A Request for Proposal
, also called an RFP
, is a document issued by a company when it wants to buy something and chooses to make the specifications public. This usually is done to have several companies bid on the work, thus producing more competitive prices. However, if it is not done correctly, it can produce no bids or bids that are a waste of your time. The steps to a successful RFP are detailed below.
Time Required: Often takes several days
- Do Your Homework
Before you start to write an RFP, figure out what you really need, what you want, and what is possible. For example, don't issue an RFP for a machine that can produce 1500 widgets per hour when you have never sold more than 25 a month. Likewise, there is no point in issuing an RFP for a flying car when a messenger can get through traffic just as fast on a bicycle.
- Distinguish Between Needs And Wants
If you want an application that can transmit pictures between headquarters and the vans at the job site, you may specify the number of images per second, the maximum size of the image, and the resolution needed. It might be nice to have the images in color, but you need to decide if that is necessary. Things that are needed are identified in the RFP but using words like "will", "shall", and "must". These are the "requirements". Those things that are merely "wants" are identified by works like "may", "can", and "optional".
- Decide What The Winner Will Look Like
The proposals you get back in response to your RFP will differ. Each company that responds will have different strengths. Some will focus on lowest cost; others on best quality; still others on most complete feature set. You should decide up front whether you are looking for the lowest cost, the fastest delivery, or some combination.
- Organize the Document
Anything you write for business should be thought through and organized. An outline is a good place to start. You will need sections, at least, for introduction, requirements, selection criteria, timelines, and process. Many of these will have subsections. For instance, the requirements section will also include the optional items. These may be blended into the individual requirements or placed in their own section.
This is where you explain to potential bidders why you are publishing the RFP and what you hope to achieve by doing so. The introduction may also include a summary of the key points from the other sections, including due date. Continuing with the example above of an RFP for an image transmission system, the introduction might read something like this: "XYZ Company requests proposals for a highly-reliable, easy-to-use system capable of transmitting images from the main office to vans anywhere in the metropolitan area. Responsive bids must be received by Monday, March 5, 2007 at 8AM PST."
This section is one of the most important and it usually takes the most time. From the example above, you would need to specify the size and clarity of the images to be transmitted and the necessary speed. Be sure to specify what you need, not how it is to be done unless that is essential. You might want to break this up into subsections by system, for example a) image size and quality, b) transmission (which could include both desired speed and any requirements that the transmission be secure), and c) desired options (where you might list color as a desirable option).
- Selection Criteria
In this section you tell the bidders as much as you choose about how the winning bidder will be selected. It is a good idea to include a sentence like "The winning bidder, if any, will be selected solely by the judgement of XYZ Company." Some government RFPs are very specific on the selection criteria. Most commercial RFPs are less precise. You may want to create a spreadsheet that awards each bid a certain range of points in each category and then have a team make a choice of the "best" bid from the ones with the top three scores.
This section tells companies who want to bid on your RFP how quickly they must act and how long the process may take. Be reasonable when you set you deadlines. Don't ask for proposals for complex systems and only give the bidders a few days to respond. The larger your RFP, the more complicated the desired purchase, and the more detailed the required response, the longer the time to prepare the bid should be. This is also where you tell the bidders how long the evaluation process will take, when the bidders will be notified whether they were successful or not, and how soon they will have to deliver.
In this section you explain how the process will work - from sending out the RFP to awarding the contract and starting the work. This section might say, for example, "bids are due on the date specified in step 8 above. All bids will be reviewed to make sure they meet all the requirements, i.e. "are responsive". All responsive bids will be scored in X categories (name the categories if you wish), and the top three bids will be evaluated by by the proposal team to select the winning bidder and an alternate. Negotiations with the winning bidder are expected to result in a contract award in 2 weeks."
- Decide How To Send Out The RFP
Most RFPs are mailed, but they do not have to be. You can send the RFP by email or post it on your company web site. Be sure to specify the name or number bidders should use to identify which RFP the are answering.
- Decide Who To Send The RFP
You may already know who the suppliers are for what you want to purchase. Your company may even have a list of acceptable vendors. If not, you can find possible vendors through your professional network, by searching on line, or by asking trusted vendors of other material for their recommendations. Don't limit the list of who you send the RFP to only "large" companies or "established" vendors. You may find better ideas and even better pricing from smaller vendors who are more interested in winning your business.
- Send The RFP