We’re all familiar with negotiation – and many of us are likely to have put it into practice in other areas of our lives, such as when purchasing a house. What about negotiation in school purchases, though? Lorraine Ashover, director of Minerva Procurement Consultancy Services Limited, looks at procurement negotiation and why you don’t have to accept initial offers
There’s something about us British – we really struggle with negotiating, don’t we? Somehow, we’re just too polite to ‘haggle’ – and I wonder how much we are leaving on the table because of it. In the current climate of stretched budgets in schools perhaps it’s time to break out our ruthless streak!
As someone who works in procurement you’d expect me to be hardened to it by now but – confession time – I’m not. However, it’s my job, so how do I make sure I’m getting the best deal?
Firstly, I’d suggest that suppliers putting their best deal out there as their opening offer is pretty rare. So, on that basis, negotiating with them offers a good chance of having a beneficial outcome; as Roger Fisher and William Ury say in Getting to Yes – Negotiating an Agreement Without Giving In, ‘Any method of negotiation may be fairly judged by three criteria:
- It should produce a wise agreement, if an agreement is possible.
- It should be efficient.
- It should improve, or at least not damage, the relationship between the parties.’
Best and final offer
One of the best tools in your negotiation toolkit is the ‘best and final offer’ (BAFO). Once you have your tender or quotes to consider, it’s time to go back to your favoured bidder. Advise them that you’re very keen on their offer – but you’re not sure that is their BAFO. You’d be surprised at the number of suppliers who, seeing the sale almost in the bag, and remembering their targets, will offer an additional discount to get the deal over the line.
Another approach is to make it clear from the outset that the supplier will only have one chance to put forward their price, so it needs to be their best and only one – this is certainly an efficient approach!
Alternatively, why not put forward your own BAFO? For example, “Thank you for your quotation; however my budget maximum is 10% less than that – can you meet this price?”
Think ‘outside the box’
One thing to be aware of is that none of this applies when it comes to an OJEU process. Unless you are using a ‘negotiated procedure’ – which is highly unlikely for the sort of procurements schools get involved in – once bids are submitted, the price is fixed. Any kind of price negotiation would be seen as non-compliant under the Public Contracts Regulations 2015 and could lead to another bidder lodging a formal challenge to the contract award.
When it comes to negotiation people, usually, automatically think just about the price. It’s worth remembering that’s not all you can negotiate. There may be softer, ‘added-value’ options you could ask for which are of great value to you, but of little or no cost to the supplier – such as upgraded software, additional review meetings or invites to events and training.
Finally, don’t forget that negotiation is all about people. Building up a good relationship with, and understanding of, the individual on the ‘other side’ can deliver real benefits – or, without it, lead to a disastrous outcome.