Contractual Arrangements: Government vs Non-Government Sectors

This presentation analyzes the differences in contractual agreements between government and non-government sectors. It discusses the variations in negotiation, conflict management, stakeholder engagement, and influence in the two sectors. The presentation also links the analysis with two case studies, Channel Tunnel and Queensland Health Payroll System.

COMMERCIAL PROJECT
NEGOTIATION
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Introduction
 Contract agreement is a mutual agreement
between two parties regarding a particular
partnership or project that will be beneficial for
both the parties.
 Contractual agreements may be between
government and non-government organizations
depending on the type of work required.
 However, there are some basic differences
between government and non-government
contractual arrangements for which, the terms
and conditions in the contracts vary widely
(Aydin, Akinci & Yilmaz, 2016).

Literature Review and Analysis
of Contractual Arrangements
 According to Sikka and Lehman (2015), government
and non-government contract negotiation and
arrangement processes are vastly different in terms
of scope, benefits, objectives and control power of
the involved parties.
 This is because, for government contractual
arrangement, the power is mainly shifted towards
one party whereas for non-government contractual
arrangement, the power is balanced between the
two involved parties.
 Some specific contractual attributes that differ in
the two sectors are discussed under the following
headers.

Literature Review and Analysis of
Contractual Arrangements (Contd.)
 In government and non-government
seconds, the operations of diverse
contractual arrangements vary widely.
 For government contractual
arrangements, the government prepares
the list of requirements, develops
business case, prepares terms of contract
with specific and unchangeable goals and
then calls for tender for contractors.

Literature Review and Analysis of
Contractual Arrangements (Contd.)
 On the other hand, during commercial contract
negotiations, both the parties need to agree
upon suitable clauses and conditions before
proceeding with the signing of the contract.
 In this case, both the parties have chances of
equal amount of negotiation before they agree
upon suitable terms.
 Hence, both the parties have equal power on
the negotiation and the terms of the contract
are set such that both of them are equally
benefitted (Castro et al., 2015).

Literature Review and Analysis of
Contractual Arrangements (Contd.)
 Influence play major roles in the
stakeholder conflict agendas in a project.
 However, the influence varies
significantly in government and private
contract negotiations.

Literature Review and Analysis of
Contractual Arrangements (Contd.)
 Contractual arrangements over government
and non–government sectors have different
methods of project negotiation, conflict
management and stakeholder engagement.
 Generally, there is very limited scope of project
negotiation in government contracts as the
government sets the clauses as per their needs
and also changes the terms to suit their needs.
 However, commercial organizations always
spend a huge amount of time in negotiating a
contract in order to reach mutual agreement

Literature Review and Analysis of
Contractual Arrangements (Contd.)
 In order to avoid conflicts, the companies
choose partnerships with other
companies with whom, there will be
maximum benefits for both parties rather
than just the financial amount mentioned
in the contract.

Literature Review and Analysis of
Contractual Arrangements (Contd.)
 Stakeholder engagement is a low priority
requirement in government contract
negotiations. Stakeholders are generally
appointed internally without much emphasis on
re–evaluating their skill sets or experience
(Scoca, Uriarte & De Nicola, 2017).
 In commercial contract negotiations, stakeholder
engagement is taken very seriously.
Stakeholders are chosen who possess specific
skill sets for the project along with previous
experience and competency in the field rather
than just being an employee of the organization.

Literature Review and Analysis of
Contractual Arrangements (Contd.)
 Now linking the analysis with the given
case studies, several conclusions can be
reached regarding contract negotiations.
 The first chosen case is the Channel
Tunnel.

Literature Review and Analysis of
Contractual Arrangements (Contd.)
 The second chosen case is Queensland
Health Payroll System.
 In both the cases, the contractual
arrangements have been analyzed and
the differences have been identified.

Literature Review and Analysis of
Contractual Arrangements (Contd.)
 The Channel tunnel project is a
government project.
 The contracts were handed to the
organizations based on the higher bids
only.
 It is seen that the contracts were
specifically set to benefit the government
only and not any of the chosen
organizations.

Literature Review and Analysis of
Contractual Arrangements (Contd.)
 For the case of Queensland Health Payroll
System, the contract was handed to one
specific company.
 In spite of mutual agreements in the
negotiation, it has been found that there
has been some confusing terms
regarding the contract.

Literature Review and Analysis of
Contractual Arrangements (Contd.)
 It is evident that the government based
contract (Channel Tunnel) has set out the
requirements very clearly but there were
instances of conflicts among
organizations under contract.
 In QH contract, there have been
confusion regarding project terms and
governance but conflict management has
been done appropriately.

Conclusion
 In this presentation, the contractual arrangement
landscape has been analyzed and the differences in
the contractual agreements between government and
non-government sectors have been discussed.
 From the analysis, it has been found that the primary
difference between the two types of contractual
agreements lie in the fact that in government contract
negotiations, the government has far more superior
legal power and hence, it can be used to develop the
contract strictly in favor of the government.
 Furthermore, it is easier for the government to
penalize the contract partner due to the legal power it
possesses.

References
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Economics and Finance, 7(5), 170.
Castro, I., Panda, A., Raghavan, B., Shenker, S., & Gorinsky, S. (2015). Route bazaar: automatic
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Demirag, I. (2017). A framework for examining accountability and value for money in the UK’s
private finance initiative. In Corporate Social Responsibility, Accountability and Governance (pp.
77-92). Routledge.
Kypri, K. (2015). Suppression clauses in university health research: Case study of an Australian
government contract negotiation. The Medical Journal of Australia, 203(2), 72-74.
Scoca, V., Uriarte, R. B., & De Nicola, R. (2017, June). Smart Contract Negotiation in Cloud
Computing. In Cloud Computing (CLOUD), 2017 IEEE 10th International Conference on (pp. 592-
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Sikka, P., & Lehman, G. (2015). The supply-side of corruption and limits to preventing corruption
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Verma, S. (2018). Data Confidentiality in Public Contracts: Why Typical'What Me Worry'Attitudes
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