In a recent column in the DCN, it was suggested that the BAFO (Best and Final Offer) is a procurement tool that owners should consider using.
With respect, we would disagree, as the concept of the BAFO flies in the face of the long established tender laws and procedures adopted in Canada, procedures backed by years of legal cases supporting the current system of obtaining design and construction services.
From Ron Engineering forward, the system in Canada is based on allowing the bidders the opportunity to respond to an offer with their best price at the time of bid. It is not an opening negotiation designed to solicit additional opportunities to beat one’s competitors.
A second round is clearly an attempt to suborn the current system and will be strongly opposed by the industry. Owners should not be fooled that just because you put it into the bid, it is OK. It isn’t.
Once tenders close, whether public or not, the prices are very quickly known. If subtrades start to receive calls pressuring them to reduce their prices, then they know someone is "bid shopping" the project. Using a BAFO system ensures this kind of unwarranted and repulsive intimidation will happen. That will lead to problems for the owner, both in who does the work and in likely litigation.
Attempts to thwart the current system have been tried before. The most recent, which is similar to the BAFO, was called a "reverse auction", a repugnant and discredited practice imported from the United States. It failed. The industry stood firm against it and drove it out. It was reported that an Alberta court stated to the effect that anything that interferes with the tendering practices and tries to turn them into an auction is wrong.
BAFO is nothing more than an opportunity to bid shop and is not a practice of which anyone should be proud of.
The BAFO column author states he often hears firms state that "they could have matched or beaten the offer."
Well, of course they could once they know the price. The reality is that the comment most often heard is "how can they do it for that price?"
No buyer should be influenced into using such a system in the procurement of design and construction services as it is simply not effective. It is wrong and will lead to confrontation with the industry.
The column seems to indicate that the BAFO can be used in situations where bids are over budget. This is nonsense. The way to deal with this or any issue arising from the bid is dealt with in the CCDC Guide to Calling Bids and Awarding Construction Contracts, Document 23 (2005).
These processes have been used for years without any negative effects, and thankfully, the majority of owners continue to follow the common sense systems in the Guide.
Owners should be aware that the use of such systems as reverse auctions and BAFO, we believe, are contrary to the system of fair, open and transparent tendering expressed in the broader Public Sector Procurement Directive and by owners and the industry alike.
Simply put, the use of BAFO is nothing more than "bid shopping" and should not be acceptable to any owner and is certainly not accepted by the design and construction industry.
Clive Thurston is the president of the Ontario General Contractors Association. Send comments and Industry Perspectives column ideas to editor@dailycommercialnews.com.
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