Wednesday, January 13, 2010

Unfair Trade Practice for Consultants: Exclusivity Letters

This has always been an annoyance for me and other consultants: Letter of Exclusivity.

Frankly, consultants should begin to demand that if a letter of exclusivity for a proposal is demanded (more often than not a requirement by donors such as USAID and the EU and the like) then that constitutes an opportunity cost which must be covered by a payment. It is an option. Companies pay for options. This should be palatable for the consulting firm if it is coupled with a deal that if the project is awarded, then the payment can be deducted from the consultant's remuneration. If the consulting firm loses the the bid, then, well, that's how options work. If the consultant withdraws after the payment is made and before any decision, then the money must be returned. It may even be structured so as to place the funds in a trust with the consultants bank.

This strikes me as completely fair. That's why it won't happen. Consultants are also terrified that they will be blackballed for being the first or even part of a small group demanding this change.

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