Request for Proposal
Encyclopedia
A request for proposal (RFP) is issued at an early stage in a procurement
process, where an invitation is presented for suppliers, often through a bidding
process, to submit a proposal
on a specific commodity
or service. The RFP process brings structure to the procurement decision and is meant to allow the risks and benefits to be identified clearly upfront.
The RFP may dictate to varying degrees the exact structure and format of the supplier's response. Effective RFPs typically reflect the strategy and short/long-term business objectives, providing detailed insight upon which suppliers will be able to offer a matching perspective.
Similar requests include a request for quotation
and a request for information
.
In principle, an RFP:
), technical capability (used on major procurements of services, where the item has not previously been made or where the requirement could be met by varying technical means), product information such as stock availability and estimated completion period, and customer references that can be checked to determine a company's suitability (including educational and military background of its employees on the project --- college graduates and those with advanced college degrees add "value" from the bidder, as does an employee's military background [especially in a similar area] as the contract).
In the militaries of many countries, an RFP is often raised to fulfill an Operational Requirement
(OR), after which the military procurement authority will normally issue a detailed Technical Specification against which tenders (i.e., bids) will be made by potential contractors. In the civilian use, an RFP is usually part of a complex sales
process, also known as enterprise sales.
RFPs often include specifications of the item, project or service for which a proposal is requested. The more detailed the specifications, the better the chances that the proposal provided will be accurate. Generally RFPs are sent to an approved supplier or vendor list.
The bidders return a proposal by a set date and time. Late proposals may or may not be considered, depending on the terms of the initial RFP. The proposals are used to evaluate the suitability as a supplier, vendor, or institutional partner. Discussions may be held on the proposals (often to clarify technical capabilities or to note errors in a proposal). In some instances, all or only selected bidders may be invited to participate in subsequent bids, or may be asked to submit their best technical and financial proposal, commonly referred to as a Best and Final Offer (BAFO). Subsequent changes can be referred to as the Best and Revised Final Offer (BARFO).
(RFQ) is used when discussions with bidders are not required (mainly when the specifications of a product or service are already known) and when price is the main or only factor in selecting the successful bidder. An RFQ may also be used as a step prior to going to a full-blown RFP to determine general price ranges. In this scenario, products, services or suppliers may be selected from the RFQ results to bring in to further research in order to write a more fully fleshed out RFP.
RFP is sometimes used for a request for pricing.
A request for information
(RFI) is a proposal requested from a potential seller or a service provider to determine what products and services are potentially available in the marketplace to meet a buyer's needs and to know the capability of a seller in terms of offerings and strengths of the seller. RFIs are commonly used on major procurements, where a requirement could potentially be met through several alternate means. An RFI, however, is not an invitation to bid, is not binding on either the buyer or sellers, and may or may not lead to an RFP or RFQ.
A request for qualifications (RFQ) is a document often distributed before initiation of the RFP process. It is used to gather vendor information from multiple companies to generate a pool of prospects. This eases the RFP review process by preemptively short-listing candidates which meet the desired qualifications.
A request for tender
(RFT) is more commonly used by government.
Procurement
Procurement is the acquisition of goods or services. It is favourable that the goods/services are appropriate and that they are procured at the best possible cost to meet the needs of the purchaser in terms of quality and quantity, time, and location...
process, where an invitation is presented for suppliers, often through a bidding
Bidding
Bidding is an offer of setting a price one is willing to pay for something. A price offer is called a bid. The term may be used in context of auctions, stock exchange, card games, or real estate transactions....
process, to submit a proposal
Proposal (business)
A business proposal is a written offer from a seller to a prospective buyer.Business proposals are often a key step in the complex sales process—i.e., whenever a buyer considers more than price in a purchase.-Overview:...
on a specific commodity
Commodity
In economics, a commodity is the generic term for any marketable item produced to satisfy wants or needs. Economic commodities comprise goods and services....
or service. The RFP process brings structure to the procurement decision and is meant to allow the risks and benefits to be identified clearly upfront.
The RFP may dictate to varying degrees the exact structure and format of the supplier's response. Effective RFPs typically reflect the strategy and short/long-term business objectives, providing detailed insight upon which suppliers will be able to offer a matching perspective.
Similar requests include a request for quotation
Request for Quotation
A request for quotation is a standard business process whose purpose is to invite suppliers into a bidding process to bid on specific products or services. RFQ, generally means the same thing as IFB ....
and a request for information
Request for Information
A request for information is a standard business process whose purpose is to collect written information about the capabilities of various suppliers. Normally it follows a format that can be used for comparative purposes....
.
In principle, an RFP:
- informs suppliers that an organization is looking to procureProcurementProcurement is the acquisition of goods or services. It is favourable that the goods/services are appropriate and that they are procured at the best possible cost to meet the needs of the purchaser in terms of quality and quantity, time, and location...
and encourages them to make their best effort. - requires the company to specify what it proposes to purchase. If the requirements analysisRequirements analysisRequirements analysis in systems engineering and software engineering, encompasses those tasks that go into determining the needs or conditions to meet for a new or altered product, taking account of the possibly conflicting requirements of the various stakeholders, such as beneficiaries or users...
has been prepared properly, it can be incorporated quite easily into the Request document. - alerts suppliers that the selection process is competitive.
- allows for wide distribution and response.
- ensures that suppliers respond factually to the identified requirements.
- is generally expected to follow a structured evaluation and selection procedure, so that an organization can demonstrate impartiality - a crucial factor in public sector procurements.
Specifications
An RFP typically involves more than a request for the price. Other requested information may include basic corporate information and history, financial information (can the company deliver without risk of bankruptcyBankruptcy
Bankruptcy is a legal status of an insolvent person or an organisation, that is, one that cannot repay the debts owed to creditors. In most jurisdictions bankruptcy is imposed by a court order, often initiated by the debtor....
), technical capability (used on major procurements of services, where the item has not previously been made or where the requirement could be met by varying technical means), product information such as stock availability and estimated completion period, and customer references that can be checked to determine a company's suitability (including educational and military background of its employees on the project --- college graduates and those with advanced college degrees add "value" from the bidder, as does an employee's military background [especially in a similar area] as the contract).
In the militaries of many countries, an RFP is often raised to fulfill an Operational Requirement
Operational Requirement
An Operational Requirement or was a UK Air Ministry document setting out the required characteristics for a future military aircraft or weapon system....
(OR), after which the military procurement authority will normally issue a detailed Technical Specification against which tenders (i.e., bids) will be made by potential contractors. In the civilian use, an RFP is usually part of a complex sales
Complex sales
Complex sales, also known as Enterprise sales, can refer to a method of trading sometimes used by organizations when procuring large contracts for goods and/or services where the customer takes control of the selling process by issuing a Request for Proposal and requiring a proposal response from...
process, also known as enterprise sales.
RFPs often include specifications of the item, project or service for which a proposal is requested. The more detailed the specifications, the better the chances that the proposal provided will be accurate. Generally RFPs are sent to an approved supplier or vendor list.
The bidders return a proposal by a set date and time. Late proposals may or may not be considered, depending on the terms of the initial RFP. The proposals are used to evaluate the suitability as a supplier, vendor, or institutional partner. Discussions may be held on the proposals (often to clarify technical capabilities or to note errors in a proposal). In some instances, all or only selected bidders may be invited to participate in subsequent bids, or may be asked to submit their best technical and financial proposal, commonly referred to as a Best and Final Offer (BAFO). Subsequent changes can be referred to as the Best and Revised Final Offer (BARFO).
Other requests
A request for quotationRequest for Quotation
A request for quotation is a standard business process whose purpose is to invite suppliers into a bidding process to bid on specific products or services. RFQ, generally means the same thing as IFB ....
(RFQ) is used when discussions with bidders are not required (mainly when the specifications of a product or service are already known) and when price is the main or only factor in selecting the successful bidder. An RFQ may also be used as a step prior to going to a full-blown RFP to determine general price ranges. In this scenario, products, services or suppliers may be selected from the RFQ results to bring in to further research in order to write a more fully fleshed out RFP.
RFP is sometimes used for a request for pricing.
A request for information
Request for Information
A request for information is a standard business process whose purpose is to collect written information about the capabilities of various suppliers. Normally it follows a format that can be used for comparative purposes....
(RFI) is a proposal requested from a potential seller or a service provider to determine what products and services are potentially available in the marketplace to meet a buyer's needs and to know the capability of a seller in terms of offerings and strengths of the seller. RFIs are commonly used on major procurements, where a requirement could potentially be met through several alternate means. An RFI, however, is not an invitation to bid, is not binding on either the buyer or sellers, and may or may not lead to an RFP or RFQ.
A request for qualifications (RFQ) is a document often distributed before initiation of the RFP process. It is used to gather vendor information from multiple companies to generate a pool of prospects. This eases the RFP review process by preemptively short-listing candidates which meet the desired qualifications.
A request for tender
Request for tender
A request for tender, commonly abbreviated to RFT, is a formal, structured invitation to suppliers for the supply of products or services. In the public sector, such a process may be required and determined in detail by law to ensure that such competition for the use of public money is open, fair...
(RFT) is more commonly used by government.
See also
- Call for bids
- Contract AContract AIn Canadian contract law, Contract A is a concept that has recently been applied by courts regarding the fair and equal treatment of bidders in a contract tendering process. Essentially this concept formalizes previously applied precedents and strengthens the protection afforded to those who...
- Funding Opportunity AnnouncementFunding Opportunity AnnouncementA funding opportunity announcement is a notice in Grants.gov of a federal grant funding opportunity.Funding opportunity announcements can be found at Grants.gov/FIND and this website lets organizations apply for grants for over 1,000 grant programs from 26 federal agencies.Each FOA includes...
- ERFxERFxIn procurement technology, ERFx is an acronym for Electronic Request For [x], where x can be Proposal , Quotation , Information or Tender . Other pseudonymous acronyms include ITT and PQQ...
- OutsourcingOutsourcingOutsourcing is the process of contracting a business function to someone else.-Overview:The term outsourcing is used inconsistently but usually involves the contracting out of a business function - commonly one previously performed in-house - to an external provider...
- Reverse auctionReverse auctionA reverse auction is a type of auction in which the roles of buyers and sellers are reversed. In an ordinary auction , buyers compete to obtain a good or service, and the price typically increases over time...
- Strategic sourcingStrategic sourcingStrategic sourcing is an institutional procurement process that continuously improves and re-evaluates the purchasing activities of a company. In a production environment, it is often considered one component of supply chain management...
- Statement of workStatement of workA statement of work is a formal document that captures and defines the work activities, deliverables and timeline a vendor will execute against in performance of specified work for a client...
- Tendering
- E-tendering
External links
- RFPs are a valuable tool and opportunity - Opinion article on the value of RFPs in competitive bidding
- Writing Good RFP Questions - an article discussing how to frame and structure RFP questions.
- To RFP or Not to RFP - The Pros and Cons. - To RFP or Not to RFP
- RFP Statement of Work Writing Guide - A do-it-yourself guide to developing an RFP Statement of Work
- 6 steps to writing a better Request for Proposals - A primer for writing better RFPs