Contract Negotiation
Situation Summary
You are part of an Integrated Program Team assigned to the Perigee Advanced Design Program (PAD), with multiple Contract Options, for the Pulse Differential Quadrature (PDQ) Satellite System. A major Subcontractor, providing a crucial part in the PDQ, recently disclosed that unexpected obsolescence of a critical part will increase the cost of their original estimates, from over extended quotes, by an estimated 30% and add an additional 6 months to the planned delivery schedule. No other vendors are available to meet the critical part requirement at this time.
Conflict Overview
In the modern business world with supply chains that span the globe, it is virtually impossible to account for every potential risk that can emerge in various circumstances. The PAD project is no exception and they have recently received devastating news that was unexpected from a critical leg in their supply chain. Not only is the part more expensive, but the lead time to acquire it has also been lengthened by six months. It is no surprise that this has also created tensions upstream on the PDQ project and subsequent negotiations have already reached the brink of project failure. Everyone realizes that the obsolescence issue was not planned for and likely could not be expected, but the relationship is tense none the less. This analysis will provide a number of negotiating tips to help the company deal with their project situation...
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