REQUESTING BEST AND FINAL OFFERS
by Michael Asner
The RFP process is highly flawed. Buyers issue documents that often provide a distorted, incomplete, or inaccurate description of the problem. This is not their intention but simply the result of many different people trying to describe a complex requirement or a difficult problem. Suppliers then take this information and interpret it in the light of their own knowledge and product offerings and develop their proposals.
Our evaluation processes attempt to compensate for these systemic problems by basing the award on a number of factors: not simply the least cost, nor only the best project management plan, nor just the best technical solution. We combine all of these factors so that we often award the contract on the basis of least apparent risk. The winning proposal often does not represent the best value but rather the proposal with the fewest “holes”, the fewest ambiguities or the fewest weak sections. In short, the proposal that seems to solve the problem and is most credible is chosen.
The systemic problem is easy to define: buyers cannot articulate many of the critical details of a solution until they have reviewed the suppliers’ proposals. Until this time, the buyers do not have sufficient insight or knowledge of potential solutions to make an informed decision. But it is fundamental to our RFP process that suppliers can’t revise their proposals; evaluators can only evaluate the submitted material. And evaluators hate it! For example, you issue an RFP and get six proposals. Only three are anywhere close to the mark. They are OK but not great. One of the proposals lacks the depth of technical information that would inspire confidence in the solution. The second lacks project management depth. The third is simply too expensive.
Best and Final Offers (known as BAFO) are a procurement strategy that is often used when the evaluation team believes that the price could or should be better, or when some elements of a proposal are confusing and need further definition. It is also used to obtain additional information that will provide a larger point difference between competitive proposals.
Vendors hate the traditional RFP process the one without BAFO. Losing a major contract because one section of their proposal was rated a ‘6’ rather than an ‘8’ is difficult to understand. Vendors often complain, “If we had only known more details and understood the buyers’ reasons, then we would have proposed a different solution.”
BAFO is designed to solve this problem too, because it permits buyers to get revised proposals from vendors. In the U.S., this process is defined in the procurement statutes of many states and in the ordinances for many cities. In Canada, BAFO is rarely used. The Province of British Columbia used this technique a few times in the mid to late 90s for IT procurements, and the City of Mississauga has used it on rare occasions. In the U.S., it is used in many jurisdictions but always under rigid controls. The concern is that all suppliers be treated fairly, and that no information be transmitted from one supplier about the other suppliers’ offers.
Here’s how it works. First, the RFP contains language that properly defines the rules and the process. Typically, the evaluators identify those proposals capable of delivering the required results. This evaluation is the same as would normally be done to develop the short-list of finalists. These finalists are then provided detailed questions related to their proposals, or informed of those parts of the proposals that are deficient. The suppliers are given the opportunity to redo their proposals. They are provided with the opportunity to improve their offering and to eliminate unacceptable conditions contained in their original proposal. The amended sections are then re-evaluated and re-scored according to the evaluation process defined in the RFP.
There are several different ways in which BAFO is employed:
In some jurisdictions, competitive negotiations precede BAFO. In this way, the revised proposals reflect the agreed-upon changes resulting from the negotiation process.
In some jurisdictions, competitive negotiations are not used. Rather, vendors are sent a letter indicating the weaknesses in their proposals and invited to submit a BAFO.
In other places, negotiations occur after BAFO and result in a contract. No revised proposal is required.
Montana has produced the following easy-to-read, logical description of the RFP process and BAFO:
Best and Final Offers (Optional step)
- The committee may decide to seek best and final offers from one or more offerors if additional information is necessary in order to make a final decision.
- The committee may request only one best and final offer.
- Offerors may not request an opportunity to submit a best and final offer.
- The procurement officer must be notified of the offerors who are provided the opportunity to submit best and final offers and the areas to be addressed.
- The procurement officer will send out the request for best and final offers in a letter stating the areas to be covered and the date and time in which the best and final offer must be returned.
- Proposal scores are adjusted in light of the new information received in the best and final offer. Additional points cannot be given.
- A best and final offer cannot be requested on price/cost alone unless so stated in the RFP.
New Mexico’s RFP Guide provides some insight into the use of BAFO:
The best and final offer is the only step in the process where the proposal can be amended. If the offeror’s proposal contains unacceptable contract terms and conditions, this is the step in the process where that problem is resolved. If an offeror stamped every page of the proposal “proprietary” or “confidential”, this is the step in the process where that problem is corrected. If costs were not proposed on exactly the same basis as the other offerors, this is the step in the process to correct that problem.
According to the procurement people in New Mexico, “The best and final offer step has produced some truly amazing results over the years saving the State literally millions of dollars.”
This article is an excerpt from The Request for Proposal Handbook (Third Edition) by Michael Asner, who is a procurement consultant based in White Rock, BC and a former columnist for Summit magazine.
© 2005 Michael Asner Consulting Inc. Reprinted by permission.