Planning for Best and Final Offer Transactions
It’s been a while since my original post, but I’ve come across some interesting developments that I’d like to share over the next few weeks. So stay tuned!
Many of our Partners’ clients are demanding tangible savings from procurement. Although there are several options, many come to the Best and Final Offer (BAFO) process as an option.
Although fairly well established in the US, this practice is virtually non-existent in Canada. And implementing a BAFO policy is sure to upset a few suppliers. Before you embark, you may want to check off a few things:
- Do you have legitimate reason to suspect that you will be able to receive better proposals, especially for price?
- Are you managing your whole-of-life costs effectively? Implementing BAFO processes will be easier if it’s seen as an action of last resort.
- Have you thoroughly examined all opportunities to drive down costs through the specs? Again, this will aid the “case” for choosing BAFO.
- Can you sustain non-bids by your legacy suppliers?
- Have you figured out which projects are best suited for BAFO? As it introduces additional cost for the proponent, you should probably establish some cost and complexity thresholds.
There is a chance that some of your suppliers will be receptive to a BAFO policy. After all, they might rather know about deficient areas in their proposals before the selection of the winning proponent.
Our Partner Michael Asner has some great information on BAFOs. They can be found here:
http://www.rfpmentor.com/bestandfinaloffers.html