Dilemma 5: Negotiation of a contract - Answer
You have agreed with the project owner that you will put in your most competitive price, just as if you were taking part in a competitive tender, and that he will not suffer as a result of not putting the contract out to tender. If it is the case that you would have bid to the project owner at 0% margin (the same as your other current bids if this was a competitive tender), then you must price to the project owner at 0%. Otherwise you are misleading the project owner. If you have made this commitment to the project owner, and you put in a price to the project owner at a higher margin than 0%, you are likely to be committing a criminal offence, as by submitting the price you are representing to him that it is your best price, when you know that it is not.
Alternatively, you could include a higher margin in the tender, and disclose to the project owner the basis on which you are pricing to him, and explain that you have priced other tenders at a lower margin. In this case, you may be breaking your initial commitment to the project owner to bid at your best price, but this will be a possible breach of contract and not a criminal issue. The project owner can then choose whether or not to place the contract with your company without being misled.