PROGRAM ON NEGOTIATION AT HARVARD LAW SCHOOL
AN INTER-UNIVERSITY CONSORTIUM TO IMPROVE THE THEORY AND PRACTICE OF CONFLICT RESOLUTION

THE TENDLEY CONTRACT
Confidential Instructions for the Schools

"No good deed goes unpunished," you thought to yourself as you received your latest special assignment from the superintendent of the Tendley public school system. Sometimes the reward for doing thankless tasks is being handed more of them.

So be it. This time you've been asked to get the schools' expensive, state-of-the-art, and utterly ineffective computer system up and running. You aren't expected to do the reprogramming yourself; rather, your job is to find an expert who can do this work and to negotiate a contract with his or her firm. You've solved the first part of the problem—namely, you've found a top-flight consultant—but you are currently at an impasse in the negotiations. The fee that the consultant has demanded is significantly more than the schools can afford.

Here's the background: Several years ago, the city of Tendley installed a networked computer system intended to link all of its municipal departments, including the public schools. It was hoped that with one integrated system, important information could be shared efficiently and could serve as the basis for more effective planning.

Unfortunately, the system has proven almost impossible to implement. As it happens, most of the city's different departments and agencies have distinctive needs that require more specialized software. The generic programs really don't handle their needs very well. It has been hard, moreover, to administer the database jointly. City officials have thus reluctantly agreed to allow each department to adapt its programming to its own needs and to manage its own information.

There is some consolation in the fact that the common hardware and software platform is of high quality, but the reality is that the city's computer network will no longer be fully integrated.

With this new authorization, the superintendent has asked you to find a consultant who can make the schools' computers do the class scheduling, registration, and record-keeping so essential to good administration. She also wants to take full advantage of using the existing hardware as an educational resource.

You quickly identified several possible consultants, but the most impressive by far is the August Group. August has earned an excellent reputation in the private sector for custom computer programming. You also have reviewed examples of manuals they have written and staff training they have designed, which obviously show sensitivity to your insights about the particular needs of the Tendley schools. Together, you have scoped out a plan that would accomplish the reprogramming, preparation of manuals, and user training over the next three or four months.

A fundamental misunderstanding has arisen, however, that threatens the entire deal. Specifically, you were shocked by the firm's bid of $85,000 for this work. Perhaps the private market will bear such costs, but these are hard times for government. There is not a penny in the original school budget for this project, and there are rumors that the School Committee may freeze or even cut the budget for the coming year. The superintendent has told you that the maximum she can invest in this project is $50,000, and she would prefer to get the job done for significantly less. (The $50,000 maximum that she has set actually would come from various accounts, some of which have not been fully spent but which could be legally devoted to this.)

You have had no luck in getting the consultant to budge from the $85,000 figure. In fact, you have subsequently learned that this figure does seem to be somewhat less than what the firm would normally charge a corporate client. You are not nearly as impressed with the work of the other consultants. Although you have not talked specifics with them, you have reason to believe that they would charge something comparable.

As a result, you have agreed to one more meeting with the consultant from the August Group to see if you can make a deal with them. In the end, it may well prove impossible, but you should make your best effort to see if you can come up with an agreement that would be acceptable to both sides. You should still try to get them to reduce their $85,000 demand, but it may be as genuine a constraint as is your own $50,000 upper limit. In any event, this doesn't seem like a case for splitting the difference: $67,500 is more than you can afford to pay and less than they apparently are willing to accept.

If you can settle on specific terms, by all means do so. As you do not have detailed information, however, it is all right if you come to a contingent agreement—subject to confirming data or securing the approval of other parties. At a minimum, see if you can brainstorm a list of plausible ways of breaking the deadlock. Do not forget that you are trying to get the best possible deal you can for your school system, so you should only consider options that might be workable for you. If you feel that the other side is being unreasonable in its demands or that a deal just isn't possible, you should break off negotiations and not waste further time.