Downtown
Atlanta, GA
NCMA 5th Annual Commercial Contract Management Conference
Make the Connection: Your Customers, Suppliers, and Partners 3
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
v
October 1718, 2005
Renaissance Atlanta Downtown
Atlanta, GA
NCMA 5th Annual Commercial Contract Management Conference
Make the Connection: Your Customers, Suppliers, and Partners 4
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:

1. Business Judgment 6. Integrity/ethics
2. Decision making 7. Education
3. Problem-solving 8. Interpersonal Relations
4. Negotiation skills 9. Responsiveness
5. Customer service 10. Communications
Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 10.
v
October 1718, 2005
Renaissance Atlanta Downtown
Atlanta, GA
NCMA 5th Annual Commercial Contract Management Conference
Make the Connection: Your Customers, Suppliers, and Partners 5
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
v
October 1718, 2005
Renaissance Atlanta Downtown
Atlanta, GA
NCMA 5th Annual Commercial Contract Management Conference
Make the Connection: Your Customers, Suppliers, and Partners 6
Exercise Q & A
1. How important are contract negotiation skills to ensure
business success?


2. How well do you negotiate?



3. 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.
v
October 1718, 2005
Renaissance Atlanta Downtown
Atlanta, GA
NCMA 5th Annual Commercial Contract Management Conference
Make the Connection: Your Customers, Suppliers, and Partners 7
Contract Negotiation Competencies
The Skills to Win!
Contract Negotiations
An NCMA NES & CD-ROM
v
October 1718, 2005
Renaissance Atlanta Downtown
Atlanta, GA
NCMA 5th Annual Commercial Contract Management Conference
Make the Connection: Your Customers, Suppliers, and Partners 8
The Contract Negotiators Competencies Model
Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 14.
v
October 1718, 2005
Renaissance Atlanta Downtown
Atlanta, GA
NCMA 5th Annual Commercial Contract Management Conference
Make the Connection: Your Customers, Suppliers, and Partners 9
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
Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pgs. 15-16.
v
October 1718, 2005
Renaissance Atlanta Downtown
Atlanta, GA
NCMA 5th Annual Commercial Contract Management Conference
Make the Connection: Your Customers, Suppliers, and Partners 10
The Skills to Win: Self-Assessment Survey
1. I am a person of high integrity.
1 2 3 4 5
2. I always act as a true business professional, especially in contract negotiations.
1 2 3 4 5
3. 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
4. I verbally communicate clearly and concisely.
1 2 3 4 5
5. I am an effective and persuasive contract negotiator.
1 2 3 4 5

Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 16.
v
October 1718, 2005
Renaissance Atlanta Downtown
Atlanta, GA
NCMA 5th Annual Commercial Contract Management Conference
Make the Connection: Your Customers, Suppliers, and Partners 11
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

Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 16.
v
October 1718, 2005
Renaissance Atlanta Downtown
Atlanta, GA
NCMA 5th Annual Commercial Contract Management Conference
Make the Connection: Your Customers, Suppliers, and Partners 12
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
Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pgs. 16-17.
v
October 1718, 2005
Renaissance Atlanta Downtown
Atlanta, GA
NCMA 5th Annual Commercial Contract Management Conference
Make the Connection: Your Customers, Suppliers, and Partners 13
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
Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 17.
v
October 1718, 2005
Renaissance Atlanta Downtown
Atlanta, GA
NCMA 5th Annual Commercial Contract Management Conference
Make the Connection: Your Customers, Suppliers, and Partners 14
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.
Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 17.
v
October 1718, 2005
Renaissance Atlanta Downtown
Atlanta, GA
NCMA 5th Annual Commercial Contract Management Conference
Make the Connection: Your Customers, Suppliers, and Partners 15

Skills to Win
Self-Assessment Survey
Scoring


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.
Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 18.
v
October 1718, 2005
Renaissance Atlanta Downtown
Atlanta, GA
NCMA 5th Annual Commercial Contract Management Conference
Make the Connection: Your Customers, Suppliers, and Partners 16
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.
v
October 1718, 2005
Renaissance Atlanta Downtown
Atlanta, GA
NCMA 5th Annual Commercial Contract Management Conference
Make the Connection: Your Customers, Suppliers, and Partners 17
Contract Negotiations Essential Elements


Key Inputs



Tools & Techniques



Desired Outputs

Solicitation (RFP,
RFQ, etc.)
Bid or Proposal
Buyers source
selection process
Seller's past
performance
Previous contracts
Competitor Profile
Business Ethics/
Standards of Conduct
Guidelines
Market and Industry
practices



Oral presentations
Highly skilled contract
negotiators
Legal Review
Business Case Approval
Contract Negotiation
Formation Process
o Plan negotiations
o Conduct negotiations
o Document the
negotiation and Form
the Contract



Contract or Walk
away

Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 56.
v
October 1718, 2005
Renaissance Atlanta Downtown
Atlanta, GA
NCMA 5th Annual Commercial Contract Management Conference
Make the Connection: Your Customers, Suppliers, and Partners 18
Contract Negotiation Process
Plan the Negotiation Conduct the Negotiation Document the Negotiation and
Form the Contract
1. Prepare yourself and your
team
2. Know the other party
3. Know the big picture
4. Identify objectives
5. Prioritize objectives
6. Create options
7. Select fair standards
8. Examine alternatives
9. Select your strategy, tactics,
and
countertactics
10. Develop a solid and approved
team negotiation plan
11. Determine who has authority
12. Prepare the facility
13. Use an agenda
14. Introduce the team
15. Set the right tone
16. Exchange information
17. Focus on objectives
18. Use strategy, tactics, and
countertactics
19. Make counteroffers
20. Document the agreement or
know when to walk away
21. Prepare the negotiation
memorandum
22. Send the memorandum to the
other party
23. Offer to write the contract
24. Prepare the contract
25. Prepare negotiation results
summary
26. Obtain required reviews and
approvals
27. Send the contracts to the
other party for signature
28. Provide copies of the contract
to affected organizations
29. Document lessons learned
30. Prepare the contract
administration plan
Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 61.
v
October 1718, 2005
Renaissance Atlanta Downtown
Atlanta, GA
NCMA 5th Annual Commercial Contract Management Conference
Make the Connection: Your Customers, Suppliers, and Partners 19
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.
v
October 1718, 2005
Renaissance Atlanta Downtown
Atlanta, GA
NCMA 5th Annual Commercial Contract Management Conference
Make the Connection: Your Customers, Suppliers, and Partners 20
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.
v
October 1718, 2005
Renaissance Atlanta Downtown
Atlanta, GA
NCMA 5th Annual Commercial Contract Management Conference
Make the Connection: Your Customers, Suppliers, and Partners 21
Checklist of Contract Negotiation Best Practices
contd.
(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.