Request for proposal
A request for proposal (RFP) is a document that solicits proposal, often made through a bidding process, by an agency or company interested in procurement of a commodity, service, 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.
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 (RFQ), whereby the customer may simply be looking for a price quote, and a request for information (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 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.
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 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 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 by mail or delivery service.
In the militaries of many countries, an RFP is often raised to fulfill an Operational Requirement (OR), after which the military procurement authority will normally issue a detailed technical specification 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 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). AN EXAMPLE OF A COMMON RFP:
1. INSTRUCTIONS TO BIDDERS
The Regional Health Contracting Office - Central (RHCO-C), Join Base San Antonio, Fort Sam Houston, Texas intends to award a two month sole source bridge contract while the solicitation for the long term requirement is being evaluated (FEDBIZOPPS.GOV, 2017). This two month bridge contract will be awarded to American Medical Response of Texas Inc. to provide emergent and non-emergent patient transportation services to and from the San Antonio Military Medical Center (SAMMC), and surrounding clinics within the immediate area.
The NAICS code of this procurement is 621910 "Ambulance Services" and the size standard is $15M. The period of performance is 1 December 2017 to 31 January 2018.
1.1 General Description of Work
Provide emergent and non-emergent patient transportation services to and from the San Antonio Military Medical Center (SAMMC), and surrounding clinics within the immediate area.
1.2 What must be included with Bid
The bidder must provide a breakdown of the bid price, revisions and extra work, technical information regarding their ambulatory equipment and related gear, as well as quality, safety and environmental information. Additionally, the bidder must provide financial and insurance documents alongside their bid to satisfy this requirement.
1.3 Schedule of Bid period activities
This bid period extends from 20th October 2017 onwards up to 30th November 2017 when the contract shall be awarded (FEDBIZOPPS.GOV, 2017). With regards to the time when bids are expected from interested parties, the process handlers expect that all bids be presented during business hours. In the event that a bidder expresses concern over their inability to meet the bid requirements, no special treatment such as extension of bid period shall be awarded. Bids presented after the due date will be treated as inadmissible and discarded without inspection.
1.4 Location of Work
Services are expected to cover the region to and from the San Antonio Military Medical Center (SAMMC), and surrounding clinics within the immediate area. Bidders are encouraged to visit the geographical region mentioned in order to familiarize themselves with the shipping and transportation costs involved.
1.5 Pre-Bid Meeting
This specific contractual process will not include a pre-proposal conference. However, should any bidder have any relevant questions regarding the bid, they should get in touch with the contacts provided for both the contracting officer and contracting specialist.
1.6 Owner Contract for Questions
The owner primary point of contact is Patricia C. Pfeninger, who is the contracting specialist. Additionally, the contracting officer, who is the secondary point of contact, is Jamie Brunner. These professionals provide all bidders and other participating players with an interface to the contract owner.
1.7 Pre-Award Surveys
Some of the owner involved in this bidding process may be interested in carrying out a pre-contract survey. Bidders are advised to prepare presentations related to aspects such as managerial performance, financial performance, and technical aspects of their equipment and human resource management of their organizations. Again, the points of contact are the contracting officer and contracting specialist.
1.8 Sealed Bid Requirements
Only sealed bid will be accepted in the bidding process. Bidders are expected to seal their bids in unmarked brown envelopes and place them in the specified location before the due date and during business hours. Bids that fail to meet these requirements will automatically be disqualified and discarded.
1.9 Basis for Bid Evaluation
The owner intends to base evaluation of the bids on important aspects such as managerial and financial integrity as well as performance. Weight associated with technical aspects such as ambulatory performance and environmental safety as well as consciousness will also be considered. However, the IVL exists to reduce such bias and consists of bidders who have performed well in the past, have proven expertise in the services required by the contract owner, or are industry giants in the same respect.
1.10 Ethical Standards
The bidders are expected to strictly adhere to ethical standards associated with bidding and contractual processes. Therefore, gifts and canvassing will not only disqualify bidders, but possibly result in the involved bidders being delisted from the IVL (FERNANDEZ, 2007). Some bidders who contravene these ethical standards may even face criminal investigation and prosecution depending on the jurisdiction and its procurement laws.
1.11 Responsibility for Surety Bonds
The bidders are expected to deposit up to 15% of the size standard with the bid office before submitting their bids. Failure to adhere to this requirement will resort in immediate disqualification of the bidder involved. The surety bond acts as security for the contract owner and participating agents to bind the bidders to the process from start to completion. Additionally, some of these funds may be deemed non-refundable in special contracts that require agency fees that are higher than normal.
1.12 Proposal Format
This bid requires all bidders to provide a schedule of their services complete with personnel changes, training, and equipment maintenance. Additionally, bidders are expected to give clear timelines on other important aspects such as organizational audits and resource development.
1.13 List of Bidders
The Interested Vendors List (IVL) contains a list of vendors the bid owner is interested in. These organizations are encouraged to place their bids based on past performance and other aspects. However, no favor or special treatment shall be accorded to them in the bidding process (FERNANDEZ, 2007). Favoring or bias towards any of the bidding organizations, be they on the IVL or outside, is highly discouraged. Bidders are therefore discouraged from resorting to gifts and entertainment as incentives to sway the contract award process to their favor.
1.14 Letter of Acknowledgement
All companies that receive this RFP are advised to send letters of acknowledgement back to the bid owner. The letter should inform the recipient of their receipt of the RFP and intentions related to the bid forthwith. Such communication is an important feedback mechanism ingrained into the bidding and contract system to ensure all parties involved are on the same page in terms of the needs and offers (SMITH, 1996).
2. DESCRIPTION OF WORK
2.1 Engineering Contracts
The project involves services to provide emergent and non-emergent patient transportation services to and from the San Antonio Military Medical Center (SAMMC), and surrounding clinics within the immediate area (FEDBIZOPPS.GOV, 2017). With regards to the nature of the contract in question, the services provider who wins the contract shall liaise with the contract owner in issues pertaining to permits and other relevant documents associated with executing the contract. Additionally, should the process of executing the contract require sub-contracting or revision of contractual terms, both the SAMMC and the contract owner will coordinate on agreement and execution thereof.
With regards to the nature of services under bidding, both parties shall undertake to agree on the bare irreducible minimums in terms of technical and engineering performance of equipment and personnel. The ambulatory equipment must be properly examined by both parties to enable them come to an agreement on matters pertaining to technical and engineering performance. Additionally, the personnel involved shall also come under scrutiny to clear any doubt and cement trust between participating parties.
The nature of the activities this contract owner is involved in requires that they specify the design of ambulatory services required. Therefore, before execution of the actual contract, both parties must agree on responsibility matters pertaining to aspects such as service design, liability scopes, and performance management.
3.1 Breakdown of Bid Price
Due to the nature of the service sought from bidders by the contract owner, bidders will provide a comprehensive breakdown of each item and equipment required to effectively execute the service. Such information enables the contract owner to get a good idea of the scope of work covered by each item of the breakdown. In order to achieve this important objective of the process, bidders are requested to make reference to their Description of Work section as well as the parts that cover Specifications and Drawings. Such reference also enables the contract owner to relate the bid items to their roles in executing his/her contract.
3.2 Revisions and Extra Work
In case the nature of the contract requires extra work, unit prices shall be clearly stated and related to these extra duties. Ambulatory work is neither definite nor is it fixed on certain timelines even with the scope of contractual obligation in place (Boland, 1987. Therefore, bidders must state unit prices for any and all items that will be required for such additional work. Additionally, should any extra work require reimbursement, the proposal will require cost limits on the process and limits on the manner in which these extra work is cost accounted to prevent an eventuality of extra work that was unaccounted for after all the contract is executed.
3.3 Escalation Formulas
While service contracts that call for pricing are the norm, some costs cannot be forecasted with certainty. Cost such as labor and materials are subject to inflationary pressure meaning the proposal must state all formulas the parties will use in accounting for such escalations. Due to the effect of the escalated prices of materials and labor costs on the contract, bidders are advised to consider all formulas and ensure they serve their interest as well as those of the client (FERNANDEZ, 2007). For contracts whose prices are not as subjective to price escalations, reservations may be made on the general contract price if the contractual terms allow it.
3.4 Schedules Completion Dates
Some contracts require the bidder to provide schedules completion dates for various stages of the contractual obligations. Such contracts and the proposals used in the bidding process require the bidders to provide a comprehensive schedule that outlines various job or service activities as schedules for completion and the dates. Ambulatory service providers may borrow from such practice if equipment is to be upgraded or downgraded over the course of the contract’s lifetime (SMITH, 1996). Additionally, important aspects of such services such as maintenance and staff training, audits and managerial development processes may also be scheduled. The start and completion dates of such crucial activities must be provided in the proposals.
3.5 List of Subcontractors
Due to the complex nature of some service contracts, the organizations that win them have to subcontract some aspects of their obligations. In such cases, the bidder must provide a list of the subcontractors they intend to use in the course of executing the contract. Additionally, bidders must also provide information related to the subcontractors’ scope of work in the contract, their experience in matters related to the contract and physical location of offices. Such subcontractors’ contacts in the form of email addresses and telephone numbers must also appear on the document.
3.6 Key Supplier or Contractor Information
In the course of executing a contract, the organization that won it must inform the beneficiary of the same about the contact person. That means the person in charge and on site during the course of contractual obligation. Bidders are advised to identify to the contract owner any personnel they intend to place in charge of the contract at the RFP stage. Not only does such a process inspire confidence in the owner, it demonstrates the contract winner’s abilities and preparedness. Should there be several personnel as would be the case with the ground ambulance service contract, bidders must provide all their contact and physical information.
3.7 Length of Time Bid is Valid
In comprehensive contracts that include a large set of requirements some of which are highly technical, there is a time provision between time of bidding and contract awarding. The provision of ground ambulance services for a large region incorporating several hospitals and clinics falls in this category of contracts (Sweeney, 1991). Therefore, bidders must be prepared for a proposal that includes a length of time the bid is valid. That means that bidders have presented their bids but they remain frozen as the owner goes through the bids to decide the best suited bidder for award of the same contract.
3.8 List of Bid Document Addenda Reviewed by Bidder
Some contractual processes attach various documents to the proposal after it has been submitted. Such documents are referred to as addenda and may include changes in the bid price, unit specifications and other information deemed necessary for the execution of the contract (Boland, 1987. During the process of bidding, bidders are advised to go through such addenda and state them as viewed. This process eliminates the occurrence of bidders operating ignorantly or blindly due to insufficient information emanating from not going through such addenda. It also updates the contract owner’s knowledge of the bidders’ familiarity with new information pertaining to their contract.
3.9 Notice of Conflicts or Errors in Bid Documents
During the process of creating and forwarding bids, some mistakes may occur necessitating the contract owner to be notified. This part of the RFP provides for such an occurrence where bidders notify their contract’s owner of the occurrence of errors and conflicts in the bid documents. Additionally, this provision facilitates the process of making corrections to the bid documents affected by errors and/or conflicts before the work that contract cover commences.
3.10 Clarification of Bids
In case the bidding process involves sections and parts that are not readily understood such as the case with highly specialized ground ambulatory services, some parts of the proposal create provisions for clarification. Herein, the bidder has a chance to clarify such parts of the bid (Sweeney, 1991). However, bidders should be careful not to over-clarify as such behavior is shunned upon in procurement practice. Additionally, most contract owner simply disqualifies over-clarified bids based on their inherent bias.
3.11 Bidder Signature
Like most proposals that contain spaces for the contractor to sign once they complete the Proposal, this one aimed at the ground ambulance service contract also does so. More spaces are provided for the date of signature of the bid, the signatory’s title and identification information pertaining to the actual bid. Such information could include licence numbers.
4. SPECIFICATIONS AND DRAWINGS
Due to the nature of the contract under bidding process, the specification and drawings portion of this RFP must include specifications and other technical aspects of the equipment that the bidders must come up with. Additionally, the bidders must provide images or drawings that outline the actual state of the ambulances and related equipment they intend to provide in their contractual obligations should their bids win the contract.
A common ambulance vehicle according to the Commission for Accreditation of Ambulance Services (CAAS) is that the ground vehicle has driver’s cab for two personnel, a spacious compartment in the back for handling patients alongside several medical emergency personnel, and enough space to store medical and support equipment such as communication radios and related equipment (Groundvehiclestandard.org, 2016). Based on this general requirement alone, bidders must make sure their equipment meets and exceeds them. Additionally, the bidders must rely on the RFP’s Definition and Description of Work sections to identify if military or civilian standards are applicable.
According to industry and Federal standards, the American ambulatory service benefits from Type 1, 2 and 3 ambulances, with some possessing ‘Added Duty” (AD) configurations (Groundvehiclestandard.org, 2016). Conversely, these configurations mean that most ambulances lie between 8000 pounds GVW and 14000 pounds GVW (Groundvehiclestandard.org, 2016). Some specialized models exceed 14000 pounds GVW meaning the bidders must choose wisely informed by both the regional strains in terms of service and the contract’s requirements.
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.
- 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 Information (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 (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's in expressing their solution, or their product and service combination.
- A Request for Tender (RFT), also known as Invitation to Tender (ITT), is more commonly used by governments.
- Blake, Gary & Bly, Robert W. (1993). The Elements of Technical Writing. New York: Macmillan Publishers. p. 100. ISBN 0020130856.
- "How Request for Proposal should be used in business |". Negotiation Experts. Negotiations.com. Retrieved 2013-05-16.
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- "Entering a Tech Procurement Process? Here Are 5 Things You Need to Know About RFPs". evolllution.com. 12 September 2014. Retrieved 18 March 2018.
- Tonti, Jon (July 3, 2012). "Out with Request for Proposals and in With Request for Solutions". Nearshore Americas. Retrieved 11 April 2017.