The BEST and FINAL Offer

Flashbacks from some recent contractual discussions where there was mention of an offer possibly being ‘Best and Final’ (B&F) or getting to the result of best and final. It brought me back to a previous history of negotiations in a prior life.? Situation was that provider was asked to provide their best and final pricing and agreed to discuss internally before returning with that final price.? Vendor was informed that our response would be a straightforward YES or NO depending on how their offer stacked up against the competition.? The vendor asked that the door be kept open if they were not selected.? They would then see what they could do further if told NO.

Translation:? The pricing and terms the vendor provided were not really B&F.? The provider had a better offer or at least the potential of a better offer to make, as is typical in a negotiation process, but not straightforward or forthright when the offer is stated as best and final.? Better not to make an offer under the guise of B&F at all than to make an offer with that ‘label’ when it is not accurate; when there is a better offer down the road given the right circumstances.? The one fact you know at this point, by definition, is that you do not yet have their B&F.? The vendor’s willingness to negotiate further validates that suspicion.

A true B&F offer means that the provider has nothing more to offer to close the deal.? They may be willing but are not able to raise their terms due to any number of factors.? For whatever reason(s):? Cost structure, existing MFN pricing, Government (GSA) pricing, other contractual restrictions. etc. they do not have the outright ability to offer more, much as they may want to.? (Note: these are solid examples of the vendor’s constraints or limitations; there could be a host of others).? Keep in mind that the vendor must make money or else they are no longer in business which hurts both parties.? Still, you do not want to be the player who is lining their pockets unnecessarily which is a reason to negotiate in the first place.

The vendor offer to further negotiate beyond B&F was rejected.? They were told that they simply needed to provide their best number now no matter what it took internally to obtain that best offer approval (this cannot and should not be a Used Car sale, escalating repeatedly to various levels of management approval toward a better deal).? This has to be the offer that you, the vendor, simply cannot improve; that is truly the best you can do.?

Asking that we come back to you if a competitive offer is better flies in the face of actually having that best and final offer and opens the door for a whole series of (UGH) “really final offers”.? Further, in matching or even slightly improving on the offer of a competitor that vendor is only putting forward under pressure what they would not openly offer previously without that pressure; an offer that the competitor offered without that same pressure.? They would not give you these terms but somebody else will, and now, due to that, they will as well.

Does not feel good.