Typically, an RFP proceeds in discrete stages with solution provider selection and contract negotiation taking place in strict sequence. This makes sense on the face of it, as the technical and business aspects need to be fully considered before detailed discussions on pricing, delivery and service levels can commence. However, there is a risk of conceding negotiating advantage to the solution provider by making it known that the deal is in essence theirs to lose rather than win by making the final remaining bidder known too soon.
In this scenario, as negotiations proceed, the solution provider knows that as more time goes by and effort is invested in the process, the less likely they are to have to make undesirable compromises in order to close the deal. Meanwhile the purchaser is under growing pressure to complete negotiations and move on to delivery of the solution itself.
This situation can be avoided by altering the sequence of solution provider selection and negotiation, leading to potentially considerably improved outcomes. Essentially, the objective is to maintain leverage throughout the process by having the selection and negotiation stages coincide with each other. The leading candidate (or even more than one candidate) can be asked to respond to contract terms and other details as part of the final selection steps. In a sense, this means “pre-negotiating” pricing and terms ahead of actually awarding the final contract. Taking this approach, solution providers are kept on their toes and will be motivated to participate in a genuine negotiation.
As soon as the deal is agreed, the contract award and successful solution provider can be announced. This is an important final step in itself, as failing to inform the unsuccessful bidders, particularly on a timely basis, is entirely unacceptable, although all too common. Inadvertently giving a solution provider the premature impression that they have been successful ahead of contract and pricing negotiations weakens your position and is best avoided!
- Avoid informing the likely successful solution provider that the deal is to be awarded to them until as much of the contract negotiation as possible have taken place.
- Have the selection and negotiation steps overlap, so that bidders view negotiations as an integral part of the selection process, not the conclusion.
- Ensure that all solution providers that have submitted proposals are informed of the outcome promptly and with guidance on why their bid was not progressed.
Read more tips on choosing marketing technology in our white paper Worst practices in RFP management, available for download now.