Introduction to Writing RFPs
This is a guidebook for writing a request for proposal (RFP). An RFP is a standard tool used by governments and businesses to purchase equipment and services by promoting competitive proposals among suppliers.1 Through this competitive process, suppliers offer a wide array of potential solutions and prices and compete with one another to win the business. Buyers evaluate the many different supplier solutions and pick the one that most closely fits their needs and budgets.
The RFP becomes a vehicle that allows both the buyer and the supplier to establish a dialogue and to work from the same set of rules, requirements, schedules, and information. The opportunity to have this dialogue is an important element in the process, because RFP requirements are often not clear and the supplier, as the expert on the particular product or service, is allowed to question and interpret what is being requested. Conversely, the buyer has the opportunity to clarify issues in supplier proposals.
Proposals, by their very nature, are a supplier's interpretation of an RFP's requirements. RFPs, therefore, promote a diversity of thinking among suppliers and encourage them to provide unique solutions based on their products and services. RFPs are used when the following conditions apply:
RFPs encourage creative thinking by suppliers.
Multiple suppliers can provide the same solution.
Buyers seek to determine the "best value" of suppliers' solutions.
Products for the project cannot be clearly specified.
The project requires different skills, expertise, and technical capabilities from suppliers.
The problem requires suppliers to combine and subcontract products and services.
Lowest price is not the determining criterion for awarding the contract.
Final pricing is negotiated with the supplier.
When a supplier responds to an RFP, both the RFP and the proposal become the foundation for a working relationship between the two companies. This relationship allows both companies to operate against the same agreed-upon requirements, schedules, and understandings, based on the RFP and the proposal. It also provides both parties with a starting place when the requirements or schedule need to be modified once the contract has started.
The RFP process typically requires that a buyer establish a budget for the project. This budget is based on supplier research, supplier interviews, the requirements for the project, and the RFP team's understanding of the various solutions. (The RFP team and organization are discussed later in the section titled RFP Project Development.) The establishment of the requirements is the primary task that allows a budget to be built and verified. How closely the estimated budget matches proposals that are submitted depends entirely on how much product research has been performed by the RFP team. Figure 1.1 shows the interrelationships necessary for constructing the project budget. The process of establishing the project budget is discussed in more detail in Appendix D, Budget Planning and Investment Analysis.
Figure 1.1 Budget Development Process
Internally, RFPs require buyers to examine their needs and translate those needs into measurable requirements. In the process of developing requirements, an RFP team often discovers divergent interests that must be resolved, so that a requirement actually represents a consensus of opinion, not a single view.
An RFP must represent all views of the issue.
RFP requirements must also take into consideration the technical, implementation, and project management requirements; the project budget; and company contract provisions. Getting agreement on these requirements means that those departments within a buyer's organization must work together, in addition to working with the chosen supplier.
Properly developed and written, RFPs are powerful tools for selecting the most appropriate solution and developing straightforward relationships with suppliers. A successful RFP process requires us to do the following:
Develop and implement a plan for understanding the problem.
Identify appropriate potential suppliers and solutions.
Gain visibility for internal acceptance of the identified need and potential solutions.
Establish the project budget.
Develop a project schedule.
Organize project personnel.
Evolve real requirements and ensure that they are clearly stated and measurable.
Develop rigorous evaluation criteria, thus ensuring an objective evaluation.
A less successful RFP process may include the following issues:
Requirements are overly restrictive and limit suppliers to a predetermined solution.
Requirements unfairly limit the range of suppliers who may participate.
Requirements are either not clear or downright ambiguous.
Project deadlines are too short to allow for reasonable project development by suppliers.
The project team has not been fully educated about available technologies.
A budget has not been established, or has been based on unverified data and is not sufficient for the project.
These issues create the risk of a problem contract or no contract. The risks, if large enough, can be very costly, leading suppliers to refrain from bidding on the project, or to submit proposals that are overly conservative as they add in money or equipment to cover all possible contingencies.
Strong leadership, dedicated resources, and management commitment are critical to a successful RFP and a successful relationship with the chosen supplier.