2-38.1 Negotiation Considerations

The contracting officer leads negotiation planning and is responsible for the conduct of the negotiations, and will begin by attempting to resolve any points of conflict that remain after discussions. However, depending on the issues to be negotiated and the experience of the purchase/SCM team members, different team members may take the lead on negotiating specific issues in accordance with the negotiation plan. Before opening negotiations, the contracting officer and the purchase/SCM team must clearly categorize negotiation objectives that are either must points (terms and conditions essential to desired contract performance that the Postal Service must obtain), or give points (terms and conditions that are not central to the Postal Service obtaining best value). Must points and give points are determined by client requirements, but the contracting officer will leverage past experiences and knowledge when negotiating these points. In order to avoid deadlock, the contracting officer will have to properly balance what is given and what is taken, especially as final agreement becomes more imminent, while focusing on obtaining the must points.

For example, negotiations are held with a supplier that has a proven record of on-time delivery (a shared interest and a must point for the Postal Service), but is also proposing a price higher than the target price generated by the pricing analyst (a point of conflict but also a give point). In a compromise, the Postal Service would give the supplier a higher price than the one recommended by the pricing analyst, but one lower than that offered in the original proposal, thereby obtaining the on-time delivery level determined essential to contract performance and improved price terms.

In the rare instance when a proposal has no points of conflict, pricing is at or below market price, and the proposal obviously offers the best value, neither discussions nor negotiations are necessary. However, purchase/SCM teams should always remember (1) that holding discussions for reasons of clarification is always prudent and (2) that negotiations normally should be held in order to improve the value received by the Postal Service. In cases where neither discussions nor negotiations are necessary, the purchase/SCM team begins the activities associated with the Perform Preaward Activities task of USPS Supplying Practices Process Step 2: Evaluate Sources.

It is important to note that negotiations are a complex process based on preparation, leveraging power, personal dynamics and compromises that vary from contract to contract. Negotiations are seldom predictable and are never a guaranteed success. Therefore, negotiations must always be rooted in facts generated during discussions, as well as market research and price analysis, and Postal Service objectives in order to maintain and avoid damaging historical working relationships with suppliers. Ultimately, the level of mutual dependency (the Postal Service need for a supply and the supplier’s need for clientele) is the greatest source of motivation for the two parties.