10 Vendor Negotiation Tips for School Districts

Getting What You Need: 10 Vendor Negotiation Tips for School Districts

As we approach the E-rate filing deadline (March 25, 2020), it’s critical to make sure that the vendor you’ve chosen is able to provide what your district needs at the best possible cost. Most vendors genuinely want to help and support school districts, and as long as the economics are practical they will work with you to create a cost-effective solution. Here are some guidelines to help you advocate for your school district’s broadband needs effectively and on time.

1. Be specific about your plans for the district.

Tell your vendor how quickly you think your bandwidth demands will grow, and what your bandwidth goals are at different points in the future. Given this type of information, the vendor account team will have what they need to go back to their management to push for a longer-term, scalable solution for the district.

2. Don’t limit negotiations to the end or beginning of a contract.

Most providers can make adjustments to service level and price in the middle of a contract term if the language in the contract and Form 470 allow for it. If you don’t think you are getting a fair price, especially towards the end of a contract term, don’t be afraid to ask for reduced pricing or more bandwidth. The cost of bandwidth is constantly dropping, so over time, the price in your contract becomes less and less competitive.
When it comes to changes in service mid-contract, keep in mind E-rate program rules require that all changes are compliant with the applicant’s state and local purchasing and contracting laws and that you re-bid if you want to make a change to the service described in your establishing Form 470.

3. When negotiating for Category 1 and Category 2 services, discuss pricing and service options to try to get the best deal.

Often, asking for more bandwidth on Category 1 connections at the same price is more successful than simply asking for a lower price. The marginal cost of adding incremental bandwidth for providers is very low, so it is worth asking if they can upgrade you at no cost.

For Category 2 services, a vendor may be more able to discount software, maintenance, licenses, and professional services compared to equipment. That said, it doesn’t hurt to ask for a higher discount on the equipment as well.

4. Use your competitive leverage.

If a vendor knows that they are the only player in the game, they are less likely to budge on pricing. In addition, use any pricing data you can find on nearby schools. This will help you benchmark where you should be and give you a much stronger foundation on which to base the discussion with that provider.

5. Talk to your provider about how their pricing will change based on contract length or purchase size.

Providers can usually offer lower pricing with long-term contracts or a larger equipment purchase because they have more guaranteed revenue. However, since the price of bandwidth is constantly dropping, contracts over five years may not be ideal as they lock you into current pricing. Even if you get a good price with a long contract, chances are that the price you could get in three or five years will be even less.

6. Don’t hesitate to negotiate terms

Contract length, the service level agreement (SLA), installation fees, and termination conditions are all up for negotiation. Be sure you are comfortable with all of the language in the contract prior to signing.

7. If your contract includes construction, shift as much of the up-front costs from the ongoing monthly service costs (MRC) to the non-recurring costs (NRC) as possible.

Service providers have historically put up-front circuit build costs into MRC (sometimes to ensure E-rate eligibility under previous rules), significantly increasing the MRC towards the district. However, at the end of the contract term, if the price is not readjusted, it can remain at a much higher than the true cost of service.

8. Think about how you can set your SLAs to maximize the potential for the provider to offer you a reasonable commitment without over-engineering your service levels and placing an excessive burden on them.

For example, a longer downtime that is out of school hours could be acceptable in many circumstances. By building these kinds of flexibility into your contract, your service provider may be better able to show some flexibility on price.

9. Incorporate a “Time is of the Essence Clause” into contract(s) with providers

A Time Is of the Essence Clause (TOE) is language contained in a contract that specifies that a certain time or date is important. To incentivize providers to maintain the original project schedule, it is in your best interest to include a strong TOE in your contract(s), e.g. one that states that delays in the project will result in discounts of X for every week past the original time of delivery.

10. Ask for Extras

Many vendors can throw into a deal things like a Wi-Fi site survey or training credits. These things are of very little value to them but can make a big difference for school districts managing tight budgets.

With these tools in hand, you should be well equipped to secure your school district’s upgrade at an affordable cost. For more help navigating the end of the filing cycle and figuring out the next steps, visit our free Tools & Resources or contact us for support.