An RFP is a request for proposals -- a process that private companies and public agencies use when they want to have work or goods supplied by an outside contractor. An RFP is essentially the first stage in the bidding process for a contract.
Competition Among Contractors
An RFP is usually widely circulated, so that many different contractors or suppliers can learn of a company's needs and have an opportunity to make a bid; this allows the company to solicit a wide range of proposals, giving more choice on both price and service.
Elements of an RFP
An RFP contains detailed specifications on the work that the issuing company requires to be done. It also outlines the form in which the bidders must reply and all of the parameters that they must include in the proposal. It should also outline to the bidders how the procurement will be carried out, and the specifics of the selection process.
Importance of the RFP
The more clearly written the RFP and the more specific the questions asked of the bidders, the more efficient the procurement will be. An RFP should ask for relevant figures, so that proposals can be easily compared. It should also ask for a consistent format in the bids, again to facilitate side-by-side comparison.
Rounds of Bidding
Occasionally, for a major contract a company will hold several rounds of bidding; thus, the first RFP may be preliminary. The first selection allows the issuer to narrow the field down to two or three of the most competitive bids. Then, a second, slightly adjusted RFP can be issued in order to test these specific bidders against each other.
