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The bonus system and best and final offer methods explained

Last checked: 20 October 2026 · Explainers

Both methods put an unsolicited proposal out to competitive tender and give the original proponent a set advantage. Under the bonus system the proponent gets extra points in the bid evaluation, often a few percent 1,2. Under the best and final offer method the proponent is guaranteed a place in a final bidding round 3. The 2017 World Bank guidelines prefer a small bonus or automatic short listing to a right to match 1.
Bonus size in World Bank guidance
Usually several percentage points, kept small 1
Chile premium
3%, 6% or 8% by project category 4
South Korea bonus
Up to 10%, a maximum of 5% if the proposal is modified 2
Indonesia and Uruguay bonus
Up to 10% 2
BAFO countries in World Bank sources
South Africa and Argentina 2,3
Argentina final round trigger
Proponent more than 5% but less than 20% behind the best bid 3

Why governments use these methods

The 2017 World Bank and PPIAF guidelines say a bonus or automatic short listing may still allow equal bidding conditions. They strongly discourage the right to match, known as the Swiss challenge, as it significantly limits competitive pressure 1.

The PPP Reference Guide groups the bid bonus, the right to match and the best and final offer process as ways to create competitive tension around an unsolicited proposal 2.

How the bonus system works

The public agency gives the proponent a bonus in the bid evaluation, usually several percentage points 1. The World Bank guidelines recommend keeping it small. They say it does not limit competition much if it is a small share of evaluation points 1.

A 2007 PPIAF paper said the bonus is applied to the proponent's offer for bidding purposes only. It said the bonus was usually between 5 percent and 10 percent 3.

CountryBonus ruleSource date
Chile 4Economic offer score raised by 3% (Category C), 6% (Category B) or 8% (Category A) 4Regulation published 8 February 2022 4
South Korea 2Up to 10% of overall evaluation scores, a maximum of 5% if the proposal is modified 2Undated World Bank guide 2
Indonesia 2Up to 10%, or a developer's fee 2Undated World Bank guide 2
Uruguay 2Up to 10% of the final evaluation score 2Undated World Bank guide 2

What the bonus record shows

In South Korea, the 2007 PPIAF paper said bonus points ranged from 0 to 6 percent, with an average of 2.7 percent. Of 65 projects that had gone to public tender, a third party won in only 6 cases 3.

In Chile, the same paper said the bonus for the first two airport concessions was 20 percent 3. The World Bank Reference Guide says that of 19 concessions awarded from unsolicited proposals as of 2015, only seven went to the original proponent 2.

How the best and final offer method works

Under this method the tender has more than one round and the original proponent gets an automatic place in the final round 3.

In South Africa the two most advantageous bids from the first round go to a final round 3. The World Bank Reference Guide describes a two-stage process for roads. The top two bidders resubmit best and final offers, and the proponent is invited if it is not in the top two. A developer's fee is payable by the winning bidder 2.

In Argentina, under Presidential Decree 966 of 2005, a proponent more than 5 percent but less than 20 percent behind the best bid goes to a final round with the best bidder. In that round the 5 percent bonus does not apply. If the proponent loses, the winner repays development costs equal to 1 percent of the estimated project cost 3.

Related approach: automatic prequalification

South Africa's amended Treasury Regulation 16, in force from 1 June 2025, gives the proponent automatic prequalification and shortlisting. It provides a development fee if the proponent bids but loses and the project reaches financial close. The regulation text does not mention a bonus or a best and final offer 5.

Common questions

Which is better, a bonus or a right to match?

The 2017 World Bank guidelines strongly discourage the right to match and recommend a small bonus or automatic short listing 1.

How big is a typical bid bonus?

World Bank guidance describes several percentage points 1. Published rules range up to 10% in South Korea, Indonesia and Uruguay 2 and up to 8% in Chile 4.

What is a BAFO round?

A final round in which the leading bidders resubmit offers. The original proponent gets a place even if it is not among the top bidders 2,3.

Does the original proponent usually win under a bonus system?

Not in the World Bank cases. In Chile seven of 19 awards went to the proponent as of 2015 2. In South Korea a third party won 6 of 65 tenders by 2007 3.

Rules and fees change. Check the official site linked above before you apply or pay. Spotted an error? Email [email protected] with the official link.

Sources

  1. World Bank Group: Policy Guidelines for Managing Unsolicited Proposals in Infrastructure Projects, Volume I (July 2017)
  2. World Bank PPP Reference Guide: Dealing with Unsolicited Proposals (undated, accessed 20 October 2026)
  3. PPIAF: John T. Hodges and Georgina Dellacha, Unsolicited Infrastructure Proposals, How Some Countries Introduce Competition and Transparency, Working Paper No. 1 (2007)
  4. Diario Oficial de la República de Chile No. 43.173: DS MOP No. 206 of 2021 amending the Reglamento de la Ley de Concesiones (8 February 2022)
  5. National Treasury, Government Gazette No. 52061, Government Notice 5841: Amendments to the Treasury Regulations (7 February 2025)

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