Using the various sections of the RFP, clients tell us several things:
- What product or service they want
- What the contractual relationship will be
- How we should present our proposal
- How they will evaluate it
RFPs have a reputation for being complex and hard to understand, but the basics are simple.
Types of RFPs
Organizations issue RFPs for a wide range of things:
- Infrastructure (think design-build)
- Services (think technical, management, administrative)
- Products (think everything from carpet to military hardware)
- Projects (think scientific research, community development)
How do all those RFPs get started? They start with a “need.”
Needs: Where It All Starts
RFPs start with a client recognizing that they need something: a product, a service, or a combination of products and services. That recognition is often driven by something changing:
- An existing contract expires
- Things wear out and have to be replaced
- Organizations grow and need more stuff, more services, in new places
- Populations grow and need more infrastructure and services
- Regulations change
- Cost pressures increase
- New technology emerges
But it’s a lot of work to issue an RFP: a complex one can require a year or more of an organization’s time. Why do they bother? There are two reasons.
Why Issue an RFP?
Organizations with money to spend issue RFPs for two reasons:
- To get value for money through disciplined procurement activities
- To drive transparency in how money is used
It turns out that those are powerful reasons: worldwide, every year, contracts totaling hundreds of billions of dollars are awarded competitively by governments, near-government agencies, and private sector companies through RFPs and tenders. In Canada alone, contracts totaling more than $30 billion are awarded annually.
Needs Become RFP Requirements
Through several iterations, clients take their relatively fuzzy idea about what they need and turn it into a relatively precise statement of requirements (SOR), or statement of work (SOW), or something similar. In doing so, they consider many factors:
- Performance (think quality standards, engineering tolerances, environmental protection, safety, security, confidentiality, privacy)
- Cost (think rent versus buy, capital versus operating expenses, price certainty and inflation protection)
- Schedule (think urgency, duration, fixed versus triggered by an event)
- Risk (think costs of non-performance or contractual default, implications of how products/services are bundled)
- Politics (think organizations that must or must not be used, and groups that they’d like to promote)
What’s in the Final RFP?
Whether they are 5 or 500 pages, RFPs all have the same six parts:
- An overview, which describes the client and the client’s need
- A description of “the Work”: the products, services, reports (and any other “data deliverables”) that the client requires
- A draft contract: the terms and conditions under which the client proposes to do business with the winning bidder
- A description of the response process: milestones as well as any process rules governing the procurement
- The response instructions, which tell bidders how to prepare their RFP responses: what content is required and how to organize/label it; how to present costs, price, or the request for money; and when and where to submit the proposal
- The evaluation process and criteria
Knowing this standard RFP structure allows you to read with intention, looking for the information you need, and to wade through the unusual and varied jargon that RFPs use.