Seven Secrets for Negotiating with Government

How to Deal with Local, State, National, or Foreign Governments--and Come Out Ahead

Jeswald Salacuse

• Publisher: AMACOM
• Year: 2008
• ISBN:
  9780814409725
• Topic: Business
• Subtopic: Government & Business
• Index: Business

Almost everyone has faced the frustrating task of negotiating with government-local, state, national, or foreign-at some point in their lives. Whether they are applying for a building permit from their local zoning board, trying to sell software to the U.S. Defense Department, looking for approval for a merger, or planning to set up a business in Limerick or Bangalore, businesspeople confront a unique set of challenges when dealing with any form of government. Distinguished author, professor and negotiation expert Jeswald W. Salacuse explains the ways in which negotiating with government is very different from private negotiation. In Seven Secrets for Negotiating with Government, he addresses the key variables involved-from the influence of bureaucracy to the perception of power on the government side of the negotiating table. The only book of its kind, this invaluable guide offers succinct, realistic, and accessible advice to help readers recognize the often-hidden interests driving government negotiators and how to use that knowledge to their advantage. Filled with real-life examples, this book will show businesspeople everywhere how to navigate this complex world and win.

CHAPTER ONE

The Many Ways of Negotiating with Governments

“You can’t fight city hall.”

—ANONYMOUS

You may not be able to fight city hall, but you certainly can negotiate with it. In fact, short of successful armed insurrection, the only way any individual or company can deal effectively with any government—local, state, national, or foreign—is through negotiation. If it’s true, as Edmund Burke has said, that “government is a contrivance of human wisdom to provide for human needs,” it is also true that governments do not necessarily provide for your needs automatically. You have to negotiate to get them.

The Scope of Dealings with Governments

Dealings with governments by individuals and organizations cover a wide variety of participants, a multiplicity of purposes, and a broad array of processes. In this first chapter, we examine the scope of dealing with governments by focusing on three key elements: participants, purposes, and processes. They are the conceptual building blocks for analyzing and thinking about any kind of interaction with a government.

Participants in Dealings with Governments

Although governments and governmental units deal with each other constantly, the focus of this book is how individuals and non-governmental organizations can best deal with governments to get what they want. In those kinds of interactions, there are potentially three participants: a governmental unit; an individual or organization; and the public. Let’s examine the special characteristics of each one.

Governments as Participants

Any time you have to deal with a government, you are actually negotiating with a governmental unit, rather than an entire government, and in particular, with individuals within that unit. Governmental units take many forms and have many names: department, agency, board, council, court, legislature, or commission, to list just a few. They are agents of governmental power, and the power they exercise may be legislative (to the extent that they make laws, regulations, or rules), executive (to the extent that they apply laws, regulations, and rules to individuals and organizations), or judicial (to the extent that they judge disputes concerning these laws, regulations, and rules and their application). In the United States alone in 2005, there were some 88,000 federal, state, and local governmental units employing approximately 19 million people, not to mention the countless governmental entities existing in the 192 other sovereign states of the world. Consequently, unless you are a hermit in the wilderness, you are bound to have to deal with one of them at some time or other.

Governments as Ghost Participants at the Negotiating Table

Even when a government entity is not physically present at the negotiating table, it may be lurking in the wings as a “ghost negotiator” that has a powerful influence on the parties who are actually engaged in face-to-face negotiations. For example, any deal you make with a private defense contractor will almost always require U.S. government approval, and in most foreign countries any sizable transaction at all needs a nod from the governing authorities. So even if you are not negotiating directly with a government in those situations, you still will eventually have to deal with one or more governmental units if you hope to make the transaction you want. In any significant negotiation, you should always ask two important questions:

1. To what extent does a government have an actual or potential interest in this deal?

2. How might that government intervene in the negotiation or the resulting transaction to protect that interest?

Individuals and Organizations as Participants

All of us have to deal with governmental units at one time or other. Some of us do it only occasionally. Others do it every day. We deal with governments in our individual capacity and we deal with them in our capacity as representatives of the companies and organization that we work for. Whether we are seeking a building permit from our local zoning board to put an addition on our house, an authorization from the state to open a new charter school, or a contract to sell software to the U.S. Defense Department, we have to negotiate with some government agency to get what we want.

If you are in business, dealing with local, state, federal, and even foreign regulators can be a constant task requiring you to reach agreement with government agencies as diverse as the New York City Department of Planning, the California Air Resources Board, the U.S. Environmental Protection Agency, and even the European Union’s Competition Directorate General, to name just a few. And if you want to undertake a really big project or transaction, you normally have to negotiate with several government departments to achieve your goal. For example, when the St. Lawrence Cement Company decided to build a new $300 million coal-fired cement plant in the Hudson Valley south of Albany in 1999, it faced the daunting challenge of securing seventeen permits from various local, state, and federal departments and agencies before it could turn over one shovel of ground. That meant it had to engage in at least seventeen separate negotiations, a process that would go on for years.¹

In many other situations, you negotiate with a government not to obtain a benefit, but to avoid or reduce a burden. At the end of an IRS audit, you may negotiate hard to escape a tax penalty. When you are stopped by a state trooper for speeding on the highway, you may try to negotiate to avoid a ticket. And if you get in real trouble with the law, you will likely find yourself engaged in plea bargaining with the prosecutor since that is the way the vast majority of criminal prosecutions end.

While we may like to think that we live in a world dominated by private enterprise, where the state is increasingly ceding its economic role to private persons and companies, governments, both in the United States and abroad, are still powerful players with whom all businesses and organizations must learn to deal. Governments regulate and tax business activity. They buy from and sell to private companies. They invest as partners in all manner of deals. So being in business means you have to learn to deal with governments. Organizations in the non-profit world, like charities, universities, and museums, also deal regularly with governments, whether they are seeking government grants, service contracts, or just permission to operate. Indeed, if you are the leader of a state college, municipal hospital, or a federal institute, you are engaged in a constant process of negotiating with both the legislative and executive branches of some government in order to obtain the budget you need to function and at the same time preserve your autonomy from government control.

Few organizations today have the luxury or even the possibility of functioning without negotiating with some government unit in some way. As a result, most substantial companies and organizations have established and staffed sizable “government affairs” or “government relations” departments and offices whose primary function is to deal with—that is, to negotiate with—governments. In this connection, they also often have outposts in Washington, D.C., Albany, N.Y., or Brussels, Belgium, in order to be close to the governmental authorities they negotiate with.

Hired Help for Individuals and Organizations Dealing with Governments

Regardless of what the law may say, it’s not easy for an individual or a private organization to actually engage a government in meaningful negotiations. Governments are usually busy, big, and powerful. Despite their size, they often suffer from a shortage of staff and resources necessary to accomplish the tasks they are supposed to carry out. Consequently, the many persons and organizations that seek their attention often find that dealing with a government is a lengthy and in some cases futile process. Moreover, for the ordinary citizen with a problem or an issue needing government attention, it is often difficult to know which governmental officials can handle the problem, where they are located, how to contact them and secure a hearing, and if a meeting is granted how to persuade them to take action in the citizen’s favor. So even though the U.S. Constitution guarantees you the “right to petition,” you may not have the knowledge, experience, contacts, and resources to engage in meaningful and effective petitioning that will allow you to advance your interests.

In order to overcome the special challenges of negotiating with governments, many organizations hire third persons, such as lobbyists, advisors, and lawyers, with the necessary expertise, relationships, and access to help in government negotiations. Third parties with special access to and knowledge of government have probably existed to help in negotiating with governments since the very idea of government began. Throughout history, courtiers, scribes, hangers-on, royal relatives, and aristocratic mistresses were always available for a fee or a favor to help bring a citizen’s petition to the attention of the king.

Today, individuals and organizations spend billions of dollars each year employing lobbyists, law firms, and public relations organizations to help them with this ages-old task. As a result, these third parties have become permanent fixtures in any significant negotiations with government, and few companies would consider undertaking governmental negotiations without this kind of hired help.

In 2003, when the U.S. president and the Congress began to consider the addition of a prescription drug benefit to the federal Medicare program, the pharmaceutical and health care industries, along with their trade associations, launched a massive lobbying campaign involving some 950 lobbyists (30 of whom were former senators or members of Congress) and the expenditure of $141 million to shape the policies governing this new benefit to their advantage. Ironically, one of the rules that the pharmaceutical industry succeeded in writing into legislation was a provision that prohibits the Federal Government’s Center for Medicare Services from negotiating with drug companies to secure discounted prices on the purchase of drugs by Medicare subscribers, thereby preventing the Center from using its potentially enormous bargaining power on their behalf. Here then was a unique case of private parties negotiating hard to prevent the government from negotiating with them in the future.²

The Public as Participant

Unlike most negotiations between private parties, negotiations with governments often take on a public dimension. Because the public interest is always potentially present any time that an individual deals with a government, any interaction that begins as a bilateral negotiation between you and a governmental unit has the potential to evolve quickly into a multilateral negotiation involving persons who at first did not seem directly involved in your transaction but have now suddenly become passionate participants. For example, a motorcycle enthusiast who began a negotiation with the town planning board to obtain a permit to build a racing track on his residential land soon found himself engaged in heated negotiations with his neighbors who objected to it. And the St. Lawrence Cement Company began negotiations with various government departments to build its new plant but within a short time was embroiled in negotiations with half the upper Hudson Valley who opposed its plans.

The potential intervention of members of the public is thus another important difference between purely private negotiations and negotiations with governments. As a result, you need to plan for this possibility and involve your public relations experts in your negotiating team from the start to deal with this possibility. Large projects, necessitating government approvals, like the construction of a factory or a shopping mall, inevitably provoke public concern that will powerfully influence a negotiation that you thought concerned only you and the government official on the other side of the table. So in any negotiation with a government, be ready for the intervention of the public, invited or not. That intervention can often have a negative effect on your negotiations with government departments and even prevent you from attaining your goals, as both the motorcycle enthusiast and the St. Lawrence Cement Company painfully learned.

The Purposes of Negotiating with Governments

Individuals and organizations engage in dealing with governments for one of two purposes:

1. To secure agreement on a transaction.

2. To obtain a rule that favors their interests.

Let’s take a look at each of these objectives.

Negotiating Transactions

The purpose of most of our dealings with governments is to achieve a desired transaction in which government is a participant, such as a contract to sell software to the Defense Department, or for which government approval is necessary, such as authorization to open a new charter school. Your avoidance of an IRS tax penalty or a speeding ticket is also a transaction that results from your negotiation with an agent of a government. As we will see, such transactions with governments and the very process by which they are made are almost always subject to complex rules found in laws and regulations applicable to the governmental unit on the other side of the negotiating table.

Negotiating Rules

Private parties not only negotiate transactions with governments, they also negotiate with governments about the very content of the rules themselves. The rules to which we are subject in laws and regulations are not only the product of the give and take of the legislative and regulatory processes, they are very much a result of negotiations between private persons and organizations on the one hand and individual legislators and regulators on the other. Private individuals, small businesses, large corporations, non-profit organizations, and indeed other government agencies are in a constant process of communicating with members of the House and Senate, state legislators, governors, and even the president of the United States in order to shape rules in ways that will favor their interests. Indeed, these kinds of communications are considered a fundamental part of the democratic process and are protected by the U.S. Constitution as the exercise of the “right of petition,” a right guaranteed by the First Amendment, which provides that “Congress shall make no law . . . abridging . . . the right of the people . . . to petition the Government for a redress of grievances.” So citizens have a right to try to persuade various branches of government to make new...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Dedication
• Contents
• Preface
• Chapter 1: The Many Ways of Negotiating With Governments
• Chapter 2: Governments Feel Different: How Negotiating With a Government Differs from Negotiating With Anybody Else
• Chapter 3: Getting Ready to Negotiate With a Government
• Chapter 4: The Myth of the Monolith: How Government Organization Affects Negotiations
• Chapter 5: The Political Imperative: The Special Nature of Government Interests and How They Affect Negotiations
• Chapter 6: Power Tools for Influencing Government Decisions
• Chapter 7: Getting a Little Help from Your Friends: Using Third Parties In Government Negotiations
• Chapter 8: The Deal Is Never Done: Renegotiating Government Agreements
• Chapter 9: On the Manner of Negotiating With Governments: Some Final Advice
• Notes
• Index