Request for Proposal (RFP) Template

Posted by Kevin Brady on Tue 16th June 2009 at 10:29 PM, Filed in Document Templates & Tools

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What is it?
A Request for Proposal (referred to as RFP) is an invitation for suppliers, often through a bidding process, to submit a proposal on a specific commodity or service. A bidding process is one of the best methods for leveraging a company’s negotiating ability and purchasing power with suppliers. The Request process brings structure to the procurement decision and allows the risks /benefits and requirements to be clearly identified upfront. An RFP typically involves more than just a request for a price. Other requested information typically includes basic corporate information and history, financial information (can the company deliver without risk of bankruptcy), 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 date, as well as customer references that can be checked to determine a company’s suitability.

Why should I use it?
An RFP give clients the following advantages:-
• Obtain correct and comparable information from different suppliers so that sound business decisions can be made.
• Leverage a company’s purchasing power to obtain a favourable deal
• Informs suppliers that your company is looking to procure and encourages them to make their best effort.
• Requires the company to specify what it proposes to purchase. If the requirements analysis 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.
• By following a structured evaluation and selection procedure an organisation can demonstrate impartiality - a crucial factor in public sector procurement.

How should I use it?
In the military, 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 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).
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Good Luck.

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READER COMMENTS:

Kevin,

very helpful.  I’d make a couple other advantages I might articulate slightly differently.

RFPs force customers to think through what they are really trying to accomplish prior to talking with vendors.  If one has a “feeling” that they’d like to do something, it’s very easy for a salesperson to persuade you that what they’re selling is the solution to your problem.

RFPs also shift the understanding of what’s available.  The typical customer doesn’t think about some product all day long, whereas a salesperson thinks about it constantly.  Thinking through what you’re trying to achieve and then evaluating multiple vendors solutions is very educational and shifts the balance of power away from the salesperson.

Most importantly, RFPs create a competitive bidding situation.  Each vendor may know who the other vendors are and they probably even know what they’re pitching, but they don’t know the price they’re pitching at.  This crucial piece of information is the leverage that will get customers the most education and the best price.

Think about it like buying a car.  If you just go to one car dealer, you’re almost certain to get fleeced.  But if you decide that you want a convertible sports car and you can get eight dealers to come to your house and demonstrate their car and bid against the other dealers, aren’t you pretty sure that you’ll get exactly what you want at the best price available?  Even from a car salesperson…

Posted by Andrew Meyer  on Wed 17th June 2009 at 12:00 AM | #

Thanks for this Andrew. You are so so right. I will be writing a few related posts to this in the next few weeks and offering up some associates templates to support the whole RFP and tendering process. These are available no where else.

Posted by Kevin Brady  on Wed 17th June 2009 at 04:56 PM | #

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