Negotiating a Contract with Navy
Order Instructions:
Assignment 4: Negotiating a Contract with the Navy
Due Week 8 and worth 150 points
Based on the same scenario as in Assignments 1, 2, and 3, you are now considering additional factors needed for your proposal based on RFP #123456789, dated 07/14/2014, where another local competitor intends to submit a proposal.
Additional factors to consider are:
1. Although you have always built in a profit margin of ten percent (10%) for commercial flooring jobs, you are willing to consider a lesser profit margin in this case in order to win the contract.
2. The Navy’s Contract Administration Officer is known to be a smart, tough negotiator.
Write a two to three (2-3) page paper in which you:
1. Determine two (2) potential profit objectives that you will consider for accepting a less than normal profit margin if you win the contract. Provide a rationale for your response.
2. Determine two to three (2-3) negotiation strategies or tactics that you feel would be effective for winning the contract. Provide a rationale for your response.
3. Use at least three (3) quality references Note: Wikipedia and other related websites do not qualify as academic resources.
Your assignment must follow these formatting requirements:
Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.
The specific course learning outcomes associated with this assignment are:
- Explain the government acquisition process using sealed bidding, negotiations, and alternative contracting methods.
- Outline and explain the process for developing competitive proposals and source selection.
- Use technology and information resources to research issues in federal acquisition and contract management.
· Write clearly and concisely about federal acquisition and contract management using proper writing mechanics.
SAMPLE ANSWER
Negotiating a Contract with Navy
Introduction
Negotiating and getting government contracts, especially from a Navy’s Contract Administration Officer is normally a hectic process. The problem persists because even after acquiring the contract, competitors will also do their best to send their proposals to win the contract next time. Therefore, when a company is given a contract, a rival company will do its best to ensure it maintains its trust to the government up to another time when it will be awarded another contract based on the trust built between the two parties (Smotrova-Taylor, 2012). The following discussion, therefore, will engage in discussing some of the profit objectives a company will consider for accepting a lower than normal profit margin after winning a contract. The discussion will also address some of the negotiation strategies that a company would use to win the contract.
Discussion
There are certain profit objectives a company would consider for accepting a lower than normal profit margin to win a contract. One of these profit objectives is elimination of competition. Rival companies will themselves be motivated to outdo the others in terms of competition on a specific item the Navy is requiring or wanting to sell. Therefore, in order to have future acquisitions, a specific firm who wishes to win the contract will be in a dominant position in winning the contract (Smotrova-Taylor, 2012). In this case, companies will be seeing themselves giving the government favorable processes and costs at their own expense just to win the contract before the other firms get it. In this type of scenario, the organization is more likely to accept reduced profit margins in the short term so that the firm or the bidder could realize extreme profits in the future.
Another profit objective that a company would employ to win the contract is survivability. According to Rumbaugh (2010), a company is said to be alive if there is cash from sales flowing through it. The normal assets of a company are usually reduced if sales are not made to make enable the company to survive and adapt in the short run. For instance, a reduction in labor force is the first phase of production that is seen after lack of sales. The negative effects are reflected in the company’s assets, recruitment and hiring, morale, and overall capabilities (Rumbaugh, 2010). Therefore, the bidder is forced to perform under these given contacts at negative profits in order for them to get and maintain cash flow. Working under this constraint makes the company to survive up to the near team maintaining that it is preparing itself for more sales in the near future. The company will also go into debts for a short period in order to cater for the continuing operations before it stabilizes first on the awarded contract.
There are various negotiation strategies or tactics that a company may deem effective for winning the contract. All of these negotiation strategies are what are referred in business terms to as win/win negotiation styles. Under this win/win negotiation style, as Roberts, Michael and Amir (2009) argue, both parties strive for the merits of the situation to get satisfactory results. Therefore, in order for a company to win the contact under a win/win strategy, the bidder is supposed to concentrate on positive tactics to resolve differences especially during the negotiations. These strategies should focus on the long-term benefits rather than on the short-term benefits (Roberts, Michael & Amir, 2009). This is where the pricing strategy comes in. The contract will be given to the company that affirms that it will provide the highest price for the government goods. A company should ensure that the price quoted should be equal to the highest fair and reasonable price.
Another negotiation tactic that a bidder might use to win a contract is cost strategy. The contract will award a contract to a bidder who shows that there will be a reduction of cost once a contract is awarded. This is mainly due to the government stand on maximizing profits. This type of negotiation tactic, in other words, is known as cooperative negotiation. This is because, both the government contractor and bidders engage in creating a good correlation between them than could be created in competitive negotiations. A company in cooperative negotiation using cost strategy aims at getting the most they can get for the organization (Osborne, 2011). The government will find itself changing its rules upon the contract after finding that the cost of production has changed drastically after the contract has been awarded. Offering the low cost incurring scenario will cajole the government to award the contract to the company that exhibit that it will be able to sustain that cost.
Summary
In conclusion, companies do their best to win government contracts. In case the competition is intense, companies will be forced to use price objectives to win the contract. On top of winning the contract, the companies will engage in negotiation tactics that see the company enticing the government to award them the contract.
References
Osborne, S. R. (2011). Winning government business: Gaining the competitive advantage with effective proposals. Vienna, VA: Management Concepts.
Roberts, K., Michael, R., & Amir, S. (2009). Renegotiation of financial contracts: Evidence from private credit agreements. Journal of Financial Economics 93(2):159-84.
Rumbaugh, M. G. (2010). Understanding government contract source selection. Vienna, VA: Management Concepts.
Smotrova-Taylor, O. (2012). How to get government contracts: Have a slice of the $1 trillion pie. Place of publication not identified: Apress.
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