You are the head of the August Group, a highly respected computer consulting firm. Most of your

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Question:

You are the head of the August Group, a highly respected computer consulting firm. Most of your work has been for private sector clients, but you recently have decided to pursue state and municipal agencies on the belief that there will be growing opportunities in this domain.

As part of this initiative, you have been trying to negotiate a contract with the public school system in the city of Tendley. The schools have an excellent hardware base but the generic software that was installed does not meet their particular needs. Having researched the situation carefully, you are confident that your firm can develop new programs and special templates that will solve their problems. You'd like to get the contract to d0 this work, both for its own sake and to generate other public sector consulting.

A fundamental pricing gap has arisen, however, that threatens the entire deal. Specifically, you submitted a bid of $85,000 to complet this work - a figure much lower than your normal private sector rates but one that is justifiable in light of your firm's desire to get its foot into the public sector door. Anything less, however, would lose money and set a bad precedent for future work. The school district claims that the most that they can afford is $50,000 and that the hope is to get the job done for significantly less.

Can you think of any plausible ways of making a deal with the school district or do you feel that you should just break off negotiations altogether? Justify either decision.