What Is an RFP?
A request for proposal (RFP) is an event that collects information about suppliers' qualifications and pricing information.
It gathers competitive market and pricing information by specifying what the customer is looking for and describes each evaluation criterion on which a vendor's proposal is assessed.
Although pricing information can be collected, price might not be the most important factor in the selection.
Why Use an RFP?
RFPs can be helpful when:
- Obtaining first-round pricing in preparation for an auction and help eliminate noncompetitive suppliers.
- Sourcing nonstandard items. The RFP allows for additional information gathering and facilitates easier comparisons of nonstandard products such as software or cleaning services.
- Comparing various possible options.
- Project owners can add terms to address all negotiable aspects of a certain deal, for example, contract terms and specifications, and easily compare different proposals.
- In closed RFPs, suppliers can respond without fear of revealing anything to competitors, since only the project owner and team members see the information.
Allowing suppliers to differentiate themselves through the bidding process by highlighting the following:
- Product differences: If the project owner is sourcing a non-standard product or service, suppliers can include information about why their product/service is superior.
- Services offered/provided: Project owners can request for information about associated services offered by suppliers related to the RFP, where suppliers can upsell or market more services or goods.