What is an RFP in Government Contracting?
An RFP in government contracts is a "request for proposal." It’s a proposal system used only by the government. The private sector, by contrast, generally uses RFBs and RFQs, which are "requests for bids" and "requests for quotations," respectively.
RFPs are used when the government knows what it needs, but doesn’t know what solutions are available. Thus, rather than soliciting a standard list of prices for set items, the government seeks proposals on how to best achieve the goals and requirements listed in the RFP .
When government contracting officers are faced with an unclear need, they don’t immediately throw open the solicitation process. Instead, the RFP process helps them learn, fairly, how similarly situated contractors would beat that need. The RFP must be clear and specific enough to set a level playing field for all competitors, which will result in just and fair results for the government and the competing contractors.
Just as RFBs and RFQs sometimes work in conjunction with a solicitation process, so do RFPs. In such cases, the RFP process helps identify potential solutions, while the RFB/RFQ process finds those solutions at the best price.
RFP Issuance Process
The first step of a Request for Proposal process occurs when a government entity identifies the needs of their organization and recognizes that a contract will be needed to fill desired services or supplies. This can occur in response to a growing need, or if an existing contract for goods or services is set to expire.
Before formally issuing an RFP, a government entity engages in a research process, determining what specific services or goods may be needed for their organization and what the market rate should be for these. During this preliminary stage, solutions offered by interested suppliers are often informally discussed to identify the range of services, timelines, and prices that might be expected.
Once a government entity has determined what their needs are, and how much they would expect to pay for them, a formal RFP is issued. To do so, the government entity develops a document that defines their needs in detail, and invites interested suppliers to submit their proposal. This invitation is posted on various platforms, so that the opportunity will be seen by many qualified suppliers.
Based on their proposals, suppliers are chosen before negotiations begin. As negotiations proceed, time may also factor into the equation. When a project must be started quickly, for example, a potential supplier with an efficient plan of action may be more desirable, even if it is estimated their proposal will cost more. As a result, the process of selecting suppliers is often very competitive between similar organizations.
After the best solution has been identified, the contract is awarded and the supplier begins to provide services to the government entity.
Elements of a Government RFP
The government Request for Proposal (RFP) contains all the pertinent details required to respond to the solicitation. The comprehensive document outlines the requirements for the scope of work, identifies the proposal submission process, and establishes evaluation criteria. Generally speaking, the government’s intention is to provide a detailed description of the project so that contracting officers can assess which offeror can deliver the best value. Most government RFPs contain the following components:
Statement of Work/Specifications
The scope of work describes in detail the project that will be performed or the supplies or services that will be provided. These corresponding specifications are provided so that the government can compare the proposals fairly and objectively. The specifications also ensure that any proposers are bidding on the same project.
Proposal Submission Process
This section provides specific information for responding to the RFP or RFQ, including the proposal deadline and submission procedures. The process may include required formatting instructions, page limitations and/or submission via a specific platform (email, fax, upload to portal, etc.). The government may also require offerors to assume certain responsibilities or conditions in their proposals. The proposal submission process provides any contract clauses that must be included in the response.
Evaluation Criteria
Here, the government will generally provide the evaluation factors, sub-factors and corresponding weights to be used to determine which proposal provides the "best value." When it comes to the evaluation of contract awards, the government is under no obligation to establish a rating system or assign weights to evaluation criteria. However, if it decides to do so then it is required to adhere to the terms of its solicitation.
Proposal Requirements
This final section of the RFP provides specific information about offeror eligibility requirements and proposal instructions. This section will include information on how to submit a bid protest in the event that an offeror is not not awarded a contract. Also among the final details are the representations and certifications that must be made by the offeror and any processes for clarifying or correcting proposal information.
How Vendors Respond to RFPs
Vendors or suppliers respond to RFPs by preparing proposals that outline how they would fulfill the contract requirements. The proposal usually includes details about the solutions proposed, the resources required to implement them, and the costs associated with those resources. In some situations, a seller may just need to submit a cost pricing proposal that complies with the cost principles, if the contract is subject to cost principles (although this is more common in federal government contracting than state and local government contracting).
Some vendors or suppliers use strategies to win the RFP contract by detailing their relevant sources of supply, past experience providing similar services, a map of the area to be covered, and highlighting their unique selling proposition as compared to their competitors. A vendor or supplier might also decide to partner with another vendor or supplier to increase qualifications. For example, two or more vendors or suppliers might decide to combine their strength to create a joint venture to respond to the RFP for work on a specific project.
Evaluating and Choosing a Vendor Based on an RFP
Proposals are submitted in response to public procurement opportunities with a difference of significant level of sophistication. Vendors’ proposals typically include education and experience relevant to the work to be performed under the RFP, and proof of the company’s or key person’s capabilities in the particular subject area. The most important factor in decision-making is often the applicant’s past experience. Government agencies also look significantly at the proposed cost of services. These details give the decision-making committee insight into the vendor’s long-term capabilities. Besides price, aspects of evaluation may include the availability of resources, technical experience, the organization’s reputation and experience, prior performance history, financial strength and solvency, the quality and relevance of past projects, and the planned approach for the services contemplated under the RFP.
Depending on the complexity of the procurement, an agency may use a formal, detailed scoring scheme to review and characterize the relative strengths and weaknesses of each proposal . This enables the committee to maintain an objective assessment of each proposal, which is important where the funding agency is obligated to financially support the vendor selected for the work. Sometimes the scoring system is pre-disclosed to vendors in the RFP itself. In other cases, the criteria for evaluation and score sheets are provided subsequent to the award decision.
Decision-making power with regard to the award recommendation is either centralized or distributed among the decision-making committee members. For example, selection is centralized when staff from the agency’s grants or contracting division will make the final decision and sign off on the award agreement. Conversely, the decision may be based on a collaborative iterative process where several levels of personnel review, critique and re-review proposals before finalizing a recommendation for award. In this scenario, the process may result in the recommendations of a large number of reviewers being consolidated into the recommendation made by the final decision maker. Usually the "top brass" are shielded from certain levels of the process, but they will view the end-gathered and consolidated information and final recommendation before signing on to the award recommendation.
Pros and Cons of RFPs in Government Contracting
As with any tool, RFPs have their advantages and disadvantages. For government entities, RFPs allow them to provide guidance on what they are looking for in proposals and allows suppliers to submit high-quality proposals to meet specific requirements. Because they are standardized, the RFP process allows government agencies to streamline the proposal evaluation process to help expedite the overall project timeline. The streamlined RFP process also ensures fair and equal treatment among all of the bidders as the objective evaluation criteria are strictly outlined in the RFP.
For suppliers, another benefit of RFPs is the ability of an interested bidder to review the exact scope of work. This helps bidders qualify themselves against a known range of expectations thus increasing the likelihood that the bidder is both willing and able to do the work. However, RFP requirements can be a double-edged sword from the supplier perspective. A less than perfect solution may be rejected because RFPs demand "best practices" rather than "good faith" responses in proposals. RFPs also tend to reduce competition by creating a bias in favor of bidders with the greatest available resources. Because RFPs tend to demand a lot of detail, smaller firms can be shut out of the game, or at least forced to spend considerable money on proposal development. An RFP response will also tend to be more expensive to produce than a bid or quote.
Tips for Effective RFP Responses
To craft a strong response to any Request for Proposal (RFP), businesses should adopt some recommended best practices that enhance their submissions. Proposals should be both compelling and compliant. A non-compliant proposal likely won’t have the opportunity to outline the compelling components of a successful bid.
By highlighting a business’s unique value proposition and benefits, an RFP proposal can significantly increase the odds of being awarded a contract. Competition is fierce; businesses must stand out to succeed. Making appropriate use of the RFP process makes that possible by allowing a business to articulate what makes them the best choice for submission.
RFP best practices include following all requirements and formatting. If an RFP stipulates a specific font size or type, stick to that when drafting your proposal. When possible, download any documents with pre-established formatting to work from and store them in a dedicated folder . This allows you to streamline the process by working from a common template.
Businesses should take several steps to ensure contract opportunities are not missed. Sign up for alerts from local, state and federal government agencies to receive notification about upcoming RFP opportunities. Be sure to check state and regional opportunities in addition to federal options. Expanding the scope of your search increases the number of potential opportunities available to your business.
Outsourcing RFP response development to professional RFP writing services also helps maintain compliance and choose the right words. If a business is not familiar with crafting winning RFP proposals, it may not get the attention it requires to win. Outsourcing RFP proposals makes ensuring compliance easier and creates more time for business owners to focus on other aspects of their organization.