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In my first job after graduating from college I was a civilian Budget Analyst with the U.S. Air Force and worked very closely with contract negotiators who were negotiating multi-million dollar contracts with aircraft, engine, and avionics equipment vendors. Vendors were selected based on the philosophy of being the lowest and most responsive bidder meaning that the “quality” of each vendor’s bid was strongly considered along with the price. However, what you find is that bidders will sometimes “low ball” the bid on a multi-year contract and suddenly in the second or third year the costs have escalated dramatically after they got the contract resulting in a “cost overrun” for the government. As a negotiator, what are some of the precautions you may want to take to anticipate and be prepared for this dynamic in your negotiations and ultimate agreement?
Expert Answer
While negotiating for a contract that too a huge one involving so much money we need to take some precautions to avoid problems once the contract is signed. We need to cross check the background of the bidder and only genuine ones must be selected. The clause stating that increase in prices is strictly not accepted during the course of this contract and the bidder must sign it. We must also add the details of the product agreed by both the sides . These precausetions will help in preventing burden in the future until the next contract period.
