Importance of Negotiation Skills in Public Procurement Other Services

IMPORTANCE OF NEGOTIATION SKILLS IN PUBLIC PROCUREMENT

Negotiation is a field of knowledge and endeavour that focuses on gaining the favour of people from whom we want
things. It is the use of information and power to affect behaviour of persons to gain advantage. It is packaging of your
ideas in such a way that it meets current needs of your company as well as present priorities of your organization,
When do we negotiate?
1) When competitive bidding is not possible due to time, supply or specification constraint.
2) If it is a single source supply.
3) If mid course changes are to be effected during the execution of contract.
4) If there is long term procurement cycle.
5) If multiple terms and conditions are necessary.
6) If purchase involves high tooling or set up costs.
7) If prices are found to be unreasonable due to cartel formation by suppliers or supplier has used excessive
cushion.
There are three main crucial elements in negotiations.
1) Information: The other side seems to know more about you and your needs than you know about them and
their needs.
2) Time: The other side does not feel pressure of time or deadlines that you feel you are under.
3) Power: The other side always seem to have more power and authority than you think you have.
Before entering into negotiations, think about following;
1) Are we comfortable negotiating in particular situation?
2) Will negotiating meet our needs?
3) Is the expenditure of time and energy on our part worth the benefits that we can receive as a result of this
encounter?
Please believe that you can choose your attitude towards any given set of circumstances and also have the ability to
affect the outcome.
The types of power:
1) Power of competition: Always show there are alternatives and demand for your order.
2) Power of legitimacy; Set of rules, bold signs and documents have effect on negotiations.
3) Power of risk taking: Calculated moderate risk taking keeping in mind resources available helps in negotiations. Loss
if any should be manageable. We can involve others to share the risk.
4) Power of commitment: Your team should be committed to the task and share the responsibility and accountability.
All should adhere to line of approach decided.
5) Power of expertise: We never question our physician, auto mechanic, auditor as we know their expertise in
particular field. Develop expertise in related fields so you can ask probing questions when you face an expert in
negotiations.
6) Power of knowledge of needs: We should explore real needs behind stated position and issues. Knowing about
company’s real position on orders, individual’s targets and real needs helps in negotiating to satisfy hidden needs of
other party while achieving our targets resulting in win-win situation,
7) Power of investment: Let other party invest time and efforts and become sensitive to results before asking for
needed concessions.
8) Power of rewards and punishment If you can influence other party’s position in getting rewards or
punishment, you will be able to get better deal. In fact nobody will negotiate with you unless he is convinced
that you have power to help or harm his interests.
9) Power of identification: If people develop identification with your products/business, you will be in better
position to negotiate good deal. Just as you prefer a particular brand or stores or physician, people should
identify with your company. This is just the result of feeling good irrespective of quality, price etc.
10) Power of morality: Posing moral questions like” although your argument is valid, would it be the right thing to
do?” helps in getting our benefit.
11) Power of precedent: Current customs, procedures, practices like” We have always done it this way” hampers
negotiations. We should not fall prey to such attitude of other party/
12) Power of persistence: Persistence is to power what carbon is to steel. Persistence is essential to convince
other side of how strongly you feel about some terms.

13) Power of persuasive capacity: Understanding what others say or feel and putting our perspective in analogies that relate to other’s experience helps in building rapport and getting our desired outcome. Our evidence must be overwhelming and irrefutable. We must try to meet inherent needs of other party.

14) Power of attitude: Treat all encounters in negotiation as fun and game and have relaxed mind, This will help
in doing our best, being more creative and getting better results.
Time:
All negotiations veer towards finalization in last phase. Hence we should keep cool and not bind our selves with
any deadlines. Be flexible. Let other party get tense about the time and in hurry start giving concessions. Never
reveal your real deadline. Also we should not get taken in by deadlines given by other party and worry about
outcome if we cannot commit something by that deadline. Let us move to finalization slowly, persevere in our line
and handle all situations patiently without bothering about so-called deadlines.
Information: Information is the heart of the matter. It affects our appraisal of reality and the decisions we make.
Negotiation is not separate isolated event. It is a process. It starts much before actual face to face encounter in
terms of weeks or months. During actual negotiations across table, parties conceal their real interests, needs and
priorities as information is power. We should start getting information about other party long before actual
encounter through their suppliers, customers, and people from various departments by casual and seemingly non
intrusive approach. We can learn about their weaknesses, strength and other important parameters of the deal to
be discussed-that will help us to mould our approach during negotiations.
During actual negotiation, we should learn to take cues from non-verbal gestures.
Unintentional cues: Behaviour or words transmit an inadvertent message.
Verbal cues: Voice intonations or emphasis sends a message that contradicts words being spoken.
Behaviour cues: Body language as displayed in posture, facial expressions, eye contacts, hand gestures and
observation of persons on other side nudging or patting each other give out lot of information.
During negotiations step back and listen with your third ear and observe with your third eye. This will enable you
to get the message in its proper non-verbal context and enable you to see the pattern.
Criteria for influencing people:
1) Credibility of the person who is talking.
2) Content and appeal of the message.
2.1) Present both the sides of the issue for better understanding.
2.2) During discussions on pros and cons, present your favoured view point last.
2.3) Convey message in the beginning or end-people tend to forget the middle.
2.4) State conclusions explicitly, do not leave to people to decide.
2.5) Repeat messages that are important.
2.6) First arouse interest/need and then provide information to satisfy the need-that will improve acceptance.
2/7) Learning and acceptance are improved if stress is placed on similarities of position and not differences.
2.8) Stress desirability of agreement to facilitate agreement.
2.9) Agreement on controversial issues improve if they are tied to issues on which agreement can be easily
reached.

2.10) Do not place people on defensive or belittle their opinions- that makes them hostile.
2.11) Appeal to higher motives of fairness, worth and acceptance, request advice to bring better understanding of
the issues.
3.0) Proper choice of media, credible-noted sources of data, good environment, comfort, experience of previous
day plays major role in negotiations.
4.0) People with high need of social acceptance and those who cannot tolerate ambiguity and uncertainty are
likely to be influenced more.

H.M.BHATT(Baroda)