What are the main items need to be considered while negotiating a contract - Procurement?

A good contract is the contract which is easy to implement, easy to follow up with it's conditions either general or special and satisfies the interest of all stake holders.

• When negotiating a contract the first question you should be able to ask your self is " Does it achieve the best interest of the establishment,company or institution you are working in?"  A good contract is the one that assures that you will receive the best of the benefits from the second party with the least effort / costs from the first party which is you.
• INCO terms are a essential when negotiating contracts since they will affect the costs directly or indirectly on the establishment.
• Frame agreements must insure a price fixed for an item over a long period from6 months to one year.
• Always make sure that the contracts can always have a void for flexibility in order to reduce any addendum that can be added in the near future to the existing contracts.
• Discounts on any item must not be shown in the body of the contacts to secure the chances for further more negotiation.
• Make sure that that the payment terms complies with the cash flow and the desires of your employer and specify them accurately to avoid the future financial court conflicts.

Regards

Price, Quality, Availability/Quantities, Locations, Authority line, time frame.

Normally, negotiation takes place on the contracting clauses /terms like, price, quantity, discount, delivery terms, payment terms, delivery schedule, warranty conditions, personnel deployment and quality control issues. 

When some of the clauses of supplier’s offer require an update and modification, negotiation for only those clauses is required in the interest of the work.

• Scope
• Schedule
• Price     
• Some other things that need to be considered
• Responsibilities
• Authority
• Applicable law
• Project management process need to be used
• Payment schedule

Prices,Terms of payment,Delivery time,Delivery Methods,Quantity.

1. Specifications
2. Request for Bids
3. Bidding
4. Reviewing the Bids
5. Award of the Contract

Here are some tips on preparing a bid:

• Allow sufficient time to prepare and evaluate the bid.
• All suppliers should receive identical copies of your bid documents and any subsequent changes.
• Whenever practical, every effort should be made to include our internal shops and departments in the bidding process.
• Specify a deadline for receipt of bids.
• If the bid is quite complicated it may generate a host of questions or require a site visit from the suppliers before they can bid.
• Make sure the person who is submitting the response is appropriate.
• All bids are confidential and should not be used as a bargaining tool among suppliers.

• • The suppliers will need sufficient time to respond (usually two to four weeks depending on the complexity).

• • If you extend this deadline for one, you must extend it for all.

• • It may be most expedient to hold a pre-bid meeting with all parties present.

• • All bids should be signed by an officer of the supplier's company with authority to commit the company's resources.

• • This is called bidding collusion and it ruins the bid process.

Once bids are received, you need to evaluate them in a fair and open process. While the procuring of goods and services at the Institution does not require the lowest bid, it is required to document when a lower bid was not accepted (see Single or Sole Source justification section of this Guide). Some tips on evaluating bids include:

• Take the time to review the bids carefully.
• Narrow the field by determining which vendors are responsive. A responsive bid will include ALL the information needed to procure the product or service up front.
• Look carefully at the proposed prices. Be wary of suppliers who substantially underbid others. It might mean the supplier misunderstood the requirements or is low balling the bid. In this case, the product or service might suffer.
• Consider the supplier's past performance, after sale support and services, technology and other criteria that might separate one supplier from another.
• Always compare TOTAL acquisition and life cycle cost. This includes shipping, consumable supplies, service agreements, potential repair parts and other after purchase costs.

There are times when the bid process cannot be used. When this occurs, prices must be negotiated. Negotiation should be used when:

• The purchase involves a significant amount of money or requires an ongoing effort. In these situations, negotiation may be used in conjunction with a bid.
• The number of suppliers available is too limited to create competition via a bid.
• New technologies or processes are required for which a selling price has yet to be determined.
• The supplier is required to make a substantial financial investment or other resources.
• There is not enough time available to seek competitive bids.

when you write a price negotiation letter to the supplier, you want to be fair to the supplier and ensure that he makes a reasonable profit but he delivers the products/services with the highest possible quality and on time.

Selecting a procurement strategy first involves analysing the requisition and determining the:

• nature and specifications of the requirement

• expected value of the procurement action.

  Once the above have been determined, then the following decisions can be taken:

• which unit within the organization should conduct the action

• whether to procure the item or to make/lease/rent it

• whether to procure through an existing long term agreement (LTA)

• whether to conduct a new competitive solicitation process

• which solicitation method to be used (RFQ, ITB, RFP)

• which competition should be chosen (limited, open or waiver).