Hard-Won Accord: British Columbia & EDS Canada Tackle a Complex Contract Negotiation (Abridged)

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  • Product Description

    Abstract:
    When a public sector agency decides to privatize a large government function (as opposed to a more discreet job), the process of negotiating the service contract becomes a more complex and far-reaching endeavor. This case study describes the dilemmas that surfaced when a government agency in British Columbia—the Ministry of Provincial Revenue—negotiated a 10-year, $750 million contract for non-tax revenue collection to EDS Canada, a subsidiary of the Texas-based Electronic Data Systems corporation. The appeal of the deal, from the public sector perspective, was that it transferred the risk of upgrading an outmoded, under-resourced system to the private sector. The appeal to the private sector was that it allowed the company to recover costs and make a profit by taking a share of the financial benefits that resulted from the upgrade. But negotiating the ins and outs of the contract for this ambitious project was to prove a formidable—nearly an insurmountable—hurdle for two organizations that inhabited different cultures, held different assumptions, and pursued different mandates. For example, what profit level was reasonable? Should the company be required to reveal its costs to the government? To what extent should the details of the contract be public, if at all? In what areas—if any—should public officials be able to regulate the firm’s business practices? And how should either party be held accountable for its contractual promises?

    Learning Objective:
    This is an abridged version of a case that was developed for a Harvard Kennedy School course on public-private partnerships. It affords students a balanced, inside look at the nitty-gritty dilemmas of both the public and private sector negotiators.

  • Other Details

    Publication Date: August 02, 2012
    HKS Case Number: 1835.3
    Case Author: Pamela Varley
    Faculty Lead: John D. Donahue
    Pages (incl. exhibits): 17
    Setting: Canada, United States
    Language: English
    _year: 2010-2015
    _pages: 16-25
    _geography: US & Canada
  • Warranty Information

    /review/1835.3.EducatorCopy.pdf

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