What is Best and Final Offer (BAFO)?
The last and definitive price or proposal submitted by a supplier after negotiations.
Definition
Best and Final Offer is a closing round in which shortlisted suppliers submit their final terms, with the explicit understanding that no further negotiation follows. It converts an open-ended negotiation into a single decisive step.
How it works in practice
After evaluating three shortlisted proposals, a buyer issues a BAFO request with a fixed deadline and a defined scope, stating that the award will be made on what is submitted. Suppliers price knowing there is no second bite.
Why it matters
BAFO only works if the buyer honours it. Re-opening negotiation after a BAFO round teaches suppliers to hold margin back next time, which raises the cost of every subsequent event.
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