Contract engineering question

[EngineerDave]

I work as a contract engineer with multiple customers. This year has been tough as we've lost some work from several clients the area I work in. I was notified today that one of my contracts will not be renewed, with the chief issue being price. I have no control over price.

If you have a contract with a company and they decide not to renew it due to pricing (i.e. not due to poor work or not meeting the requirements) is it unethical for them to make this decision without allowing your company to make a counteroffer? In particular I believe we were underbid by a competitor who is friends with the decision maker at my client.

I enjoy working with this client, I believe in the past year when new management took over at my client, it became more apparent that they had an interest in bringing their friend who used to work directly in my position before leaving several years ago back.

I have no control over my contract pricing, so my boss would negotiate, but I'm a little concerned because my boss wasn't given a chance to negotiate a renewed contract.

This all took place at the end of the business day today, and my boss would like to meet with the client next week to negotiate.

 

[EngineerDave]

I just noticed the engineer business practices and issues, perhaps this thread would be more appropriately transferred there.

 

[hokie66]

Probably best there, Dave, but you should get some discussion in this forum as well, although I don't think this is an ethical issue, at least not engineering ethics. As to business ethics, that may be an oxymoron.

 

[SNORGY]

It sounds to me like a case of contractor versus old boy network.

I don't think that is something you can ever win. If your boss can negotiate a deal that does not result in a pay cut at your end, I'd go with the flow, help him out from the background but otherwise act as if nothing out of the ordinary is going on.

 

[MikeHalloran]

The new Customer Decision Maker will be gone as soon as his buddy screws up badly for the Nth time, at which point his replacement will be calling you. Nobody knows was N will be. In the meantime, just behave professionally.





Mike Halloran
Pembroke Pines, FL, USA

 

[IRstuff]

The fact that they did not attempt to negotiate a lower price already tells you their intent, which is that they've already found someone else.

TTFN
faq731-376

 

[ajack1]

Things like this are seldom black or white. You state that the chief issue was price, what were the other issues?

Whilst some people will offer you the chance to lower your price to match or beat another quote others see it as getting into a bidding war and will not do it, do you know for sure if they asked the last time the contract was up for renewal will you renegotiate the price and your boss just said no?

I would guess most of us like to work with people we know and trust, one mans old boys network is another mans networking contacts.

 

[EngineerDave]

I am not sure if they asked the boss last time for a concession in contract price. But they did ask to review the contract at the end of the year and instead of a two year contract they made it one. That boss is no longer with the company.

I don't expect things to turn out our way. Our company seems less willing to negotiate and we have lost work in the area because of it. I just want to ensure that i will not have to move anytime soon for a new position.

 

[miningman]

The facts are you and your boss agreed to provide a service at a certain price. For whatever reason, the client is no longer wiling to pay that price. You and your boss have had ample opportunity over the last 12 months to offer a reduction in the agreed price based on recognition that the local market is not what it once was, that the client's new management may wish to institute better cost controls, that perhaps the quality of your supplied services is not what it once was etc etc. Personally I despise the concept of " price matching" whether it is suggested by the contractor or the client. Take your lumps, move on, and perhaps seriously re examine your price structure with your other clients....you say you've lost work at other clients already, there is the most relevant comment in your post.

 

[greenone]

"If you have a contract with a company and they decide not to renew it due to pricing (i.e. not due to poor work or not meeting the requirements) is it unethical for them to make this decision without allowing your company to make a counteroffer?"

I used to solicit bids for engineering/contracting work. Your bid was your offer to my company to provide a service. I felt it was unethical of me to then go back to bidders and ask them to "review" their bids and see if they wanted to "revise" them. (Were revisions ever going to be higher?) You had your chance to provide me with your best deal, and we both lived with the results.

Without knowing the specifics of your situation, it seems if would have been fair to announce that this coming contract would be open to bids; however, we don't know all that happened-maybe the company was not happy with the work, or the billing practices, or who knows what.

 

[EngineerDave]

I agree with everyone. Hopefully they have been happy with the work as i have been the one doing it. At one point they looked into hiring me directly as an employee instead of a contract engineer. Apparently for various reasons such as my noncompete etc, hospital management wouldn't allow this. The same recurring pricing issue has come up at places where my colleagues work. I liked working for this client they are however pretty far away from where I live. My greatest concern is that there is enough work to keep me employed.

 

[IRstuff]

" I felt it was unethical of me to then go back to bidders and ask them to "review" their bids and see if they wanted to "revise" them. (Were revisions ever going to be higher?)"

Government procurements often do that, asking for a "Best and Final" offer.

TTFN
faq731-376

 

[Ron]

See what "bidding" for engineering services gets you? Stop bidding for engineering services. Engineering is a profession, not a commodity service that can be provided by anyone.

 

[EngineerDave]

My particular current line of engineering surely has been commoditized, in part by various consulting groups, not unlike the one i work with. Then it becomes a scramble, a fight for scraps amongst all the fish.

It's particularly frustrating in my case because i have zero control over my contract pricing.