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Understanding Government Tender Negotiations
Government level business is crucial for gaining traction in any business. Due to its large volume and lucrative nature, government business is always most sought after by organizations big and small. The prestige that comes with becoming a supplier with any government business is above the value of the contracts. Besides, government contracting has a lot of scope for repeat business as suppliers may expect authorities to give repeat business. It is due to this fact that understanding government tender negotiations are crucial to securing government contracts. In this article, we shall show the major ways in which companies can understand negotiations with governments when it comes to tenders.
The process of a government tender undergoes several stages where bidders interact with officials from the government entities to clarify and seek information on the exact nature of procurement. During this activity, it is imperative that bidders understand the requirements set out by the authorities, know their own position in the tender stage, analyse the market and competitors as to their offering and propose a suitable solution. In some cases, attaining information beforehand through a prequalification process or a prior information study on the procurement can go a long way in securing the contract. For unique product offerings, companies can help present their products in a way that the tender is issued keeping in mind the company’s offering so that they are best positioned to respond.
One of the key ingredients in understanding the negotiation process is the clarification meetings held by the authorities on specific procurement projects. It is to be noted that government business can be achieved through a lot of human communication strategies that can communicate and convince the authorities about the company’s offering as the best solution to the authorities. Preparing a set of questions for a clarification meeting is an ideal way to stay ahead of the competition and let the authorities know your stance on the offering. It also conveys a soft signal that the company is well prepared for the tender and is best positioned to offer the solution.
The negotiation phase usually happens through effective communication. With the advent of eprocurement portals, the form of communication has changed but it still forms a vital part of public procurement. Negotiation on pricing can happen through regular homework on authorities past purchase records, the industry standards, competitor analysis and belief in the product and its associated pricing. Delivering a product or a service that is unique in the market can be capped at a higher price given that the companies can justify the price with the value added services. A good negotiation strategy is to focus on a win-win situation for the authorities and convey the benefit of the product in lieu of its competitors in the market. Doing this shall ensure that the value concept is conveyed. Showcasing a flexible approach to the bid can also help in the negotiation process. Organizations must show flexibility in terms of turnaround time, delivery mediums, payment terms and even supply chain alternatives to give more options for the authorities to choose from. Negotiation tactics can also include price discounts, volume discounts on quantity in product based procurements, subscription based services, pay as you go models and service contracts along with the product itself. The aim must be to make the offering most attractive amongst others. Since government tendering is a transparent process, offering transparent pricing is the best strategy in most cases. Unless specified, all costs must be mentioned upfront including logistics, support and maintenance to allow the authorities to fully understand the scope.
A post negotiation plan must be in place for large value procurements. This includes a communication strategy, a follow up plan, monitoring performance of the contract being executed and finding loopholes if any in current contract with any other providers. By doing the homework correctly, manufacturers and service providers can simply convince their offering to the authorities. Building a rapport with the officials is also a good negotiation strategy as it can promise future business. Even if a single contract is lost, companies must still follow up with the authorities and make them believe that they are present to make the situation better and work for the development rather than just transactional business.
Overall, government tender negotiations are not a lot different from other business negotiations apart from that it requires a more astute understanding of the requirements and the margin for error is minimal. Companies need to ensure they work as a team with the authorities and really want to develop solutions for the betterment of the society. A good CSR program and a healthy social image can also work well for companies in specific industries. The corporate reputation must also be kept optimum and any blind spots must be cleared out with the authorities directly. Visit Tender Impulse for more information.