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GSA Expo 2009. Negotiating with Confidence to meet Agency Needs. Behn Kelly US Air Force. What Is Interest-Based Negotiating?. The Five Principles. Separate the people from the problem Focus on interests not positions Create options for mutual gain Develop your BATNA

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GSA Expo 2009

Negotiating with Confidence to meet Agency Needs

Behn Kelly

US Air Force



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The Five Principles

  • Separate the people from the problem

  • Focus on interests not positions

  • Create options for mutual gain

  • Develop your BATNA

  • Define objective criteria


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Separating People & Problem

  • Perceptions

    • Place yourself in their shoes

    • Do not interpret their motives by your fears

    • Discuss the perceptions

  • Emotions

    • Recognize they exist

    • Acknowledge them and allow for venting

    • Do not react to them

  • Communication

    • Listen & avoid misunderstandings


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Separating People & Problem

  • Be patient

    • Tolerate the need for the other side to “vent” and then engage

  • Leadership

    • Be prepared to build or maintain a relationship/trust if necessary


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Separate the People & Problem

• Stand in their shoes: why did this great dog eat the new couch?

• Analyze the Emotions Why am I so angry? Are my feelings hurt? Does this mean the dog doesn’t love me?

• Try on their perspective What was the dog thinking? Maybe there was a legitimate reason: a burglar? forgot to feed? Was scared? Protecting?


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Separate the people from the problem

Focus on interests

not positions


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Focus on Interests

Positions are pre-determined OUTCOMES

Interests are your NEEDS TO BE SATISFIED


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Focus on Interests

  • Look for interests behind positions

  • Prioritize interests

  • Consider other side’s interests

  • Critical to preparation before the negotiation!


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Positions

Solutions to problems

Specific & definite

Basis for argument

Require justification

End discussion

Interests

Why a particular solution is preferred

Reasons underlying positions

Require explanation not justification

Start discussion

Focus on Interests


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Positions vs. Interests

Think of them as parts of an iceberg…

10%

Positions

90 %

Interests

I n t e g r i t y - S e r v i c e - E x c e l l e n c e

11


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Interests

  • Examining the prioritization of interests highlights areas of mutual gain

  • Exchange a low priority for you to meet a high priority for your counterpart


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Positions v. Interests

Owner:

•Interest No. 1: Stop eating the furniture. Bad for dog’s health; bad for living room and pocketbook.

•Interest No. 2: Find a way to make the dog behave

•Interest No. 3: Do not harm the loving relationship.

Pooch’s Interests:

• Interest No. 1: Food! Bones!

• Interest No. 2: Dog-joy! Fun, fun, fun!

• Interest No. 3: Protecting and keeping my human buddy happy!!


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Separate the people from the problem

Create options

for mutual gain

Focus on interests

not positions


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Options for Mutual Gain

  • There can be more than 1 option

  • Look for ways to work together

  • Find value in differences

  • Common sources of differences:

    • Risk

    • Timing

    • Perceptions

    • Marginal value of the same item


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Options for Mutual Gain

  • Brainstorm possible solutions together

  • Consider options for joint benefit

  • Create what neither of you could do on your own

  • Look for possible trade-offs that can turn potential into reality


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Options for Mutual Gain

Positions

Options for Mutual Gain

Interests

17



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Separate the people from the problem

Create options

for mutual gain

Develop

your

BATNA

Focus on interests

not positions



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BATNA

Best Alternative to a Negotiated Agreement

  • What you will do if an agreement is NOT reached (e.g., what will happen in litigation, what the GAO or BCA will likely hold)

  • Alternatives are OUTSIDE the ADR negotiation

  • Must be “real” and concrete

  • Must be achievable


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BATNA

BATNA

Positions

Options for Mutual Gain

Their Interests

Your

Interests

22


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Developing BATNA

  • Developing BATNA is creating alternatives BEFORE your negotiation

  • Questions that assist in developing BATNA:

“If we don’t agree, I can always…..”

“What will I do if this negotiation fails?”

“What alternatives do I have?”

“What alternatives can I create?”

“How can I weaken the BATNA of my counterpart(s)?”


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What is the difference between Options and BATNA?

?

  • Options

  • “Inside” the negotiation

  • Potential solution(s)

  • Created with counterpart

  • BOTH you and counterpart receive benefit

  • Brainstorming session

  • BATNA

  • “Outside” the negotiation

  • Fall back position if negotiation fails

  • Only requires you


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Identify and Strengthen BATNA

  • Know your BATNA

    • Focus on what you want to achieve and the different ways to accomplish this

  • Strengthen your BATNA

    • Construct your BATNA to be more achievable, probable, or satisfying more of your interests

    • Improves your confidence during the negotiation

  • Consider what the other side’s BATNA is

    • Make their BATNA less attractive to them


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BATNA

BATNA

Inside the Negotiation

your aspiration point

your reservation point

Any option within this continuum should be agreeable


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Separate the people from the problem

Create options

for mutual gain

Developing

your

BATNA

Focus on interests

not positions

Define objective criteria


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Objective Criteria

  • “Other agencies have….” (What is customary)

  • “The last time this happened we….” (Precedent)

  • “The standard contract says…” (Law)

  • “What remedies are available in the event of a sustain?”


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Conclusion

Understanding Interest Based Negotiation

  • Understanding the 5 principles

    • Separate the people from the problem

    • Focus on interests not positions

    • Create options for mutual gain

    • Develop your BATNA

    • Define objective criteria


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Review: What is IBN?

• Separate the people from the problem (“you’re cute but you ate the chair”)

• Focus on interests not positions (you want a good dog and I want to be forgiven.)

• Create options for mutual gain (you lecture, I’ll listen and then we’ll have a bone)

• Identify your BATNA (There’s no guarantee my behavior will ever change—but a bone might! What do you have to lose?)

• Objective criteria = Vet



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Successfully Negotiating Some Acquisition Hot Spots…..

  • Helping your Teams Document the Record

  • Organizational Conflicts of Interest

  • Conducting discussions with offeror(s)

  • The Debriefing


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Team Evaluation & Documentation:It Doesn’t Have To Be A Migraine!


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The Administrative Record

  • Use straight-forward terms

  • Describe the evaluation results reasonably and clearly

  • Don’t try to use a complicated mix of evaluation methods, colors and schemes

  • Ask an outside “devil’s advocate” to review the source selection decision and underlying basis.



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Discussions: Advise of specific weaknesses

  • Contracting agency engaged in meaningful discussions where the agency advised protester of specific weaknesses regarding its technical proposal; the agency was not required to also afford the protester an opportunity to cure proposal defects first introduced either in response to discussions or in a post-discussion proposal revision.

    • Honeywell Technology Solutions, Inc., B-400771 and B-400771.2, Jan. 27, 2009, 2009-1 CPD ___, 2009 WL 564602.


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Example of Unreasonable Discussions

  • In a procurement covered by the Trade Agreements Act (TAA), protest of an award to a vendor whose quotation identified products that were not TAA-compliant was sustained, since the agency failed to follow required evaluation procedures for TAA procurements, improperly failed to ascertain whether the products identified by the protester were TAA-compliant, and did not conduct meaningful discussions with the protester even though the agency regarded the protester's quoted price as unreasonably high. Tiger Truck, LLC, B-400685, January 14, 2009, 2009 CPD ¶ 19.


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Definition of an OCI

An Organizational Conflict of Interest (OCI):

“means that because of other activities or relationships with other persons, a person is unable or potentially unable to render impartial assistance or advice to the Government, or the person’s objectivity in performing the contract work is or might be otherwise impaired, or a person has an unfair competitive advantage.”

See Federal Acquisition Regulation

(“FAR”) § 2.101.


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OCIs Are Becoming Increasingly Problematic

  • Notable increase in industry consolidation and mergers—which means fewer providers and suppliers;

  • The Government is procuring more and more services from contractors;

  • The Government is increasingly relying on contractors and their technical expertise for assistance in decision-making;

  • The DOD is increasingly using contractors to serve as private Lead Systems Integrators, responsible for executing large, complex, defense-related acquisition programs (e.g., the Army’s Future Combat System and the U.S. Coast Guard’s Deepwater Program.) See Defense Acquisition: Use of [LSIs]—Background, Oversight Issues, and Options for Congress, CRSReport No. RS22631 dated August 20, 2008


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OCI Risk

OCIs are more likely to occur in the following types of contracts:

  • Management support services

  • Consultant or other professional services

  • Contractor performance of, or assistance in, technical evaluations; and

  • Systems engineering and technical direction work performed by a contractor that does not have overall contractual responsibility for development or production.


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Organizational Conflict of Interest

Summary of the three general OCI Categories:

(1)Impaired Objectivity (Most Difficult to Mitigate)

(Contractor’s evaluation of own work or setting the ground

rules of a procurement, See FAR § 9.505.1 and .3)

(2)Biased Ground Rules

(Writing Statement of Work or performing systems engineering

and technical direction effort, see FAR § 9.505.1 & .2)

(3) Unequal Access to Information

(Access to nonpublic information in performance of a

government contract, see FAR § 9.505-4)


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Why worry about OCIs?

Potential Harm Resulting from an undisclosed or unmitigated OCI:

Could likely result in a procurement decision that is influenced by factors other than competition and best value.

Reasons for pursuing OCI disclosure and mitigation:

  • Contractors want to make sure they can compete for future work and recoup their initial competition investment;

  • The Government wants to be sure that potential OCI concerns do not unnecessarily discourage the private sector from contracting with and contributing to the government’s future work and needs.


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The Contracting Officer has the most vital role in assessing OCIs

  • Should be part of the market research phase;

  • The responsibility for determining whether an actual or apparent OCI exists or will arise, and to what extent a firm should be excluded from the competition, begins with the contracting officer who is required to:

    • Identify and evaluate potential OCIs as early in the acquisition process as possible;

    • Avoid, neutralize, or mitigate significant potential OCIS before award.

      See FAR 9.504.


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Required Contracting Officer OCIs OCI Analysis

During the analysis of potential OCIs, the Contracting Officer must obtain the advice of counsel and the assistance of appropriate technical specialists in evaluating potential OCIs and developing any necessary solicitation provisions and contract clauses.

See FAR § 9.504(b).


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Required Contracting Officer OCIs OCI Research

  • Goal: Obtain unbiased advice

  • The FAR directs the contracting officer to “first seek information on a potential OCI from within the government.”

  • Next, the FAR directs the use of “Non-Government sources” defined as:

    • Publications

    • Commercial services (e.g., credit rating services)

    • Trade & Finance Journals

    • Business Directories & Registries


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Required Contracting Officer OCIs Written Analysis of OCI(s)

  • If identified, before issuing the solicitation, the Contracting Officer must provide a written analysis discussing the OCI to the Head of the Contracting Activity (HCA) before issuing the solicit:

    - Why the OCI is significant

    - A recommended course of action for avoiding, neutralizing,

    or mitigating the OCI

    - A draft solicitation provision

    - A proposed contract clause (if appropriate)

    See FAR 9.506(b)(1)


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Suggestions for a Contractor’s OCI Mitigation Plan OCIs

Other Features of an effective mitigation plan:

  • Separate physical locations

  • Separate work forces

  • Separate management

  • Separate computer systems

  • Representation that there will be no “cross-talk” or information shared between two affiliates in connection with future work.


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Suggested OCI Mitigation Efforts For the Contracting Agency OCIs

  • Review and investigate for potential OCIs early;

  • Conduct a market research effort;

  • Prepare a diagram of all participants;

  • Solicit OCI Mitigation Plans from each offeror;

  • Analyze and review all information against FAR 9.505 criteria and relevant case precedent;

  • Draft an agency mitigation plan that resolves potential OCIs;

  • Post the agency mitigation plan on the web so all participants are aware and involved (pass-word protect);

  • Require period reviews and updates because the veracity of an OCI certification can change as the contractor gets additional work;

  • Include the impact of an OCI as an evaluation factor;

  • Document, document, document.


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Successful OCI Mitigation Requires OCIsContractor-Agency Collaboration

  • The Government and the Private Sector Must actively collaborate to identify and mitigate potential and actual OCI’s as early as possible in the acquisition process.


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Agency OCI Checklist OCIs

  • Identify potential for OCI issues during the Market Research phase of the acquisition

  • Issue a “Memorandum for Potential Offerors” of “OCI Findings.”

    • Explain the OCI finding

    • Include an OCI clause in the solicitation requiring offerors to address the OCI concern

    • Add OCI Mitigation Plan Acceptability Critieria to the Solicitation

    • State and evaluate the potential for OCI as part of the best value analysis

      See AF XR-SIMAF Cabilities Integration Services dated 9/25/2005.


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Agency OCI Checklist OCIs

  • Compartmentalize sensitive information development, such as requirements definition, by using separate contracts when possible

  • Publish key program architecture, requirements, trade studies, and other documents on the procurement website.

  • Utilize recognized industry associations and forums for input and review regarding development of program requirements to facilitate the widest opportunity for comment from interested industry parties.


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Agency OCI Checklist OCIs

  • Assess OCI status as part of the regular quarterly Project Management reviews. Confirm the effectiveness of the Mitigation Plans and make any necessary changes.

  • Share task order deliverables with industry in an open, equally available environment, to the maximum extent possible.

  • Publish key MOD documents (requirements, procedures, processess) for industry review to agency-controller, technical, password protected website. (e.g., NASA).


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Agency OCI Checklist OCIs

  • Focus industry efforts on discrete segments of a procurement’s development cycle, such as concept exploration, alternative analysis, and architecture studies, but do not include requirements definition activities.

  • Assign industry work via a task order type contract that limits requirements definition work from any contractor who might also wish to compete in a later system procurement.


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Problematic OCI Precedents OCIs

GAO:

“Once an agency has given meaningful consideration to potential conflicts of interest, our Office will not sustain a protest challenging a determination in this area unless the determination is unreasonable or unsupportedby the record.”

SeeNortel Government Solutions, Inc., B-299522.5; B-299522.6, Dec. 30, 2008.


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Problematic OCI Outcomes OCIs

  • Don’t forget to document the OCI and the proposed solution!See Alion Science & Technology Corp., B-297342, Jan. 9, 2006—sustained a protest involving an impaired objectivity OCI because the agency failed to reasonably evaluate the effect potential OCIs would have on performance, and the record was devoid of any OCI discussion.

  • Always allow the offeror the opportunity to submit a mitigation plan! Id.


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Problematic OCI Outcomes OCIs

  • Contract to provide agency with general policy advice (not specific analytical tasks) may affect company’s own economic interests and consequently constitute an improper OCI. See Alion Science & Technology Corp, B-297022.3, 2006; SAIC, B-293601 (2004)


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Problematic OCI Outcomes OCIs

  • Give meaningful consideration to potential OCIs. See Operational Resource Consultants, Inc., B-299131.1, B-299131.2 (Feb. 16, 2007).

  • Relying on a contractor’s OCI assessment by itself, without further investigation, is insufficient. See Axiom Resource Mgt. Inc. v. U.S., COFC, Sept. 28, 2007


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Problematic OCI Outcomes OCIs

  • A contractor’s false certification can be found to be both false and material under the False Claims Act. In United States ex rel. Harrison v. Westinghouse Savannah River Co., 352 F.3d 908 (4th Cir. 2004) Westinghouse submitted a no-OCI certification to the DOE, even though one of its subcontractor employees was directly involved in preparing procurement sensitive documents for the DOE.


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Problematic OCI Outcomes OCIs

  • A contractor’s erroneous OCI certification can also result in a violation of the False Claims Act. See United States v. SAIC, 502 F.Supp.2d 75 (D.D.C. 2007)


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Examples of OCI Solutions OCIs

  • Missile Defense Agency is encouraging contractors and subcontractors to select one of two types of required work they will perform for the agency and to recuse themselves from the unselected work option:

    e.g., either: “work on major developmental programs” or “work on the Missile Defense Agency Engineering Support Services competition”—but not both.

    See MiDAESS Statement of Policy Regarding OCI dated 24 November 2008.


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OCI Solutions OCIs

  • Ask the contractor!!

    An agency’s communications with an offeror do not constitute improper “discussions” when their purpose is to determine whether the offeror is barred from performance by an OCI. See Overlook Systems Technologies, B-298099.4, B-289099.5, November 28, 2006.


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Waiver of an OCI Is An Option OCIs

  • Must be based on a determination that applying “any general [OCI] rule or procedure” of the OCI “Subpart” of the FAR “in a particular situation would not be in the Government’s interest.”

  • The Waiver request “must be in writing” and must “set forth the extent of the conflict.”

  • The Waiver must be approved by the Agency Head or Designee—which cannot be anyone lower than the HCA. See FAR § 9.503


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The DOE Approach to OCIs OCIs

The Department of Energy :

  • Requires pre-award disclosure and certification from each contractor of no OCI

  • If there’s an OCI, DOE “shall afford the affected offeror an opportunity to provide in writing all relevant facts.

  • If there is an OCI, the agency takes one of the following actions:

    • Disqualification

    • Includes appropriate terms and conditions in the contract to avoid the conflict

    • Makes a finding that the best interests of the government require waiver

    • Contractors have a continuing obligation to disclose new work to DOE

    • See Title 10, Energy, Chapter XVII—Defense Nuclear Safety Board, § 1706.7


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The FAA’s OCI Approach OCIs

  • FAA: Created an OCI Chart indicating “Which Specific Situations are OK:

    See Working Group Co-Chairs, 27 Aug 2008

    Next Generation Air Transportation System

    Published in the Acquisition Management System


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Possible OCI Mitigation Strategies OCIs

1. Be Proactive—if there’s a potential OCI, alert the agency immediately in writing and provide a mitigation plan;

2. Neutralize potential OCIs through Firewalls (within the company and/or with subcontractor(s)

  • Organizational, Physical and Managerial Separation

  • Financial and goal separation

  • Data security and management

    3. Offer Complete Recusal;

    4. Non-compete Agreement(s);


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Suggested OCI Mitigation Strategies for the Contractor OCIs

5. Offer a partial recusal—limit contractor to work to which the specs/SOW apply;

6. Non-Disclosure Agreement(s);

7. Publish the information industry-wide;

8. Contractor OCI training program (both internal and subcontractors)

9. Establish an OCI Mitigation Plan/Firewall Compliance Administrator


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Additional Resources on OCI OCIs

  • Daniel I. Gordon, Esq., Organizational Conflicts of Interest: A Growing Integrity Challenge, 35 Pub. Cont. L. J. 25 (2005)

  • Sarah M. McWilliams, Esq., Identifying Latent Organizational Conflicts of Interest, Contract Management, December 2007.




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Tips for a Successful Debriefing Protest

  • If possible, conduct the debriefing in person

  • Don’t mandate that questions be submitted ahead of time

  • Don’t rush the debriefing—allow a few days

  • Give reasonable answers to reasonable questions

  • Benefits: at the ODRA, which has an ADR-first policy, 2/3 of all protests are withdrawn following an extensive debriefing. A good debriefing builds trust and demonstrates honesty.


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At a Debriefing, what is the agency’s BATNA? Protest

BATNA No. 1:

The risks and costs of a defending a potential protest.

BATNA No. 2:

The Protester might help the Agency discover a procurement error that it can correct without litigation.


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Options for Mutual Gain at a Debriefing of the Unsuccessful Offeror

The Agency’s Options:

1. To explain to the contractor(s) how the competition was conducted, and how your team negotiated fairly and in good faith.

2. To actively listen to the contractor(s) and reasonably

respond to their questions and interests.

3. To avoid a protest.

The Contractor’s Options

1. To learn information and gain an understanding of the outcome.

2. To find out if the competition was fair.

3. To decide whether or not to protest.