An RFP is a formal document issued by an organization to solicit bids from qualified contractors for a specific project. It provides background information, outlines the project scope, and invites potential vendors to submit proposals to meet the project’s needs. Essentially, it’s a way to open up competition and encourage alternative proposals for a planned project.
The RFP typically contains a section, sometimes called a statement of work (SOW), defining the scope of work or the scope of service(s) to be provided. This section discusses the tasks to be performed by the winning bidder and a timeline for providing deliverables.
Like, in certain cases, the complexity of an IT project calls for a formal RFP. An organization can benefit from multiple bidders and perspectives when seeking an integrated solution calling for a mix of technologies, vendors and potential configurations. A business moving from a paper-based system to a computer-based system, for example, might request proposals for all the hardware, software and user training required to establish and integrate the new system into the organization.
An organization may also release an RFP to boost competition to drive down the cost of a solution. That said, a proposal accepted on the basis of being the most responsive to an RFP’s specifications may not always be the lowest-priced bid. As many companies will be competing for business with the company issuing an RFP, it is important for vendors to craft winning RFP responses. It’s important for companies to set clear expectations with vendors in order to receive a quality response.
The RFP process may start with a draft RFP; bidders review the draft solicitation document and submit suggestions for improvement. After implementing feedback, the final request for proposal is issued. Bidders then submit their proposals.
The proposals are submitted for review. Depending on the size and scope of the project, this review may be a multi-level process involving a number of committees.
The review process is used to narrow down the proposals to a few finalists who may be asked to submit additional information with a view to a final selection and a start date for the project.
The contract is then presented to the company providing the best solution to the issue.
The RFP also includes a number of supporting documents and exhibits to further clarify what the trust is looking for. This not only helps define the scope of what services are being pursued but helps interested firms evaluate schedules, logistics, and pricing.
The proposal should not be so detailed that it hinders the contractor’s creativity, or so vague that the contractor is left stumped.
Collectively RFP is, in part, an advertisement. It announces that a project is proceeding and opens the door to qualified candidates who can get the job done. This gives the organization an opportunity to study a variety of approaches and prices and choose the one that best meets its needs.