Principles of Project Finance

specifications and contract terms are clarified, and a final decision may be made

at this stage. (This is not acceptable under some procurement procedures, on the

basis that such issues should be settled before the initial bid, and negotiations of

this type cloud the transparency of the procedure.) Alternatively, two or three of

the short-listed bidders may then be invited to submit revised “best and final of-

fers” (“BAFOs”), taking account of revised project specifications and documen-

tation that reflect these discussions (again assuming procurement procedures al-

low this second round of bids).

When the bid recipient has chosen a preferred bidder, a letter of intent (LOI, or

memorandum of understanding—MOU) is signed setting out the basic terms of

the ...