“Seven Secrets for Negotiating

With Government: How to Deal With

Local, State, National, or Foreign

Governments—and Come Out Ahead,”

by Jeswald W. Salacuse;

Amacom, New York, New York;

2008; 210 pages; $24.95.

 

About seven years ago, at the very moment when fiscal conservatives had pretty much made their case for downsizing government at all levels, we became involved in a war that increased the need for more government, not less. The first to benefit were some of the largest corporations in the country who had the know-how to get substantial government contracts and whose senior executives had just benefited from the twin windfalls of higher income and a major roll-back of their income tax.

Smaller companies benefited, too. Not only had a growing number become eligible for small business set-aside contracts, but many of the most skilled small company owners (those earning not more than $23 million annually, which is the federal government’s definition of a small business) were able to obtain teaming agreements and subcontracts from the corporate giants.

By 2004, things started to get complicated. There was no end to the war in sight, which meant that the larger corporations which dominated the field made even more money, but were facing a growing second tier of companies. The first tier companies used a time honored competitive tool called “buying out the competition.” The top 10 government contractors bought out many of the companies that occupied the eleventh through thirtieth positions. Those employees who were displaced by the buy-outs either went to work for other contractors, or formed their own contracting positions. Some even went back to being government employees. Displaced senior employees, especially those who had been generals and admirals within the Department of Defense, became consultants to their former employers.

The net result of all this shuffling was the downsizing of the government contractors and their increasing use of consultants. It wasn’t until 2006 that the Bureau of Management and the Budget figured out that the government was, in fact, downsizing itself. The cheering stuck in everyone’s throat, however, when it was realized that nearly half of all non-military federal employees would be retiring by 2010, and no one wanted to replace them. What was worse, most of them wanted nothing more to do with being government employees. They took the retirement packages offered to them, and walked into jobs at private consulting companies and government contractors.

That’s pretty much where we stand today, with the exception that the laws of supply and demand being operative, taxpayers will not only have to pay more to government workers, but also have to pay for generous retirement benefits, plus the inevitable double-dipping that will take place.

What does any of this have to do with negotiating for government contracts? It’s essential to know because it dictates the shape of the negotiating table and the negotiating process.

Author Jeswald Salacuse points out that government officials will say they are simply following the law. Contractors will say that they are simply meeting the requirements of well-documented and broadly published contract solicitations. Salacuse sums up his “seven secrets” by saying:

“1: Governments DO negotiate with private parties about anything.

“2: Governments are NOT all powerful in their dealings with private parties.

“3: Governments are NOT united monoliths in those dealings.

“4: Governments DO NOT seek only to advance the public interest in their negotiations.

“5: Governments ARE susceptible to influence techniques by private parties.

“6: Governments DO accept third party interventions in their negotiation with individuals.

“7: Government decisions, once made, ARE open to negotiations.”

“Seven Secrets…” is a no-nonsense book written in broad brushstrokes telling what it takes to become a profitable contractor for any level of government. 

                                                                        -- Henry Holtzman