Cooperative Contracts Negotiations The Starting Point Agenda Cooperative

Cooperative Contracts Negotiations The Starting Point

Agenda • Cooperative Contracts Defined • The Contract Documents • Planning for Negotiations • Negotiations Defined • Pricing • Terms and Conditions • Q&A

Cooperative Contracts Benefits Streamlines Purchasing Process • Pre-Negotiated Contracts • Reduce purchasing and contract cycle time • Reduce duplicate efforts • Simplifies sales process for vendors • Competition is built into the program • Create savings by leveraging the state’s buying power • Allow flexibility for DIR customers to negotiate pricing and other terms and conditions specific to customer requirements 3

Cooperative Contract Documents • Common Elements • • Contract Document Appendix A Standard Terms and Conditions Appendix B HUB Subcontracting Plan Appendix C Pricing Index • Additional Appendices (as needed) Examples • Appendix D Service Agreement • Appendix E Master Operating Lease Agreement • Appendix F Statement of Work • Amendments Use the contract page as your resource to download all contract documents.

Key Contract Document Provisions • Order of Precedence • Amendments In the event of conflict among the provisions, the order of precedence shall be this Amendment Number 4, then Amendment Number 3, then Amendment Number 2, then Amendment Number 1 and then the Contract. • Contract Term • Software License and Service Agreements • Shrink/Click-wrap License Agreement • Authorized Exceptions to the Contract (the last paragraph before the signature)

Appendix C: Pricing Index • Appendix C lists the MINIMUM discount offered by the contracted Vendor.

Reading is Fundamental The DIR Contract is the starting point for negotiations. • What agreements (Appendices) are part of the contract? • What are the pre-negotiated terms and conditions? (Appendix A and Authorized Exceptions) • What is the minimum discount offered on products/services? (Appendix C)

Negotiations Defined Discussion aimed at reaching an agreement. BATNA

What can be Negotiated? Anything in the contract, but focus on: • Schedule • Price • Terms/Conditions

Negotiating Pricing • Planning • Appendix C Pricing Index to the DIR Contract • SB 533 Threshold Requirements • Budget goals • Considerations for how SLAs affect pricing • Schedule

Pricing Do’s and Don’ts You can tell a Vendor that you believe the price is too high/low based on: • Market research – Market/Catalog prices • Past procurements – historical prices • Independent government estimate But, you CANNOT discuss other offerors’ prices

Terms and Conditions

Negotiating Ts & Cs • DIR’s contract provides basic terms for state and local procurements. These ensure that many requirements of public sector procurements will be satisfied. • If customers need more protection, more certifications or assurances, or enhanced remedies beyond what DIR has provided for, they can negotiate with the vendor for them. • But the vendor already has committed to provide at least what DIR has negotiated.

Common Customer Interests • Damages • Terms of any licenses, which are one area (shrink and click wrap licenses) where the DIR contract may be overridden.

Special Interests, continued • Term of your engagement • Survives the expiration of our contract, but cannot bring in new time periods, purchases, or dollar volumes that were not contemplated in the customer’s contract before the DIR contract expires • Plan ahead, and provide in customer contract documents for what you may need • Any areas where the vendor seeks to vary from the DIR terms. • The DIR contract’s terms generally have priority over almost all vendor documents (note the exception for third party license agreements). • Sometimes customers rely on the contract priority rather than iron out issues that show up in negotiating their own specific engagements. This is a route to pursue with caution.

Potentially Problematic Terms • Pricing that includes taxes • Payment terms • Termination rights • Limitations of liability • Indemnification obligations • Limitations on hiring vendor’s employees • Injunctive relief

Unique Customer Requirements • Statutory authority • Organization’s requirements • Funding sources

Questions David Brown Phone: (512) 463 -7372 Email: David. Brown@dir. texas. gov Kelly Parker Phone: (512) 475 -1647 Email: Kelly. Parker@dir. texas. gov