Request for proposal (RFP) is the process by which a corporate department or government agency prepares bid documents to acquire equipment or services. The RFP is frequently published in the legal documents section of pertinent newspapers or in trade journals covering the industry in which the department operates. The RFP can also be distributed to a list of qualified potential bidders who have already been contacted and prequalified as eligible by the agency or department.
Qualification, a key concept in the RFP procedure, frequently depends on follow-up investigation on the part of the hopeful bidder, and careful wording of the original RFP. A company that deals only in Macintosh computers and software written for Apple Computer, Inc., for instance, could not hope to win the RFP bid and fulfill the needs of a government agency that is equipped with IBM personal computers. On the other hand Dell Computer, which sells IBM clones, may indeed fill the needs of the same department if it can prove that its computers can mesh with the existing IBM machines and MS-DOS software.
Private corporations sometimes employ the practice of issuing RFPs, usually when purchasing commodities or services that do not bear directly on the company's own products or services. Government agencies are closely associated with preparing and evaluating RFPs since their responsibility to get equipment and consulting talent at the lowest possible price is closely monitored by the press and tax watchdogs. This attention to low cost as monitored by the RFP process is exemplified by an old joke in which astronauts are asked how they feel about sitting on top of a rocket designed and built by a long string of low bidders.
Developments in public and private sector businesses and organizations have led some to doubt the continuing efficacy of RFPs. Many contractors are less than totally truthful in their responses to RFPs, a practice that can lead to nasty surprises for the contracting business or agency. Furthermore, the accelerated pace of business today makes the traditional RFP process too slow to allow agencies and businesses to respond to changes in technology and the marketplace. In light of these obstacles, many businesses and agencies are turning to the use of a streamlined RFP, known as a request for information (RFI), to identify qualified contractors. Many businesses are also eliminating the RFP process entirely by developing their own prototypical products and services in-house, where they are better able to maintain quality and scheduling control.
Even among corporations and agencies that continue to make use of RFPs, problems can arise. Under the Freedom of Information Act, all RFPs presented to government agencies are part of the public record, and can yield information useful to competitors. Finally, agencies and businesses issuing RFPs frequently know more about the products and services they require than do any potential contractors, and are therefore obliged to educate all parties responding to RFPs, a time-consuming process.
In response to these and other criticisms of the RFP process, the Society of Professional Administrators and Recordkeepers (SPARK) began development of national standards for RFPs in 1996. Through the creation of a model RFP, SPARK hopes to streamline the process while retaining the main strength of the RFP, namely, the in-depth information it can provide. Further efforts to modernize the RFP process are driven by computer software companies, including Microsoft, which launched its Exchange software to compete with Lotus Development Corporation's venerable Notes package in 1996.
There are some elements that an issuing agency should make sure to include in a good RFP:
A lawyer may be needed to make sure the RFP and the equipment or services it seeks are legal under local, state, and federal laws. For example, a company advertising for bids for fuel-oil storage tanks should make absolutely sure that the tanks offered by companies responding to the RFP fit all federal environmental standards as set down by the Environmental Protection Agency.
Companies wishing to bid on RFPs should monitor the legal notices in local newspapers and trade magazines, and contact the purchasing departments of corporations and government agencies likely to request services and equipment. Investigate the requirements to be added to the "bid list."
There may be more to answering the RFP than just providing the lowest cost or the highest level of customer service. Some corporations and government agencies give special consideration on their bid lists to minority- and women-owned companies with "set-asides," a certain percentage of a job predetermined to go to companies that are usually smaller and newer to business.
Read the RFP carefully, paying particular attention to deadlines and performance clauses. Some RFPs may require that the winning bidder provide the service by a certain date. If that date is missed, the bidder might be forced to return cash to the organization that issued the RFP.
Determine if the RFP is for both equipment and service. Companies that sell equipment might not be able to adequately service it, yet that service performance may be written into the RFP in a separate section from the equipment specifications. Responders must know they can fulfill the entire contract before answering it.
[ Clint Johnson ,
updated by Grant Eldridge ]
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