Chapter 4 Gathering Data

There is a wealth of information out there that can help you and your team prepare for the negotiation. In fact, you’ll be staggered by the sheer volume and number of sources of useful information that’s available. When faced with this large amount of data, it is important to remember the main reason you are gathering data: to verify that the contractor’s proposed pricing, terms, and conditions are fair and reasonable and, if not, to develop and defend your position on what you consider fair and reasonable. Keeping this in mind will help you limit your search and prevent information overload. So, let’s talk about some of the kinds of data you’ll want to get, and where to get it.

Remember that the data gathering you’re doing at this stage of negotiation preparation is solely to help you come up with your negotiating position, given the contractor’s proposal and your customer’s needs. We’ll discuss in a later chapter how to gather additional data to give you important clues and insights into the folks that will be sitting across the negotiating table from you. The following are some of the most important sources of data you will need to help you establish your negotiation positions.

THE REQUIREMENTS PACKAGE

Before you start gathering data, you need to know what you’re gathering data for—in other words, what you’re buying. This important information is contained in the requirements package your customer has forwarded to you. The requirements package will contain all sorts of important information: the purchase request document, the government cost estimate, delivery or performance requirements, requests for waivers of competition requirements or publicizing requirements, required amounts, delivery dates, performance periods, available GFP, and so on. However, the heart of the requirements package is the requirements document. This document is your customer’s description of the supplies or services he needs. You’ll eventually wrap the business terms and conditions around this requirements document to create the solicitation document—another key document you need to help you prepare for negotiations. We’ll talk about it later.

Don’t get hung up on definitions here. Requirements documents are called by many names: statements of work (SOWs), performance requirements documents, specifications, performance work statements (PWSs), statements of need (SONs), statements of objectives (SOOs), and so forth. Your agency may prefer a particular term, or may even have a completely different name for them. Although there are some differences represented by the different names, they are all forms of requirements documents.

You and your team need to know—and I mean really know—the requirements document. You can’t be an informed buyer if you don’t have a full grasp of what you’re buying and why. If you’re truly being a business advisor to your customer, as the FAR requires you to be, you should have had a hand in helping your customer develop this document. If not, you need to get your hands on it as soon as possible, even if it’s in draft form, and even if you get it well ahead of receiving the rest of the requirements package. Because you’re not expected to be the technical expert, some of the language in the requirements document may look like Greek to you. Make sure you ask your technical experts to explain the parts of the requirements document you don’t understand to you in layman’s terms, so you fully understand what you’re negotiating for.

THE SOLICITATION DOCUMENT

The solicitation document is what was sent to the prospective contractors inviting them to submit bids, proposals, or quotes. As mentioned earlier, the requirements document will form the heart of the solicitation document, but it’s not all the solicitation document consists of. The solicitation document tells the prospective contractors not only what the government needs (the requirements document), but gives them additional guidance about how to go about fulfilling that need when they submit their proposals, what their proposals should look like, and how you are going to conduct the evaluation of their proposals after they are submitted to you. This information is also crucial to planning for the negotiation.

Chances are, you’ll already be familiar with the additional information contained in the solicitation document, since you were the one who put it together, but the rest of your team may not be. Make sure all team members are educated on what the solicitation document requires contractors to do. For instance, how long did it give the contractors to respond with their proposals? Did it require any additional information from the contractors not asked for in the requirements document, like strike plans, small business subcontracting plans, or additional reporting requirements? Did it inform the contractors they would be evaluated using the lowest price/technically acceptable (LPTA) method or the tradeoff method? What factors did it state that are going to be used to evaluate the proposals, and what is their relative importance to each other? What type of submission was requested—a proposal or a quote? Are oral presentations required? Can partial awards be made, or are only all-or-none submissions going to be allowed? Is this acquisition being treated as a simplified acquisition?

These are most of the “biggies,” but not necessarily all the information a solicitation will contain. The answers to all these questions will have an impact on your negotiations, and on how you must prepare for negotiations. They will dictate how the proposals will look when they are submitted, the level of competition you’ll have, the importance of technical factors versus price, the extent and depth of information expected in the proposals, and so forth. Not only you, but your entire team, will have to understand the solicitation’s impact on all these things to prepare and conduct the negotiation properly. One of the biggest mistakes I’ve seen government teams make when planning for a negotiation is to concentrate only on the requirements document and not on the entire solicitation document.

THE CONTRACTOR’S PROPOSAL

The next most important source of data in preparing for negotiations is the contractor’s proposal. A common saying in negotiations is, “He who speaks first loses.” Now remember that with government negotiations, you don’t want any losers; you want a fair and reasonable outcome for all. However, having the contractor’s proposal without giving the contractor the benefit of your cost estimate is one of the huge advantages you have in negotiations. You force them to speak first by requesting they send you their proposal, which must be priced. Simply by having that proposal, you already know the contractor’s going-in (or maximum) position. A careful analysis of the proposal can yield other important facts too—like who their negotiators might be, what other business goals the contractor might be trying to attain, and so forth.

The proposal also will have that particular contractor’s technical approach to addressing the needs your customer outlined in the requirements document. It’s their “how-to” solution to your customer’s problem. You’ll have a technical team review their approach in detail, and this review, or technical evaluation, will create many of your issues and positions for the negotiation. The technical team will summarize all this in a technical evaluation report, which is your next source of important information in preparing for the negotiation.

THE TECHNICAL EVALUATION REPORT

After the contractor proposals are received, you’ll have your technical experts evaluate them. This evaluation will find weaknesses, significant weaknesses, deficiencies, strengths, and so forth, in the contractor’s proposed process for fulfilling the need. Your technical team will generate a technical evaluation report summarizing all their findings and comments, tailored to each contractor’s unique approach. This document, addressed to you, the CO, will form the crux of your prenegotiation positions on the technical aspects of the negotiation. In fact, it’s the most critical document you’ll have to prepare for negotiating the technical merits of various proposed solutions. Make sure your technical folks write this report in language you, a nontechnical expert, can understand.

FACT-FINDING/EXCHANGES

Another important source of information may be notes or memos written by the government as a result of fact-finding or other exchanges between the government and contractors—either prior to or after receipt of their proposals. The preaward stage has several opportunities to have exchanges with contractors: communications, clarifications, competitive range determinations, and so forth. In noncompetitive negotiations, your ability to gather additional facts to help you prepare your negotiating position is even more wide open. All these exchanges are documented and can be the source of useful data to help you prepare for negotiations. In all cases, you’re gaining more information about the contractor’s position, and this better prepares you to negotiate when you sit down at the bargaining table.

PRICE ANALYSIS AND COST ANALYSIS

While your technical team is scrutinizing the technical aspects of the contractor’s proposal, you and your other team members are taking a look at the dollars and the business terms and conditions the contractor is proposing. When the government reviews the contractor’s cost proposal, it uses price analysis, and sometimes cost analysis (depending on the type of contract contemplated). Cost analysis, used mainly for cost reimbursable-type contracts, can give you a detailed analysis of the important individual elements of cost that make up the contractor’s proposal. Price analysis is simply a comparison of the contractor’s “bottom line” price with other contractor bottom lines to determine whether it is “fair and reasonable.” Although price analysis isn’t concerned with the individual elements of cost, its results can still be useful to you as a negotiator.

An additional technique that’s sometimes used is a should-cost analysis, during which you examine the contractor’s technical approach to determine what it should cost, given reasonable efficiency and economy, and compare it with what they’re actually proposing. Because you’re considering technical aspects and relating them to costs using this method, you’ll usually need the help of your technical team to perform a should-cost analysis correctly.

If you’re lucky, you may be able to recruit the assistance of a price analyst or a cost analyst to help you with the evaluation. If not, you become these analysts by default. In any case, just as the technical review and report helped your team develop your prenegotiation positions on technical matters, these types of reviews help you form your prenegotiation positions on price, cost, and business issues.

ACQUISITION HISTORIES

Another great source of data is the acquisition history your agency or other federal agencies have amassed as a result of buying the same or similar items in the past. Chances are, your agency has bought this kind of stuff before. If you can find those files, you’ll have a head start on gathering and evaluating data such as historical prices paid, warranties, delivery times, and so forth. You can look at what was considered fair and reasonable in the past, and use it as a starting point to form your prenegotiation objectives. Of course you may have to dust them off a bit and revise the information to make it current, but at least you have a place to start.

You can find these files by searching your agency’s database, by searching databases and Web sites of other agencies, by talking to other COs, or simply by asking the contractor. In fact, most contractors will have to give the government a list of previous contracts they have worked on relating to the requirement. This information allows the CO to find them responsible and to gauge their past performance history. This list is another starting place, already tailored to your contractor, for obtaining this acquisition history.

OTHER SOURCES OF DATA

There are many other government and commercially available sources of data out there for you to use. I’ve listed a few of these sources in Appendix B for your use as an easy reference. I hope this helps you; but remember, this list is not all inclusive—not by a long shot!

Please be aware that creating or gathering all this information, and then sorting through it can be a huge task—and one you won’t want to do all by yourself. Remember: You have a team. During your team kickoff meeting, assign gathering and analyzing data to individual team members. Consider tailoring the amount and kinds of data you’ll gather to the size and complexity of your particular situation. Folks, this is a judgment call you’ll have to make. Don’t get caught up in the “paralysis of analysis.” If you try to collect all available information before you negotiate, you’ll never negotiate. You’ll spend all your time collecting data. Collect enough data to make smart decisions and press on!