Request for proposal

Last updated February 22, 2024

A request for proposal (RFP) is a document that solicits a proposal, often made through a bidding process, by an agency or company interested in procurement of a commodity, service, or valuable asset, to potential suppliers to submit business proposals.^[1]

Overview

An RFP is used where the request requires technical expertise, specialized capability, or where the product or service being requested does not yet exist, and the proposal may require research and development to create whatever is being requested.

The RFP presents preliminary requirements for the commodity or service, and 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.^[2]

Similar requests include a request for quotation (RFQ), whereby the customer may simply be looking for a price quote, and a request for information (RFI), where the customer needs more information from vendors before submitting an RFP. An RFI is typically followed by an RFP or RFQ.^[3]

In principle, an RFP:

Informs suppliers that an organization 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.
Is generally expected to follow a structured evaluation and selection procedure, so that an organization can demonstrate impartiality, a crucial factor in public sector procurement.

Specifications

An RFP typically involves more than a request for a price. Examples of such are: Choosing requirements, the timetable for the project, the RFP Package format, and Obtain clearance for the RFI Package format. Other requested information may include 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 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 may add "value" from the bidder).

The ubiquitous availability of the internet has made many government agencies turn either to state-run or vendor operated websites which provide listings of RFPs as well as RFIs and RFQs. Many allow vendors to sign up at no charge to receive e-mails of requests either generally or for specific categories of product or service for which there is an interest. In some cases, the entire process is done on-line with responses as scanned documents or PDF files uploaded to the server; in other cases, or for legal reasons, a response must be sent in hard copy form and/or on CD/DVD disc or flash drive by mail or delivery service.^{[ citation needed ]}

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. Typically organizations follow a detailed vendor screening process to short list the vendors who should be invited for further rounds of negotiation. This screening process could either be vendor scoring models or internal discussions within the buyer organization. Discussions may be held on the proposals (often to clarify technical capabilities or to note errors in a proposal or in many cases to negotiate on the price). In most instances, 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 andRevisedFinal Offer (BARFO).

Once both the parties, i.e. a buyer organization and seller organization, agree on the technical and commercial terms and conditions of the proposal, they could move on to next steps like contract signing, statement of work which would formalize the purchase transactions.

Today, many organizations are becoming more collaborative in the development of RFPs; this is especially true for universities and other major public entities making major technology purchases. RFP-issuing groups ask for specific use cases, rather than providing a list of features, and ensure they have the opportunity to include demonstrations, webinars and meetings as part of the RFP process to ensure they have a strong understanding of all competing products before making a purchase.^[4]

RFP Template

An RFP template is a document that is used to create a formal request for proposal. It is usually created by the person who will be issuing the RFP. The template can be used as a guide for those who are responding to the RFP.

The purpose of an RFP template is to provide all of the necessary information and instructions in order for someone to respond with a proposal that meets all of the requirements set out in the document.

A well-written RFP template will include sections on:

Write an introduction. Why are you going into this project and what do you hope to achieve with the project?
Explain your company’s history and project’s background.
Define high-level business and tech requirements.
Describe solution architecture with an understandable diagram (current setup, with desired changes) or in case of a completely new solution provide architecture on how the solution should be integrated with your other systems (CRM, Billing…)
List all detailed technical requirements in the format of a Statement of Compliance
Explain how vendors should respond. Write the structure you expect your vendors to follow when planning their response to your RFP. When all vendors follow the same format, responses are easier to evaluate.
Outline your selection criteria.
Note your timelines.^[5]

Role in government procurement

In United States government procurement, Federal Acquisition Regulation 15.203 covers requests for proposals, stating

Requests for proposals (RFPs) are used in negotiated acquisitions to communicate Government requirements to prospective contractors and to solicit proposals.^[6]

The FAR allows for evaluation of proposals, further discussions with bidders and invitation for submission of written final proposal revisions (FPRs), upon which a final selection decision is based.^[7] Federal government requests for final proposal revisions must

advise offerors that the final proposal revisions shall be in writing and that the Government intends to make award without obtaining further revisions.^[8]

The term "request for proposals" is sometimes used in relation to government procurement in the United Kingdom, for example a request for proposals to raise and manage the UK Government's proposed Broadband Investment Fund was issued in June 2016.^[9]

Other requests

The collective term RFX is often used to embrace a request for proposal (RFP), or any of the terms listed below.^[10]

A request for association (RFA), also known as request for partnership or request for alliance, is a proposal from one party to another for acting together (usually in business) and sharing the benefits of this joint action.
A request for expression(s) of interest (RFEI), is part of the EOI (expression of interest) discovery process in order to gather information regarding the potential procurement of the services sought, similar to the RFQ, sometimes done prior to publishing an RFP.
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 quotation (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 prior to issuing 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. In commercial business practice, the RFQ is the most popularly used form of RFx, with many companies not understanding the distinction between the RFx's, and so defaulting to RFQ.
A request for qualifications (RFQ) also known as pre-qualification questionnaire (PQQ) 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 solution (RFS) is similar to a RFP, but more open and general. This allows the vendor or supplier the most flexibility of all RFx in expressing their solution, or their product and service combination.^[11]
A request for tender (RFT), also known as invitation to tender (ITT), is more commonly used by governments.

Related Research Articles

A business proposal is a written offer from a seller to a prospective sponsor. Business proposals are often a key step in the complex sales process—i.e., whenever a buyer considers more than price in a purchase. When one person signifies to another their willingness to do or to abstain from doing anything with a view to obtaining the assent of the other to such act or abstinence, they are said to make a proposal.

A request for information (RFI) is a common 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.

Purchasing is the procurement process a business or organization uses to acquire goods or services to accomplish its goals. Although there are several organizations that attempt to set standards in the purchasing process, processes can vary greatly between organizations.

The Information Services Procurement Library (ISPL) is a best practice library for the management of Information Technology related acquisition processes. It helps both the customer and supplier organization to achieve the desired quality using the corresponded amount of time and money by providing methods and best practices for risk management, contract management, and planning. ISPL focuses on the relationship between the customer and supplier organization: It helps constructing the request for proposal, it helps constructing the contract and delivery plan according to the project situation and risks, and it helps monitoring the delivery phase. ISPL is a unique Information Technology method because where most other Information Technology methods and frameworks focus on development, ISPL focuses purely on the procurement of information services. The target audience for ISPL consists of procurement managers, acquisition managers, programme managers, contract managers, facilities managers, service level managers, and project managers in the IT area. Because of ISPL's focus on procurement it is very suitable to be used with ITIL and PRINCE2.

E-procurement is the business-to-business or business-to-consumer or business-to-government purchase and sale of supplies, work, and services through the Internet as well as other information and networking systems, such as electronic data interchange and enterprise resource planning.

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 (RFP) and requiring a proposal response from previously identified or interested suppliers. Complex sales involve long sales cycles with multiple decision makers. Multiple stakeholders and stakeholder groups contribute to every complex sale. These types of sales can take up to 8 to 18 months as multiple people from higher management are involved.

Strategic sourcing is the process of developing channels of supply at the lowest total cost, not just the lowest purchase price. It expands upon traditional organisational purchasing activities to embrace all activities within the procurement cycle, from specification to receipt, payment for goods and services to sourcing production lines where the labor market would increase firms' ROI. Strategic sourcing processes aim for continuous improvement and re-evaluation of the purchasing activities of an organisation.

A purchasing cooperative is a type of cooperative arrangement, often among businesses, to agree to aggregate demand to get lower prices from selected suppliers. Retailers' cooperatives are a form of purchasing cooperative. Cooperatives are often used by government agencies to reduce costs of procurement. Purchasing Cooperatives are used frequently by governmental entities, since they are required to follow laws requiring competitive bidding above certain thresholds. In the United States, counties, municipalities, schools, colleges and universities in the majority of states can sign interlocal agreements or cooperative contracts that allow them to legally use contracts that were procured by another governmental entity. The National Association of State Procurement Officials (NASPO) reported increasing use of cooperative purchasing practices in its 2016 survey of state procurement.

In the United States, the processes of government procurement enable federal, state and local government bodies in the country to acquire goods, services, and interests in real property. Contracting with the federal government or with state and local public bodies enables interested businesses to become suppliers in these markets.

Purchasing is the formal process of buying goods and services. The purchasing process can vary from one organization to another, but there are some common key elements.

In procurement technology, ERFx is an acronym for electronic request for [x], where x can be Proposal (RFP), Quotation (RFQ), Information (RFI) or Tender (RFT). Other pseudonymous acronyms include ITT and PQQ. All relate to a similar activity: a buyer requesting information from potential suppliers for the purpose of evaluation and comparison. Often this is part of a tendering exercise. The more structured this information is, the easier it is to compare the suppliers. For example, it is more effective to ask 20 multiple choice questions than it is to ask 2 essay questions, as long as suppliers have an opportunity to provide commentary to qualify their answers. Therefore, eRFX software should help the buyer to compare suppliers in useful ways – e.g., apples vs. apples.

Industrial marketing or business-to-business marketing is the marketing of goods and services by one business to another. Industrial goods are those an industry uses to produce an end product from one or more raw material. The term, industrial marketing has largely been replaced by the term B2B marketing.

A request for quotation (RfQ) is a business process in which a company or public entity requests a quote from a supplier for the purchase of specific products or services. RfQ generally means the same thing as Call for bids (CfB) and Invitation for bid (IfB).

In a supply chain, a vendor, supplier, provider or a seller, is an enterprise that contributes goods or services. Generally, a supply chain vendor manufactures inventory/stock items and sells them to the next link in the chain. Today, these terms refer to a supplier of any goods or service.

A reverse auction is a type of auction in which the traditional roles of buyer and seller are reversed. Thus, there is one buyer and many potential sellers. In an ordinary auction also known as a forward auction, buyers compete to obtain goods or services by offering increasingly higher prices. In contrast, in a reverse auction, the sellers compete to obtain business from the buyer and prices will typically decrease as the sellers underbid each other.

The procurement of Landing Platform Docks (LPD) by the Indian Navy, formerly known as the "Multi-Role Support Vessel Program" (MRSV) - is an initiative of the Indian Navy (IN) to procure a series of landing platform docks, specific vessels dedicated to amphibious warfare, as part of the service's strategy to augment its capabilities of amphibious warfare, disaster-response, humanitarian assistance and auxiliary duties.

An invitation to tender is a formal, structured procedure for generating competing offers from different potential suppliers or contractors looking to obtain an award of business activity in works, supply, or service contracts, often from companies who have been previously assessed for suitability by means of a supplier questionnaire (SQ) or pre-qualification questionnaire (PQQ).

A request for qualifications (RFQ) is a step sometimes used in the formal process of procuring a product or service, for example by a government agency. It is typically used as a screening step to establish a pool of vendors that are then qualified, and thus eligible to submit responses to a request for proposals (RFP). In this two-step process, the response to the RFQ will describe the company or individual's general qualifications to perform a service or supply a product but generally will not include specific details or price proposals.

A request for solution is a commercial document that describes a technological or organizational situation and demands a solution to possible suppliers of this solution. This document is normally issued by the organization which would benefit from the solution. The buying organisation keeps a dialogue with would-be suppliers to determine together the best solution.

References

↑ Blake, Gary; Bly, Robert W. (1993). The Elements of Technical Writing. New York: Macmillan Publishers. p. 100. ISBN 0020130856.
↑ "How Request for Proposal should be used in business &#124". Negotiation Experts. Negotiations.com. Retrieved 2013-05-16.
↑ "What's the difference between an RFI, an RFP, and an RFQ?". Humboldt State University. Archived from the original on 2015-07-21. Retrieved 2015-07-28.
↑ "Entering a Tech Procurement Process? Here Are 5 Things You Need to Know About RFPs". evolllution.com. 12 September 2014. Retrieved 18 March 2018.
↑ Biljan, Ivan (April 19, 2022). "Want An IPTV/OTT Service RFP?". Uniqcast. Archived from the original on December 8, 2022. Retrieved May 10, 2023.
↑ Federal Acquisition Regulation, 15.203 Requests for proposals, accessed 23 February 2023
↑ Government Accountability Office, Matter of: All Native, Inc., file: B-411693; B-411693.2; B-411693.3, published 5 October 2015, accessed 9 March 2023
↑ Federal Acquisition Regulation, 15.307 Proposal revisions, accessed 9 March 2023
↑ Infrastructure and Projects Authority and HM Treasury, Broadband Investment Fund, published 16 June 2016, accessed 23 February 2023
↑ James, M., Definition: RFx, TechTarget, updated May 2017, accessed 23 February 2023
↑ Tonti, Jon (July 3, 2012). "Out with Request for Proposals and in With Request for Solutions". Nearshore Americas. Retrieved 11 April 2017.

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[1] Blake, Gary; Bly, Robert W. (1993). The Elements of Technical Writing. New York: Macmillan Publishers. p. 100. ISBN 0020130856.

[2] "How Request for Proposal should be used in business &#124". Negotiation Experts. Negotiations.com. Retrieved 2013-05-16.

[3] "What's the difference between an RFI, an RFP, and an RFQ?". Humboldt State University. Archived from the original on 2015-07-21. Retrieved 2015-07-28.

[4] "Entering a Tech Procurement Process? Here Are 5 Things You Need to Know About RFPs". evolllution.com. 12 September 2014. Retrieved 18 March 2018.

[5] Biljan, Ivan (April 19, 2022). "Want An IPTV/OTT Service RFP?". Uniqcast. Archived from the original on December 8, 2022. Retrieved May 10, 2023.

[6] Federal Acquisition Regulation, 15.203 Requests for proposals, accessed 23 February 2023

[7] Government Accountability Office, Matter of: All Native, Inc., file: B-411693; B-411693.2; B-411693.3, published 5 October 2015, accessed 9 March 2023

[8] Federal Acquisition Regulation, 15.307 Proposal revisions, accessed 9 March 2023

[9] Infrastructure and Projects Authority and HM Treasury, Broadband Investment Fund, published 16 June 2016, accessed 23 February 2023

[10] James, M., Definition: RFx, TechTarget, updated May 2017, accessed 23 February 2023

[Nearshore-11] Tonti, Jon (July 3, 2012). "Out with Request for Proposals and in With Request for Solutions". Nearshore Americas. Retrieved 11 April 2017.

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