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A negotiation is underway between State Technical University(STU) andMajor Aerospace Corporation (MAC). Background on each of the two parties and the negotiation is as follows:
Major Aerospace Corporation (MAC)
MAC has spent tens of millions of dollars developing in-flight entertainment systems. Flyers are now demanding an increasing number of entertainment services on aircraft and surveys show that fliers are more likely to fly on an airline that is able to offer them in-flight internet access. In fact, they are willing to pay additional fees in order to do so. MAC has developed a modification to its in-flight entertainment system that will enable this internet access.
This modification will require equipping the aircraft with additional satellite transmission equipment. As there is the possibility that lightning could strike this equipment – affecting both the entertainment system and perhaps other aircraft equipment – MAC wants to test this equipment under simulated conditions. It also wants access to experts who can advise it on design improvements if the equipment fails. STU seems to have facilities and personnel that can meet both requirements for MAC. MAC wants to enter into an agreement with STU for testing of its new entertainment system and its satellite equipment, as well as an evaluation of the design by STU’s experts.
State Technical University (STU)
STU has on its staff many experts in the field of atmospheric electrical discharge (also known as lightning) and facilities to test the impacts of electrical discharge.Some of STU’s experts, as well as STU students who may be assisting STU’s experts, are citizens of countries other than the United States.
STU is very interested in performing work for MAC, since state funding has been drastically reduced this year. In order to provide MAC with a cost estimate, it will first need to negotiate a non-disclosure agreement with MAC.
The Negotiation Issue
The satellite transmission equipment includes technology that has been regulated by the US Department of Commerce. An export license is required if this technology is shared with citizens of certain countries listed in the regulations.
You are the negotiator representing STU. You have been negotiating a non-disclosure agreement with MAC. Once this is in place, STU will be able to provide a price quotation to MAC and then receive a purchase order to perform the work.
Negotiation of the agreement has gone pretty smoothly. However, the parties disagree on including a provision that requires compliance with US export law. A university is a learning environment. STU believes that this provision will make an issue of faculty and students’ nationality and negatively impact the learning environment atmosphere.MAC has been clear that, for non-US citizens, access to the entertainment system technology will not be possible until the nationalities of the persons requiring access is revealed and requirements for an export license determined. The provision at issue reads as follows:
Export. The Parties will comply with all applicable requirements of the International Traffic in Arms Regulations (“ITAR”) and the Export Administration Regulations (“EAR”) regulations. In the event that disclosure of any Proprietary Information subject to ITAR and EAR requirements to a non-United States citizen is required, the receiving Party will immediately notify the disclosing Party. The disclosing Party will then provide instructions to the receiving party on how to proceed.
University administration is aware of the delays and has asked you to provide them with a plan on your strategy to complete negotiation of the non-disclosure agreement. Luckily, this plan will also be useful as a homework assignment for your Management 423 class.
The requirements for this assignment are:
1.Prepare a one – two page summary of the issue in the negotiation.
2.This should explain the interests behind STU and MAC’s positions.
3.It should propose several options for settlement.
4.You should conclude with a recommendation on which option to follow.