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Case Study #4
Military Technologies Inc. vs. Guidance Systems LLC—Part Two
Re-read and review the case study in Chapter 10 as a point of reference for this case study. You are the program manager for Military Technologies Inc. and Guidance Systems LLC is currently the subcontractor to Military Technologies Inc. for other guidance systems for the new generation of military support ground vehicles. These vehicles are state of the art and have considerable technology on board to move the vehicle as well as to notify the driver of friends and foes. This vehicle is under development for ultimate use by the U.S. military.
The negotiations that were discussed in Chapter 10 have already taken place, and this case study is taking place about a week after that negotiation meeting. From that meeting, a verbal agreement has already been discussed that sounded like it would meet everyone’s expectations. Although the agreement to utilize the new proprietary technology between Military Technologies Inc. and Guidance Systems LLC has not been signed, most of the agreement was concluded in the last negotiation. Jack Smith was given the responsibility to complete the contract details, but then without much notice, Jack Smith resigned from Military Technologies Inc. and took a job with a competitor. Jack Smith did not have a confidentiality agreement and did not have a non-compete clause in his contract, and this new situation could potentially be an issue.
What is interesting is that Jack Smith has taken a new role with one of the companies that had been put forward as a potential alternative sup-plier by Graham Garnet. Graham feels that this was a planned move by Jack Smith and feels that Jack can use the information from the negotiation as well as from the file that Graham had compiled to destroy all the hard work that has gone into the negotiation. You are not sure what Jack might be up to; however, you wish him well.
As you are working to complete the contract between your company and Guidance Systems LLC, you get a call from Jack Smith. Jack lets you know that his new company, Seatech Industrial Inc., can actually provide the same technology at half the price of what the deal with Guidance Systems LLC was going to be. He advises you that now that he works at Seatech Industrial, he has reviewed their specifications in detail, and he is sure that Seatech could do the same thing for a lot less money. You are unsure of what to do because the savings would represent a lot of money to your company.
Later that day, you get a call from the head of Guidance Systems LLC, Edward Saturday, and he advises that they got a call from Jack Smith that you are considering an alternative offer from Seatech Industrial Inc. Mr. Saturday tells you that he feels upset that at this late stage in the negotiation you would consider an alternative offer, from an inferior company. Edward Saturday speaks about the long history between the two companies, and how the offer that you have made to Guidance Systems LLC is a lot of money for a small company, and it means a lot of new jobs. Backing out now would not only mean no new jobs, but it would result in putting dozens of people out of work. He mentions to you that he knows that the U.S. military has been promised this new proprietary technology from Guidance Systems LLC, and he would personally go to his contacts there to tell them about how you purposefully misled everyone involved.
Mr. Saturday advises that you may have worked with Jack Smith for a long time, but he says that working with him was not easy. He found Jack to be deceptive at times in the relationship between the two companies. He would hope that you would do the right thing and send over the contract at the agreed upon price. You close the discussion that you will call him in the morning after you have had some time to discuss the matter internally. Mr. Saturday was not happy but advised that he will look forward to your call.
Case Study Questions
What do you do? Will you consider the new offer or will you move forward with the contract as verbally agreed with Guidance Systems LLC?
Do you use this opportunity to re-open negotiations with Guidance Systems LLC? It is obvious that they are worried, so do you use this as a way to get a better price?
You feel that given the politics involved in this now, you will likely get a call from the president of your company to ask about the status of the contract. What will you prepare as a response to the company president?
What will you cover in your call to Edward Saturday at Guidance Systems LLC in the morning? You know that you need a solid position with whatever you decide to do.
Will you include Graham in this discussion? Why or why not?
Do you contact Jack Smith? Why or why not?