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Not in the Contract, Not Part of the Deal by Joe Auer

If it’s not part of the contract, it’s not part of the deal. This is one of 10 truths in technology deal making [Business Advice, June 4], and it’s an important one whenever you negotiate, regardless of the state of the economy or your relationship with a vendor.

The potential consequences of forgetting it make it all the more critical. Some have learned this the hard—and costly—way. Many times they have to get into a dispute with a vendor to discover that a clause is written into the vendor’s contract, right near the signature line.

Overlooked clauses cause countless problems. Here’s one way to counter it: When you issue a request for proposal (RFP), include a comprehensive description of your requirements, and make it clear that you expect all potential vendors to respond to every requirement. In order for the vendor to be in the running, its response to your RFP requirements must be included as part of a contract. Also, announce that contracts will include any additional vendor representations and inducements that you deem important. All of it is part of the contract, which is the only criteria you should use in selecting a vendor. And be sure you reiterate these ground rules throughout the vendor sales campaign. You may be surprised—this eliminates a lot of superfluous sales posturing, unrealistic user expectations and other unnecessary representations.

At some point in the discussions, you can offer an alternative. For those naive vendors willing to delete the “if it’s not in the contract, it’s not part of the deal” provision, you can incorporate things outside the contract into the deal, including verbal assurances of the vendor’s promised results and “guaranteed” success for the project. Few, if any, vendors will accept your offer, but it does make your point.

In addition, your RFP should contain a contract. For the best results, make it your contract instead of a standard vendor contract. And have every vendor respond to every provision in one of three ways: Accept the provision, reject it or accept it with specified modifications.

Also, make their responses to the contract a large percentage of your evaluation of them. Judge them on their contractual willingness. Why make a decision without paying attention to a vendor’s willingness to back up everything in the contract?

A second truth, one of almost equal significance, is that it is not a relationship of trust and it is not a partnership. If you’re unsure about that, ask your attorney what defines a legal partnership. For one thing, it involves being liable for each other’s actions. This isn’t what a vendor contract is about. Read one and you’ll agree: It’s not a relationship of trust; it’s one of mistrust.

This is a relationship where a vendor drafts a document that protects itself and passes the risk on to you. At some point, the vendor will say to you, “Trust us.” Ask yourself if it has shown any trust. In many cases, the answer is, of course not. So, forget the fantasy of a vendor “partnership.”

That doesn’t mean you can’t have a good, professional relationship with a supplier.

Just because it’s not a relationship of trust doesn’t mean it’s all bad. But we have a tendency to let down our guard when we think about a relationship of trust.

Along the same lines, I’ve heard customers say, “We’re partnering with them.” Don’t believe it.

When a client tells me that he’s partnering with a vendor, I say, “Could I see your partnership agreement?” Better than 99% of the time, it isn’t a partnership and it certainly isn’t a relationship of mutual trust.

These two truths will go a long way in supporting your deal-making efforts. Watch for future columns with more truths.


JOE AUER is president of International Computer Negotiations Inc. (www.dobetterdeals.com), a Winter Park, Fla., consultancy that educates users on high-tech procurement. ICN sponsors CAUCUS: The Association of High Tech Acquisition Professionals. Contact him at joea@nulldobetterdeals.com.

Copyright by Computerworld, Inc., 500 Old Connecticut Path, Framingham, MA 01701. Reprinted by permission of Computerworld.

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