So what is your organization responding to? Is it a RFP, RFQ, IFB . . . what’s the difference anyway and how does it affect your sales strategy?
I’ve seen these terms tossed about like multicolor balloons on New Year’s Eve! But in the contracting world, each balloon is different. They signal the solicitor’s varied intentions, which can affect your decision to respond to the opportunity in question. Unfortunately, these terms are not always used consistently and can lead to confusion.
To see how other experts define RFx terminology, I did a quick Internet scan. Below is a high level summary of what I found and my personal comments on each. Take a look but don’t consider them the gospel for RFx terminology. Instead, use this information as part of your overall research on the solicitation opportunity. And remember, no matter what they call it, the real meanings will be found in the solicitation details such as: purpose, scope of work, instructions, terms and conditions and vendor selection criteria/process.
Request for Information (RFI) – These are open solicitations that seek broad information and understanding about a problem or requirement. RFIs are used to gather industry data, intelligence and vendor capabilities to help decide what step to take next before embarking on more formal and specific solicitations. RFI’s are, therefore, seldom the final vendor selection stage, but instead tend to establish the beach head that paves the way for other solicitation types described below.
Bottom line here is don’t expect this to result in a contract, at least not yet. Instead, think of the RFI as a golden opportunity to introduce your organization to the buyer and contract manager. You will most likely have to respond to another solicitation to win the contract. That’s more work but it may be worth the effort in terms of getting positive exposure and time to propose the best solution.
Request for Quotation (RFQ) is a solicitation opportunity for potential vendors/suppliers to communicate to the buyer proposed costs for a defined set of products and services. I’ve read some industry sources that say the quote you submit is not a binding offer. But I have come across RFQs that included terms and conditions that effectively bind your firm to the price you submitted and confirmed with your signature as an official person authorized to commit your firm. So read the nitty-gritty details!
An RFQ usually contains a specific detailed list or description along with related parameters of the service and or items to be acquired by the purchasing organization. Bottom line, the buyer knows what s/he wants and is most likely doing a price comparison. This is a technique sometimes used to ensure that the incumbent vendor (if there is one) doesn’t overcharge for his/her services or products. The lowest priced vendor usually prevails here.
Invitation for Bid (IFB)– Similar to a RFQ, this solicitation is a method to gather competitive pricing for a specifically defined need and the decision is generally based on price not ideas. I’ve read IFBs are used for procurements greater than $100,000 in value but not all procurement departments follow that rule. For example, we recently won a Texas IFB that totaled about $20,000.
Request for Proposal (RFP) is a solicitation sent to potential suppliers with whom a creative relationship or partnership is considered critical to success. Typically, the buyer knows what s/he wants but is not sure on the approach to get there. So, the RFP asks competing vendors to state their proposed strategy to achieve the buyer’s goals and objectives. This also gives the buyer an opportunity to see how their potential vendor partner thinks and to get a glimpse into how the relationship will take shape. In fact, the creativity and innovation that vendors include in their proposals can become a real competitive advantage as the buyer is looking to see if what the vendor is thinking is aligned to the buyer’s needs and organizational culture. Prior to the RFP due date, I’ve seen and participated in a lot of back and forth with the buying organization to better understand the true intent of the buyer/contracting officer and establish a relationship.
A word of caution here, don’t simply dump boilerplate information, brochures and fancy advertisements in your RFP response to describe your approach. This is not a high school or college lab assignment where the professor grades your paper based on its weight. If you do, the buyer and contracting officer will probably knock points off your evaluation score . . . I would.
Having been on the receiving end of vendor RFP responses, nothing angers me more than having to wade through a ton of paper and pamphlets that do not support their approach and strategy. Nowadays, contracting officers are putting statement into their RFP solicitations that discourages this sort of shot gun approach. For example, a recent Florida RFP solicitation included the following discreet statement “The Department discourages lengthy Proposals.” I even saw this statement in a California solicitation, “Due to limited storage space, the proposal package should be prepared using the least expensive method (i.e. cover page with staple in upper left-hand corner, no fancy bindings).” A major university in California went even further saying, “Elaborate bids in the form of brochures or other presentations beyond that necessary to present a complete and effective proposal are not desired.” And for those who can’t read between the lines, that university went on to say “The bidders ability to follow the bid preparation instructions set forth in this solicitation will be considered an indicator of the bidder’s ability to follow instructions should they receive a contract award.” Get the hint?
Needless to say, if done right, RFPs take more time to: clearly define an aligned and prioritized need set; communicate that need to the competing vendors and allow them sufficient time to formulate an intelligent and innovative response; assess and select the best vendor; and conclude final negotiations. Effective RFPs typically reflect the strategy and short/long term business objectives and provide insight upon which suppliers can use to enhance their proposals and shine brightly in the buyer’s eyes.
Request for Tender (RFT) is similar to the RFQ where the: work or commodity to be delivered is clearly defined/specified; price carries a high evaluation factor and there is not much room or need for alternative strategies or problem solving techniques. You may read that RFTs tend to be used more in the public sector but I’ve seen more solicitations labeled as RFQs than RFTs in that space.
There are several more types of solicitations but we have covered the basics. Below is a list of the solicitation types I know about. Drop me a line if you find any others.
RFS – request for services
RFQ – request for quotation or request for qualifications
RFP – request for proposal
RFO – request for offers
RFN – request for negotiation
RFI – request for information
RFD – request for documentation
RFA – request for applications
ITV – invitation to vendors
ITT – invitation to tender
IFB – invitation for bids
EOI – expression of interest