Negotiation Preparation - Reviewing Agreement Red-Lines

When you see a redline change to an agreement made by the Supplier, the first thing you need to do is understand the impact of the proposed change.

            a. Does it impact your costs?

            b. Does it increase your risks?

            c. Will it impact performance or your ability to manage performance?

For proposed changes that have a cost impact ask these questions”:

a) Is this a cost you can manage?

b) Is this a cost the Supplier can manage?

c) Is this a cost that neither can manage fully?

d) Who is best prepared to manage the cost?

            e) If you accept the cost responsibility:

1. What additional terms do you need to manage the cost?

2. What investments do you need to make to manage the cost?

3.  What concessions of equal or greater value would you want from the Supplier to agree to manage it?

 

For proposed changes with a risk impact ask these questions:

a)  Is this a risk you can manage?

b)  Is this a risk the Supplier can manage?

c)  Is this a risk neither can manage fully?

d) Who is best prepared to manage the risk?

e) If you accept the risk:

1) What additional terms do you need to manage the risk?

2) What investments do you need to make to manage the risk?

3) What concessions of equal or greater value would you want from the Supplier to agree to manage assume managing it?

For any changes that would impact performance or the ability to manage performance ask:

a) What will be the cost impact of accepting the different performance commitment?

b) What risks can occur with the different performance commitment?

c) Before you accept the change consider:

1) What additional terms do you need to manage the performance?

2) What investments do we need to make to manage the performance ?

3) What concessions of equal or greater value do you want from the Supplier to agree to manage it?

For all changes you also need to consider how the proposed change to that one section

will impact any other sections that may be tied to or be dependent upon that section.

A simple example of this is when you change the delivery term. That change may impact

a number of other terms.

1. Payment is frequently tied to delivery.
2. The warranty term is frequently tied to delivery.
3. Rights of acceptance and rejection may be tied to delivery.
4. Responsibility for costs and risk of loss depends the delivery term.