In a Request for Quotation (RFQ), a buyer knows exactly what product or service she requires, and is requesting suppliers to provide a price quotation (along with payment and delivery terms) for that specific item.
In contrast, in a Request for Proposal (RFP), a buyer has a general idea of what they require, or is able to articulate a statement of work that needs to be addressed, but does not know exactly what the set of goods required or the scope of services to be delivered is.
In an RFP, a buyer is essentially asking a supplier to propose a solution along with a price. The buyer articulates the issue and the context, and asks the supplier to define a solution that meets the buyer’s needs.
An RFP contains document level meta information similar to what you might find in an RFQ. This includes the following:
Beyond this, there are several sections that an RFP has:
In this section, the buyer adds the background information to explain to the supplier the broad situation—it usually includes an introduction to the company or the buying organization and what they do. As responding to an RFP often entails substantial effort by the supplier, adding in information about the buyer’s organization adds credibility and serves as an indicator of the seriousness of the buyer’s intent.
The introduction section also provides some overview of what is required and what the end objectives of the services or works are. This provides an indication of the size and scale of the requirement.
The scope of work section lays out in more detail exactly what is required. It can also include a bill of quantities or an item list, but may not specify quantities as these are indeterminate at the RFP stage. Scope of work can include technical and commercial requirements or these can be separately listed as questionnaires.
This lists in detail all the technical requirements from the side of the buyer. They can be simple instructions which do not require any action from the supplier, or short questions to which the supplier has to agree, or mark yes or no against. Alternatively, buyers can also choose to set longer questions requiring a more detailed response from the supplier. Buyers may also ask for additional supporting documents and evidence, and request that these be attached along with the proposal.
The commercial requirements section is the pricing and payment terms section. This lists in detail all the elements that have commercial implications—this includes price, delivery time and terms, payment terms, warranties, after sales support commitments.
The buyer may specify specific timelines and milestones, or simply ask the supplier to specify these in a structured way. Typical milestones for a service contract may include an upfront fee or mobilization advance, intermediate payments against achievement of specific, measurable milestones or deliverables, and payments on completion of the project along with performance bonuses. In most cases, buyers will provide general guidelines on when they would like to have the project completed, and leave it to suppliers to suggest timelines and milestones within these parameters.
Sometimes, buyers need to evaluate not just the quality of the proposal, but the quality, reliability, and credibility of the supplier as well. In this case, they may include a supplier qualification section, requiring suppliers to submit additional qualification details beyond the basic ones such as their business incorporation certificate and trade licenses. These can include financial statements, professional certifications, quality standards certifications, indemnity certificates, and references from other customers.
For complex RFPs, buyers will often list the evaluation criteria as well so that suppliers know the weightage of each question or section and can understand the scoring and appraisal methodology. If it is a points-based criteria, the buyer can mention the points allocated next to each question in the technical and the commercial questions. Alternatively, general evaluation criteria can be added in the form of text and instructions to bidders.
If there are additional instructions for how to submit the bids, this can be added here. It can include time and place of submission, format of submission, fees to be paid for bid submission, guarantees or performance bonds to be submitted, and so on.
In the event that there is a person other than the creator of the RFP who is to be contacted for questions, clarifications or addressal of grievances, the focal person can be explicitly identified.
There are a number of additional sections that can be added beyond the key sections mentioned above. The idea of clear sections is to ensure suppliers are able to see the key elements of the request at a glance and easily look up details where needed. Additional sections can include: