This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
Purchasing institutions should govern their contract award negotiations under negotiated RFP formats with a high degree of professionalism. At the same time, negotiators need to be ready to deal with a deep body of tactics that could be used by the opposite negotiating party to try to undermine your position and compromise your objectives. While sharp tactics are generally becoming less common in the more evolved field of RFP contract award negotiations (as opposed to the more adversarial and aggressive field of dispute resolution negotiations), the following discussion covers the ten sharp negotiation tactics that your negotiation team should be prepared to deal with during contract award negotiations in the event that they encounter “old-school” negotiators:
- Feigned Indignation
- Table Pounding
- Standard-Policy Play
- Silence or Playing Stupid
- The Red Herring
- Limited Authority
- The Decoy
- Good Guy v. Bad Guy
- Repeat Slicing
- Stalling
1. Feigned Indignation – Emotional Outbursts and Flinching
Feigned Indignation is a tactic where the negotiator acts surprised, hurt, or betrayed over your position on a key issue to try to weaken your resolve.
For example, the lead representative for your incumbent contractor may express resentment for being “beat down on pricing” by being forced through a new Request for Proposals (RFP) process as a tactic to try to discourage you from seeking price improvements. Similarly, the salesperson for the selected supplier may pull a “flinch” and act surprised over your refusal to pay 100 percent of the contract price at the start of the contract. These tactics can have an anchoring effect and temper your aspirations during negotiations. Your negotiation team may be tempted to lower their expectations when they encounter feigned indignation, but should instead be ready with counter-replies that serve to turn the tables on the tactic to make it clear that they won’t be swayed into compromising your position.
2. Table Pounding – Bully Tactics
When a negotiator uses emotional outbursts to wear down your position and obtain concessions, it’s called Table Pounding, or bullying tactics.
For example, the external technical expert for the supplier’s negotiating team may gesture aggressively, make sarcastic comments, avoid giving clear answers, go off on irrelevant tangents, literally pound the table, or even storm out of the room to distract your negotiation team. Your team should avoid losing focus as a result of these tactics and should be ready with blocking strategies to rebuff them, which may include taking appropriate measures to have the bully removed from the negotiation process.
In a negotiated RFP, this type of tactic can typically be contained, since the top-ranked proponent will quickly bully itself out of a contract award. However, the tactics should be well documented to ensure you have strong contemporaneous records supporting your decision to pull the plug on the negotiations when the timeframe for negotiations runs out. The midway point of that negotiation period may be an appropriate time to raise the impasse caused by the bully to senior members of the selected supplier’s team to see if that can temper a more productive second half of the negotiation period.
3. Standard-Policy Play – “We’ve Never Done This Before”
A Standard-Policy Play is where the negotiator maintains its position or blocks your position by shielding its intransigence behind long-standing “standard policy”.
For example, the in-house counsel for the supplier may present you with a heavily redlined version of your legal terms and conditions, which have been amended to reflect their “standard commercial changes” and state that they never agree to “purchaser-side” terms since they are “commercially unreasonable”. The lawyer may shut down any discussions on the changes by repeatedly stating that the supplier is not allowed to vary from standard company policies and practices on these issues, and state that other customers have no problem agreeing to their changes. Your negotiation team should be prepared for this type of stonewalling and be armed with information to support its position on the issues, while also being prepared to escalate by confirming in writing that a failure to make progress will result in you proceeding with the next-ranked proponent once the negotiation period lapses.
4. Silence or Playing Stupid
When the negotiator blocks discussion by responding with silence or acting as though he or she does not understand your position, it can be characterized as Silence or Playing Stupid.
For example, you are on a conference call trying to finalize a contract award. Whenever you raise outstanding issues, you are met with long periods of silence or repetitive questions about basic issues that you have already covered. Your project team may get frustrated, since you are running out of time and need to get the project started, and then express their urgency to the supplier. The supplier may respond by offering to sign a “standard letter of intent” or “early start letter” to get the project going and to then paper the deal once you have had time to work through the issues. Once you agree to this tactic you have lost your negotiating leverage and have taken your process outside of due process boundaries. Your negotiation team should be ready in advance to respond to this tactic and be ready to remind the selected supplier team that they have the prescribed negotiation period to either close the deal or lose the deal to their next-ranked competitor.
5. The Red Herring – “Dead Fish on the Table”
Negotiators who raise a contentious false issue and then try to leverage a concession from you in exchange for abandoning the false issue are using a tactic called The Red Herring.
For example, when asked to present their discussion list for negotiations, the representatives for the selected supplier may send you a chart with a long list of issues. Some of the issues on that list may appear to be generic and not even relevant to the contract. Other points may raise issues that are already covered under the contract documents. Negotiation teams should avoid being drawn into these false issues or feeling that they need to counter every raised issue with a concession, since trading off against a swarm of red herrings can quickly turn a negotiation into a rout for the supplier.
6. Limited Authority
Limited Authority is a tactic where negotiators block your request by claiming that they do not have the authority to deal with the issue.
For example, representatives for the supplier may arrive for contract negotiations and inform you that their project lead was called away at the last minute for an urgent out-of-town assignment. They tell you that they are not authorized to discuss the issue list you provided them last week without their project lead. However, to help move the process forward, they offer to go through the list of requested changes that they sent you that morning. Negotiation teams should be careful not to fall for this tactic and turn the negotiation into a one-sided concession session. Your negotiated RFP process rules should clearly establish that the negotiation representatives for the supplier should have authority to bind the supplier. If they show up without authority to bind, this procedural transgression should be immediately documented to support your ability to terminate negotiations if necessary if you run out of time. You should not feel compelled to proceed with a meeting in those circumstances.
7. The Decoy
When the selected proponent sends in its “B-team” to scope out your positions on key issues and to make temporary tentative concessions, only to retreat and be replaced by the “A-Team” that rescinds those concessions and uses knowledge gained by the “B-team” against you, it’s called The Decoy.
For example, day one of your major contract negotiations are going well with the representatives politely listening to your issues and concerns and seemingly agreeing to all your contract requests with friendly nods. Your project team may be comforted by this, breaking protocol and agreeing to a working lunch with the supplier representatives, during which members of your negotiation team may disclose key information, such as bottom line pricing or the urgency of closing the deal because of your project schedule, thereby disclosing your walk-away point, as well as the fact that you don’t really have a plan B since there is no time to go to the next-ranked proponent. The next day, you discover that there was a change in plans with the supplier’s project team, who now sends their “A-team” to restart negotiations. Suddenly you hit multiple walls on the issues on which the “B-team” originally appeared agreeable. Their “A-team” starts making a series of demands that go against your interest, knowing full well that your plan B is no longer viable and that you have lost your negotiation leverage.
8. Good Guy v. Bad Guy
Good Guy v. Bad Guy is a negotiation tactic where one of the supplier’s negotiators “takes your side” and makes concessions to get your buy-in, only to have those concessions later withdrawn by a more senior “approver” in the organization. This tactic is combination of Limited Authority and The Decoy.
For example, negotiations may have gone well with the lead sales representative during the first day of contract award negotiations under your negotiated RFP, but you then receive an aggressive email from the supplier’s in-house lawyer, stating that the negotiating team was not authorized to make any contract concessions on the issues that were raised on day one. You are then presented with a written list of outstanding issues, many of which you thought you had resolved in exchange for the concessions that they appeared prepared to accept. Based on your quick read, the outstanding issues list will likely take several weeks to resolve and will put your project behind schedule. Your project team has also lost its negotiating leverage, since it disclosed its bottom-line pricing and time constraints and lacks the resolve to disentangle all its prior concessions and start the process over. This is why you need to have a viable Plan B in a negotiated RFP process: going to the next-ranked proponent if negotiations go sideways. While you will rarely need to deploy that option, having the ability to walk away helps maintain “peace through strength” at the bargaining table and keeps the process focused on closing the deal.
9. Repeat Slicing – “The Last-Minute Ask”
Negotiators who attempt to dilute your deal by demanding a series of small, but accumulating, concessions are employing the Repeat Slicing tactic, often deployed as a last-minute ask.
For example, you agreed to the final contract terms with the selected supplier after spending two hours in limitation of liability discussions with the supplier’s lawyer. You shake on the deal. As you are packing up, the supplier’s VP then asks you to adjust the implementation schedule to factor in the standard delays in approvals that are common on the buyer’s side. He also asks you whether you would like to extend the warranty for an additional two months to cover that time at a special discount rate, stating that he is willing to do this by way of change order after the contract is signed. These are examples of seemingly small concessions that can quickly add up to significant changes to the contract terms if you open yourself up to the Pandora’s box of repeat slicing after formal negotiations have ended.
10. Stalling – Knowing Your BATNA
Stalling is a tactic where the negotiator stalls on closing to try to win further last-minute concessions. It is also a tactic that should be answered with your BATNA, or your Best Alternative to a Negotiated Agreement, a.k.a. your next-ranked proponent.
For example, you are two days away from the end of the established negotiating period but have received no supplier response to your urgent emails and phone calls. You need to wrap up the final contract award so that you can quickly proceed with your targeted contract start date. On the last day of your negotiating period the supplier representative tells you he is waiting for higher approvals on the final pricing adjustments that he previously agreed to in exchange for your other negotiation concessions a week ago.
He says that he has authority to proceed on the original bid price but faces at least a week or two of delays before he can get approval from his CEO on the lower pricing he previously agreed to. The question is, who will blink in this game of brinksmanship and will you be prepared to go with your Plan B, pull the plug on your contract award negotiation, and proceed to the next-ranked proponent in your negotiated RFP rankings? In a negotiated RFP process, negotiation teams need to be fully engaged and committed for the entire negotiation and be prepared to go into overtime with their BATNA, if necessary, as a counter-balance against making last-minute concessions.
