Master Agreements, Service Contracts--Negotiating with Procurement

Negotiating with Procurement at large companies is where small and mid sized companies, entrepreneurs, vendors, independent contractors and consultants face the  daunting Master Agreement or Services Contract.  Wielding a typical fifty page plus agreement, the Procurement Department seeks to slash and cut costs.

Emboldened by the recession and corporate dictates, Procurement takes a commodity pricing to most contracts while demanding unparalleled services or goods.  They use a Master Agreement or Service Contract or some other global contract form arguing that  they have to have a uniform agreement.

We had one client who had successfully used our concise 5 page contract form for almost 10 years with a global company come to us with a new 86  page Master Services Agreement. The Global Procurement division of the company said that master agreement must be signed to continue getting business.

What do you do with a small contract amount, a client who needs to watch every cent and a global company slamming down terms through such master service agreements and Procurement?

First, you make sure you have a business advocate inside the Global Company who will go to bat for you with Procurement.

Second, you prioritize--what is really truly worth fighting for so much so you will walk away?

Besides quickly pointing out where Big Company could eat the client's lunch through gotcha provisions (what we refer to as operational you snooze and lose contract provisions), we came up with four key points that the client had to  negotiate  or walk away from.

Make sure you develop a sound strategy on walk away points. What can you give up in exchange for those key terms? Is your evangelist at the customer helping you regarding those critical issues? Are you truly prepared to walk away? Easy to say, but hard to do when you have potential revenue staring you in the face. And remember the key negotiating strategy, we just want what's "mutual, fair and reasonable."