Assignment 4: Negotiating a Contract with the Navy
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:
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.
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:
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.
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.
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.
Grading for this assignment will be based on answer quality, logic/organization of the paper, and language and writing skills. Click hereto access the rubric for this assignment.
Assignment 3: Negotiating a Contract with the Navy
Negotiating a Contract with Navy
Negotiating government contracts is usually a hectic process, especially when getting a contract Navy. Companies need to have well-laid negotiation strategies so as to help win the contract. Also, winning a contract one time is not guaranteed that the organization will win the next contract; this is because competitors are always doing their best to send their proposals so as to win the next contract. Therefore, once my company is given the contract, our rivals will do their best to ensure they maintained a good relationship with the government so as to earn government trust so as they will be awarded the next contract. (Smotrova-Taylor, 2012). This paper aims at discussing various potential profit objectives that a company will consider for accepting a less than normal profit margin after winning the Navy’s contract. The paper will also discuss some of the contract negotiation strategies that the company would use so as to win the contract.
Potential profit objectives
For, any company to accept a lower than normal profit margin after winning the contract, it must consider certain profit objectives. One of the potential profit objectives is to eliminate their competitors. After my company wins the Navy contact, our competitors will be motivated to outdo the company in terms specific items, supplied as well as increasing product quality. The competitors will also try to create a good relationship with the government so as to earn its trust hence they will be assured of future acquisitions. Therefore, for the company to have future acquisitions, the specific company winning the contract will supply quality products to the Navy in time at an affordable price even if it is lower than their normal profit margin so that they can maintain a good relationship with the government. Also, the will do this so as to outdo their competitors thus hindering them from acquiring the next contract (Smotrova-Taylor, 2012). The company will be willing to accept lowered profit margins in the short run expecting that it will realize extreme profits in the long-run.
Another potential profit objective that a company would use so as to win the Navy contract is survivability. According to Rumbaugh (2010), an organization is said to be alive if at all there is cash from sales that is flowing through it. In some cases when the company’s sale is reduced, company’s assets are disposed of so as to keep the company operating in the short run. For instance, the company may decide to reduce its labor force so as to cut down production costs. The negative effect of this is reflected in the company’s assets, employee morale, recruitment and hiring as well as its overall capabilities (Rumbaugh, 2010). Therefore, the bidder is forced to perform under these given contacts at negative or lowered profits for them to get and maintain cash flow. Working under this constraint will make the company survive in short-run maintaining that it is preparing itself for more sales in the long-run. In some cases, the company might go into debts during the short-run so as to cater for the continuing operations even before it stabilizes first on the awarded contract.
Negotiation tactics/strategies are statements or ways that the company would employ so as to counter the client’s statement and turn them into their favor. Contract negotiation plays a very significant role in the business as it helps the involved parties to decide how the deal is made without exploiting any party thus keeping both the dealer and the client’s idea to work on a specific job or work. Therefore, for a company to be good at the contract negotiation, some points need to be taken care.
There are various negotiation tactics or strategies that a company may use for winning the contract effectively. All these negotiation strategies and tactics are also referred as business terms and conditions. Involved parties should feel that their terms and conditions have been met thus a win/win negotiation strategy. Under this win/win negotiation strategies, like Roberts, Michael, and Amir (2009) argue, involved parties strive to take advantage of that situation as much as they can so as to get the highest satisfaction results. Therefore, for a company to win the contract under a win/win strategy, the bidder is supposed to concentrate on positive tactics so as to resolve differences between their terms, especially during the negotiations. These negotiation strategies should focus on the long-term benefits rather than the short-term benefits (Roberts, Michael & Amir, 2009). In this scenario, the company may also use the pricing strategy. The contract will be given to the company that affirms that it will provide the highest quality products at the lowest price for the government goods. A company should make sure that the quoted should be equal to the highest fair and reasonable price.
Another negotiation strategy that a company might use so as to win the contract is cost strategy. The government will only award the contract to the company which will show that there is a possibility of cost reduction once the contract is awarded. This is because, the government aim is to minimize costs and at the same maximize its profit, and thus, the government will only consider the companies that will help the government realize its objectives (Osborne, 2011). The company offering the low-cost incurring scenario will motivate the government to award the contract to it since it will be able to sustain the agreed costs.
Companies do their best so as to win government contracts. In case their competitors are intense, the company will be forced to use price and profit objectives so as to win the contract. Before winning the contract, the company should engage in negotiation tactics to ensure that the contract will meet its aims as well as entice the government so as to award them the contract.
Osborne, S. R. (2011). Winning government busines: 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: A press.