Major Contract Negotiation for an integration services provider

The Challenge:

Following a long period of challenging financial results amid an aggressive and competitive market exacerbated by global market conditions, Organization X had come from the outside to the final 2 competitors for a game-changing public outsourcing deal with projected revenue in excess a minimum of $10Bn over 10 years. The deal was headline, front page national news as it involved the outsourcing of the business processes for a major Government agency. All the company’s top resources were highly engaged in winning this ‘must win’ transaction against the incumbent.

A little over a year before the winner was to be decided, another major government agency announced its intent to engage providers to perform a national technology transformation that potentially impacted every citizen in the nation. Not only was this beyond complex from a technology and ‘customer buy-in’ perspective, but the procurement agency was also known to take a very aggressive stance in contract negotiation and risk management; expecting industry to ‘step up’ and assume the risk of failure almost entirely. Industry was also nervous since, on one hand, any serious integration provider needed to be ‘seen’ to engage in the procurement. However, given the draft solicitation and contract terms, there was a high preference to take a ‘sub’ rather than ‘prime’ position. Organization X also struggled to find internal team members to work on the transaction as it was considered somewhat of a ‘poison chalice’ given the high visibility Organization X’s parent company would have of all activity and the likely view that this would be a less favorable deal that the one already being worked.

Action:

We undertook this transaction understanding our goal was not to ‘win’ a prime seat. However, we could see that the experience would be extremely valuable and that this was an opportunity to work on protecting Organization X’s best interests in very novel ways. It would also allow us to work closely with the parent company and participate in highly charged in-person negotiations with a ‘Goliath’ of an opponent. Over almost 8 months, with a skeleton team, we worked all aspects of the transaction (prime negotiation, commercial terms review, risk assessment and management, subcontract negotiations, Parent company Board review and approvals) with limited internal support and external counsel relationships that we were also required to forge and manage. The transaction tempo was brutal and called for many 18-20 days, 6 days a week over that period in an atmosphere of suspicion, tension and political gamesmanship. Our approach was to try and take the high ground and not only negotiate externally but ensure that all internal parties understood each other’s motives, positions and worked effectively to as smooth of a conclusion as possible. In the middle of this period, our General Counsel resigned which was personally devastating as he was a source of wisdom and unequivocal support. However, we had built strong working relationships with other executive leaders who were available to mentor and guide as required. 

Outcome:

Our response to the RFP was strong enough to be credible and gained us a key subcontractor position under one of the major primes with sufficient protection for the enterprise when the inevitable delivery issues started to emerge not long after the project commenced. Rather than being perceived as a career-limiting activity, most of the team who worked this transaction were promoted for the manner in which we had conducted ourselves during a very challenging program.