Investopedia defines an RFP (request for proposal) as a type of bidding solicitation in which a company or organization announces that funding is available for a particular project or program, and companies can place bids for the project’s completion.
Most often, it can also be described as a huge investment of time and resources that yields a mixed bag of results. We respond to many RFPs each year and have a pretty good win ratio, but that doesn’t mean we like to do them. It also doesn’t mean it’s the best approach for the client.
Instead of dismissing an RFP as an arcane remnant of a bygone age, it is worth noting that there are times it is the right tool.
The advantages are:
- It allows people with different viewpoints to come together and examine a problem, explore solutions, and put in writing exactly what they believe they need.
- It provides an instrument of consensus which should lead to a precise outline of what the committee developing the RFP thinks needs to be accomplished, as well as timeline and budget.
- It provides a seemingly scientific process for selection.
- Especially in the case of state or open RFPs, it opens the bidding up to a wide number of companies interested in your project. In theory, the RFP can connect you to new ideas, suppliers, and capabilities.
- It allows incumbent vendors an opportunity to validate their processes, pricing, and progress.
But the downside is pretty significant.
- At the very least, developing a reasonably articulate RFP takes dozens, if not hundreds, of staff hours. There are meetings, drafts, revisions, proofing, and intellectual capital of people who have other valuable intellectual capital to offer your organization.
- Many vendors do not respond to RFPs because of the financial commitment it takes to respond in the form of staff hours. Sometimes your ideal vendor choice may just be too busy to respond.
- The seemingly scientific scoring or analysis matrix you devise will almost always be influenced by preference. There’s nothing nefarious about that; it’s simple human nature.
- RFPs extend timelines and encourage bureaucracy.
- You can alienate good vendors who have performed well for you.
- In the case of many advertising and marketing RFPs, you will receive as many as 30 responses. Each one of these will need to be reviewed and scored by your selection committee.
- Even though virtually every RFP states that the document should be simply and economically produced, there is no easy way to produce a boilerplate template that can be competitive. Say your RFP gets 30 responses and the average response takes 40 staff hours to prepare. That’s nearly 10 weeks of staff time that has been spent preparing RFP responses, of which you will choose only one. It’s a lot of wasted energy.
- Many ask for way too much and scare off potential good vendors. A recent RFP we looked at asked for a comprehensive SWOT analysis, but did not offer access to data or internal staff. It is an exercise that is doomed to fail because of the lack of meaningful data and it scared off many companies that may have been a good fit for the project.
- In the end, many clients will hire the company that produced the prettiest RFP response. While that the RFP is a useful tool, it is not a sure indication that you hired the best company to meet your needs.
Some companies are better at winning work than doing it.
What are the alternatives?
- If you are a state agency, you may believe that you have no alternative other than to produce an RFP for a project that exceeds a specified budget. That’s not necessarily true. Many state agencies have provisions that allow you to tap into existing contracts at pre-negotiated terms that best suit your needs. Access, for example, has open contracts with Virginia Tech, George Mason, Virginia Western, and Wytheville Community College. We have had two clients who examined the active state contracts and selected two or three agencies to interview and selected the company that best fit their needs. This saved them months of time in the RFP process and fast tracked their projects.
- If you are not under a government-mandated system, “asking around” is a great way to narrow the list. If you get recommendations for a small number of vendors from trusted colleagues, you can talk to them to see if they meet your needs.
- If you have a vendor you like, but are concerned about budget, attention, or process, simply have a talk with them.
- If you expect you might be looking for a company in a specific sector in the immediate future, follow them on social media and get a flavor for what they are like. Look at the work they have done and the things they are proud to be accomplishing. In the internet age, there is a lot of information available for companies of every type.
The RFP is a club in the procurement golf bag, but it is by no means the only one. Another lower-risk, less costly option may provide a good answer for you. And if all else fails, you can still issue an RFP.