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Concept
Request for proposal
Summary
A request for proposal (RFP) is a document that solicits a 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.
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 procurement.
An RFP typically involves more than a request for a price. Examples of such are: Choosing requirements, the timetable for the project, the RFP Package format, and Obtain clearance for the RFI Package format.
Official source
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Related concepts (6)
E-procurement
E-procurement (electronic procurement, sometimes also known as supplier exchange) is the business-to-business or business-to-consumer or business-to-government purchase and sale of supplies, work, and services through the Internet as well as other information and networking systems, such as electronic data interchange and enterprise resource planning. The e-procurement value chain consists of indent management, e-Informing, e-Tendering, e-Auctioning, vendor management, catalogue management, purchase order integration, Order Status, Ship Notice, e-invoicing, e-payment, and contract management.
Reverse auction
A reverse auction (also known as buyer-determined auction or procurement auction) is a type of auction in which the traditional roles of buyer and seller are reversed. Thus, there is one buyer and many potential sellers. In an ordinary auction also known as a forward auction, buyers compete to obtain goods or services by offering increasingly higher prices. In contrast, in a reverse auction, the sellers compete to obtain business from the buyer and prices will typically decrease as the sellers underbid each other.
Proposal (business)
A business proposal is a written offer from a seller to a prospective sponsor. Business proposals are often a key step in the complex sales process—i.e., whenever a buyer considers more than price in a purchase. When one person signifies to another their willingness to do or to abstain from doing anything with a view to obtaining the assent of the other to such act or abstinence, they are said to make a proposal. A proposal puts the buyer's requirements in a context that favors the seller's products and services, and educates the buyer about the seller's capability to satisfy their needs.