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A request for proposal (RFP) is a document that solicits proposal, often made through a
bidding Bidding is an offer (often competitive) to set a price tag by an individual or business for a product or service ''or'' a demand that something be done. Bidding is used to determine the cost or value of something. Bidding can be performed by a p ...
process, by an agency or company interested in
procurement Procurement is the process of finding and agreeing to terms, and acquiring goods, Service (economics), services, or works from an external source, often via a tendering or competitive bidding process. Procurement generally involves making buying ...
of a
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,
service Service may refer to: Activities :''(See the Religion section for religious activities)'' * Administrative service, a required part of the workload of university faculty * Civil service The civil service is a collective term for a sector of gove ...
, or valuable asset, to potential suppliers to submit business proposals. It is submitted early in the procurement cycle, either at the preliminary study, or procurement stage.


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. Similar requests include a
request for quotation A request for quotation (RfQ) is a business process in which a company or public entity requests a quote from a Distributor (business), supplier for the purchase of specific Product (business), products or Service (economics), services. RfQ general ...
(RFQ), whereby the customer may simply be looking for a price quote, and a
request for information A request for information (RFI) is a common business Business is the activity of making one's living or making money by producing or buying and selling products (such as goods and services). Simply put, it is "any activity or enterprise ent ...
(RFI), where the customer needs more information from vendors before submitting an RFP. An RFI is typically followed by an RFP or RFQ. 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 In systems engineering and software engineering, requirements analysis focuses on the tasks that determine the needs or conditions to meet the new or altered product or project, taking account of the possibly conflicting requirements of the v ...
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
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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 Portable Document Format (PDF), standardized as ISO 32000, is a file format ogg-file: 154 kilobytes. A file format is a standard Standard may refer to: Flags * Colours, standards and guidons * Standard (flag), a type of flag used for pe ...
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
flash drive
by mail or delivery service. In the
militaries A military, also known collectively as armed forces, is a heavily armed, highly organized force primarily intended for warfare War is an intense armed conflict between states, government A government is the system or gro ...
of many countries, an RFP is often raised to fulfill an
Operational Requirement An Operational Requirement, commonly abbreviated OR, was a United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain,Usage is mixed. The Guardian' and Telegraph' use Britain ...
(OR), after which the military procurement authority will normally issue a detailed
technical specification A specification often refers to a set of documented requirements to be satisfied by a material, design, product, or service. A specification is often a type of technical standard A technical standard is an established norm or requirement for a ...
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, 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 ...
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 and ''Revised'' Final 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.


Other requests

*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 A request for information (RFI) is a common business Business is the activity of making one's living or making money by producing or buying and selling products (such as goods and services). Simply put, it is "any activity or enterprise ent ...
(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 A request for quotation (RfQ) is a business process in which a company or public entity requests a quote from a Distributor (business), supplier for the purchase of specific Product (business), products or Service (economics), services. RfQ general ...
(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. *A request for tender (RFT), also known as
invitation to tender Invitation or The Invitation may refer to: Films * ''Invitation'' (1952 film), an MGM film starring Dorothy McGuire and Van Johnson *The Invitation (1973 film), ''The Invitation'' (1973 film), a Swiss film *The Invitation (2003 film), ''The Invita ...
(ITT), is more commonly used by governments.


See also

*
Call for bids An invitation to tender (ITT, otherwise known as a call for bids or a request for tenders) is a formal, structured procedure for generating competing offers from different potential suppliers or contractors looking to obtain an award of business ...
* Contract A * E-tendering * ERFx * Funding opportunity announcement *
Outsourcing Outsourcing is an agreement in which one company hires another company to be responsible for a planned or existing activity that is or could be done internally, and sometimes involves transferring employees and assets from one firm A compan ...

Outsourcing
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Proposal softwareProposal software also known as proposal management software, proposal writing software, or proposal automation software is a computer program designed to help users develop proposal (business), proposals, presentations, and responses to Request for ...
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Qualifications-Based SelectionQualifications-Based Selection (QBS) is a procurement process established by the United States Congress as a part of the ''Brooks Act'' (Public Law 92-582; see also 40 USC §1101 et seq.) and further developed as a process for public agencies to use ...
*
Reverse auction A reverse auction (also known as buyer-determined auction or procurement auction) is a type of auction An auction is usually a process of buying and selling goods In economics Economics () is the social science that studies how peopl ...
*
Statement of work A statement of work (SOW) is a document routinely employed in the field of project management Project management is the process of leading the work of a team to achieve goals and meet success criteria at a specified time. The primary challenge of ...
*
Strategic sourcingStrategic 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, ...
*
Tendering An invitation to tender (ITT, otherwise known as a call for bids or a request for tenders) is a formal, structured procedure for generating competing offers from different potential suppliers or contractors looking to obtain an award of business ...


References

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