Reading this morning about the tricks employed by both parties during contract negotiations, and the new book by Stephen Guth leaves a bit of a sour taste in my mouth. We all know these tactics are employed by customers and suppliers alike, but we need to encourage both parties to come to the table with mutual benefit in mind. Not because it’s all touchy feely ’isn’t that lovely,’ but because this is the only way to make contracting work.

The disappointment is that all that time you spend trying to trick the other party with clever drafting and negotiation techniques, is time that you could have been thinking about commercial outcomes and building a workable relationship with contracting win-wins.

Dear Customer, hello, if you screw the supplier then you will never achieve positive outcomes. You will just create bitterness, and your supplier will only ever deliver just what he has to, nothing more. Creating a positve working partnership is the best way to work together, where the supplier can be profitable and you can receive more value out of the relationship.

Dear Supplier, if you treat a contract negotiation as a battle, then you will not win (remember the golden rule; ‘the one with the gold makes the rules’). You must work with the customer to achieve a mutually beneficial position, providing commercial outcomes and representing value for the customer.

Unfortunately, Guth’s new book is designed to benefit buyers, not sellers, perpetuating the myth that contracting is a battle that needs to be won. The reaility is that sometimes, if you win you lose. Watch out.

One of the things I hate most ia a ‘cut and paste’ contract. We’ve all seen them. You know, the contract that was written for a completely different purpose, or worse still, a bit of this agreement and a bit of that agreement, commonly referred to as a ‘bitsa’.

To have a ‘cut and paste’ contract thrust upon you, just when you get to the business end of a deal just makes you think, ‘do I really want to do business with these guys?’ ‘Do they really know what they are doing?’

A typical example of the wrong contract in the wrong place at the wrong time, is being handed the terms and conditions of a capital works contract, fot the supply of very standard goods or services, or being told that you need insurance that far exceeds what should be reasonable for the type of work being performed. It is really like the other party has just failed to think at all about the issues.

But we must also remember that if it is a customer contract we are presented with, then there is not a lot that we can do about it, really. You just have to bite your tongue and reach for the highlighter, if you want the business that is.

I cannot stress highly enough that a contract is an instrument of mutual benefit and it must be structured with specific commercial outcomes in mind, rather than just throwing a few well used clauses together. If you are the customer, and you are buying goods or services, but the only standard contract you have is for road construction, then it may be a good idea to have a look at your supplier’s standard agreement. Because it is quite likely going to address all of the relevent terms and conditions of the type of business you are doing. When I sign up for a new mobile phone, I don’t take in my standard contract for supply of stationery, and try to get the phone dealer to sign it. It’s not relevant. I simply read the vendor’s contract, and I discuss any changes that I think need to be made. Then when I’m happy, I proceed.

Finally, one important point. Whatever contract you are executing… read it. Sounds silly, but many people don’t even read contracts before they sign them.

Steven Schooner, senior associate dean of academic affairs and associate professor of law at George Washington University commented in an article published this week that “We spent an entire generation of irresponsible underinvestment in the acquisition workforce, so now we spend a lot of energy on inspectors general, auditors and oversight to find all the mistakes the contractors made rather than do anything to avoid those mistakes.”

This is an interesting insight into the ’small government’ concept, and where contractors are cut, government must hire more employees to make up the numbers, or get fewer things done. “Whether the federal government relies too much on contractors is an interesting — but irrelevant — philosophical, public policy and moral question…” he said.

 Schooner’s further comment is that acquisition leaders need to know better how to manage outsourcing. People. And don’t forget the systems that support the people.