If you follow professional football, you are familiar with the message generally given to an aspiring player just before he is cut – “Coach wants to see you.  Bring your playbook.”  The playbook, that step-by-step guide to on-the-field success, is something that teams guard zealously.

Not all teams, however, maintain the secrecy of their playbooks, and the U.S. Government is a case in point.  The Government actually publishes its playbook of bargaining techniques recommended for its contract negotiators.  Like the Commandments Moses brought down from Mount Sinai, the Government playbook consists of 10 Rules.  These Rules can be found in Chapter 6 of Volume 5 of the DoD’s Contract Pricing Reference Guides.  The Rules are all reasonable and, in many ways, predictable. Because “Forewarned is forearmed,” here they are –

Rule No. 1 –    “Be Prepared

It is difficult to characterize the motto of the Boy Scouts as unreasonable and let’s face it – if you enter negotiations less prepared than the Government, shame on you.

One problem that confronts contractors, however, is that in many negotiations, particularly negotiations relating to Government claims, audits, cost disallowances, and CAS noncompliances, the issues are only raised by the Government well after the fact.  This makes preparation difficult, because decisions relating to these issues may not have been well-documented in real time and decisionmakers may have moved on in the interim, leaving little if any institutional knowledge of the who, what, when, and why of long past decisions.  Contractor negotiations will always be more effective if the “preparation” includes a standard operating procedure of adequately documenting significant decisions in real time and maintaining those records for ready access and future use.

Rule No. 2 –    “Aim High”

The Government is no different from the contractor in this regard, seeking to maximize the outcome of the negotiation.  Unlike the Government, however, contractors operate under some statutory constraints with severe penalties when deciding just how high they can aim.  The Government’s “Aim High” stricture purports to be based on empirical evidence that a negotiator’s expectations strongly influence the outcome of the negotiations.  Negotiators who dwell on the weaknesses of their position often fall victim to the “Aim High” approach of their counterparts, and vice versa.  It may sound hokey, but the Reference Guide cites Norman Vincent Peale’s “The Power of Positive Thinking” in support of this Rule.

Rule No. 3 –    Give Yourself Room to Compromise

This is the obvious corollary to Rule No. 2.  The higher your initial aim, the more room you have to lower your sights.  And, if your first offer is your final offer, there really is not any room for negotiation at all.  The Reference Guide advises Government negotiators to compromise in a series of pre-planned steps, i.e., “a variety of positions that will permit you to demonstrate a range of apparently fair and reasonable positions.”  Some contractors may raise an eyebrow at the adverb used here – “apparently” fair and reasonable.  In any event, if the Government adheres to Rule No. 3, do not expect the negotiations to conclude swiftly.

Rule No. 4 –    Put the Pressure on the Contractor

Surely this comes as no surprise to anyone.  The Government holds virtually all the cards in this respect. Contractors operate at a distinct disadvantage here, and the Government knows it.

The only pressure the contractor can put on the Government is to walk away from the deal.  While that can work theoretically when negotiating to create a new contract, the thirst for new business often eliminates this option as a practical matter.  And once under contract, in a claims or audit context, the contractor has no real “walk” option, given the duty to proceed and/or the fact that costs under DCAA challenge already have been incurred.  The Government, by contrast, will be sensitive to and will seek to capitalize on the pressures affecting contractors, such as the importance of booking the business, the desire to maximize revenue at certain annual milestones, or the contractor’s justifiable concern over self-funding of an unresolved change for years while litigators engage in a seemingly endless disputes process.  And so, the Government will often advance positions that have been squarely rejected by courts and boards, ask for endless rounds of marginally relevant documents, plead “program poverty,” and wax eloquent about the criticism it will receive from “upstairs” if it accedes to your position, no matter how well-founded it may be.

Rule No. 5 –    Do Not Volunteer Weaknesses

Contractors often think that a frank recognition of weaknesses will demonstrate good faith and hasten a reasonable outcome.  That approach will not be reciprocated.  The Guidelines instruct negotiators as follows – “Never volunteer information that would weaken your negotiating position.”  The Guidelines further suggest the avoidance of known weaknesses in the Government’s position “by carefully worded statements or by avoiding a direct response to a direct question.”  The line between accuracy and inaccuracy when pursuing this stratagem can often be elusive and, unlike the Government, contractors can suffer severe consequences when failing correctly to toe that line.  When trying to capitalize on what you know to be a Government weakness, thus, listen to the Government’s answer, do not accept a non sequitur response, and rephrase your questions until you do get a direct answer.

Rule No. 6 –    Use Concessions Wisely

Here is an obvious supplement to Rule No. 3, “Give Yourself Room to Compromise.”  The strategy here is never to concede too much too soon or all at once, to offer concessions as if you are peeling an onion, to isolate individual concessions in your counterpart’s mind so that the total appears to be more than the sum of the individual concessions, and always to extract something more in exchange for each onion peel.

Rule No. 7 –    Say It Right

Rule No. 7 has to do with “style,” e.g., listening politely, permitting the counterparty to speak without interruption, avoiding the personalization of the discussions by referring to the contractor (the “XYZ Company”) as opposed to negotiator (“you”), and maintaining a calm demeanor and a modulated voice.  The Rule subscribes to the well-worn maxim about flies, honey, and vinegar.

Rule No. 8 –    Satisfy Non-Price Issues

In the end, all open issues need to be resolved.  There may be, on occasion, non-price issues that can be resolved before pricing, but most negotiations regarding disputed matters turn, ultimately, on price.  As H.L. Mencken so aptly put it, “When somebody says it’s not about the money, it’s about the money.”

Rule No. 9 –    Use the Power of Patience

This Rule is a natural extension of Rule No. 4, and any contractor that has attempted speedily to definitize an undefinitized contract action has felt its effects.  The operative assumption is that the longer it takes to get to “Yes,” the more favorable that “Yes” will be for the Government, because – outside of the contract formation setting where an award schedule is usually in place and expiring funds can come into play – the Government will often be holding the money and/or the contractor will be spending its own money without reimbursement.  That pressure can make time the Government’s most potent ally.  As Canadian novelist Janette Oke has said, “Impatience can cause wise people to do foolish things,” and the Government counts on that possibility.  See Rule No. 4 above.  It is incumbent on contractors, in response, to practice their own brand of patience, even if that patience is, as defined by former Apple executive Guy Kawasaki, “the art of concealing your impatience.”

Rule No. 10 –  Be Willing to Walk Away From or Back to Negotiations

If Rule No. 4 is “Put the Pressure on the Contractor” and Rule No. 9 is “Use the Power of Patience,” does Rule No. 10 come as any surprise?  While it is true that intervals between negotiating sessions provide an opportunity for reflection, for the collection of further support for your position or to answer Government questions, or simply for some “cooling off” before rejoining the fray, at the end of the day contractors often conclude that no matter how many rounds they go, the match will never end.  Remember, interest on a contractor’s claim does not accrue until it has filed a certified claim, so time has an opportunity cost for contractors.  At some point, the contractor may well be forced to conclude that “This is why God invented the courtroom.”