BAFO (Best and Final Offer)
A final-round bid request asking shortlisted suppliers to submit their best price and improved offer.
Definition
BAFO stands for Best and Final Offer. It is a final-round bid request asking shortlisted suppliers to submit their best price and most improved offer after one or more earlier evaluation rounds. BAFOs are common in private sector procurement and were widely used in pre-PCR 2015 UK public sector negotiated procedures. Under PCR 2015 BAFO use is restricted but can appear in Competitive Procedure with Negotiation; under PA 2023 the Competitive Flexible procedure allows BAFO as one possible design choice.
How it works in practice
A BAFO process typically runs after initial bid evaluation has identified a small number of leading candidates (typically 2-3) but the buyer wants a final commercial improvement before award. The buyer issues a BAFO request to the shortlisted suppliers, specifying what improvements they are seeking (price reductions, methodology refinements, additional commitments). Suppliers respond with their final position; the buyer evaluates and awards. BAFOs concentrate negotiation pressure on the final stage and can drive substantial commercial improvement over the initial bid. Risks include: suppliers may suspect BAFO is being used to extract concessions disproportionate to the actual competitive position; the process can compress timelines on critical decisions; and over-reliance on BAFO can encourage suppliers to hold back their best offer in the initial bid. UK public sector BAFO use is more restricted than private sector because of procurement regulation: changes to bids during the procurement must be conducted transparently and consistently across all eligible bidders to avoid procurement challenge. Where BAFO is used the rules must be published before the BAFO round; deviations risk challenge.
Common questions
Is BAFO permitted in UK public procurement?
Restricted under PCR 2015 to specific procedures (Competitive Procedure with Negotiation). Under PA 2023 the Competitive Flexible procedure allows BAFO as one possible design choice. BAFO use in Open or Restricted procedures is not permitted because it would amount to negotiation after bid submission which those procedures do not allow.
How do I respond to a BAFO request?
With your genuinely best final offer, not a held-back improvement. BAFO requests typically come after the buyer has shortlisted you against competitive alternatives; if your initial bid was already at your best position, you should say so. If you held back from the initial bid, BAFO is your opportunity to release the improvement but expect it to be evaluated alongside competing improvements.
Do I have to participate in BAFO?
You can decline; declining usually means the contract goes to a competitor. If your initial bid represented your best position and BAFO is requesting further improvement beyond that, an honest "no improvement available" response is acceptable provided the initial bid was genuinely at your best position.