Whether or not this is true may be dependent on your definition of "in contract negotiations". From what I am hearing, the Bills are definitely still pursuing/talking to Cowher and he remains #1 on their list of candidates. Even while Buddy and Russ travel to Minneapolis, then Stanford (then San Diego?) to interview candidates, they are still actively pursuing Cowher.
Since he has yet to say "No", I guess one might consider that "contract negotiations". Of course, it is also possible things are further along than anyone is admitting, but that's too much to hope for I fear.