Bargaining tactics and strategy in a Government/Contractor bilateral monopoly
Van Veen, Dennis Gerard.
David V. Lamm
Terasawa, Katsuaki L.
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The purpose of this research is to examine potential bargaining strategies and tactics which might be used to respond to an offer perceived as unfair or unreasonable from a sole source offeror. Initially, a sole source offeror normally has considerable bargaining leverage over the Government. Pricing data needed to properly evaluate the seller's quotation may be incomplete, inaccurate or unavailable. Urgent and compelling need may require accelerating the procurement process. Using bargaining theory and the classic economic paradigm of bilateral monopoly as a foundation for the research, potential bargaining strategies and tactics were evaluated through a survey of 62 Department of Defense contracting specialists. A primary conclusion of the research is that attaining a bargaining agreement that reflects a fair and reasonable price under bilateral monopoly conditions is not possible unless the Government possesses adequate information to accurately assess the fairness and reasonableness of the offered price.
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