Request for Proposal (RFP)
Summary Definition: A formal document that organizations use to evaluate and solicit information from potential suppliers before selecting a vendor.
What is an RFP?
A request for proposal (RFP) is a formal procurement document organizations use to solicit information from potential suppliers for a specific project, product, or service.
Instead of centering the decision solely on price, a request for proposal broadens the evaluation by clearly defining business needs, project scope, timelines, and evaluation criteria. This creates a consistent framework that allows stakeholders to objectively compare responses and assess vendor qualifications, capabilities, and long-term fit.
Key Takeaways
- Requests for proposals are formal procurement documents used to evaluate vendors based on solutions, qualifications, and overall value for complex or high-impact initiatives.
- Most RFP procurement processes follow a structured sequence (e.g., defining needs, reviewing responses, etc.) that promotes transparency, consistency, and informed decision-making.
- While a request for proposal document can help organizations reduce risk and evaluate vendors, the request for proposal process can be time-intensive and overly rigid, making it less suitable for smaller or time-sensitive purchases.
How Do RFPs Work?
The RFP process begins when an organization identifies a business need that requires external vendors and determines that a structured bidding process is necessary to address it. From there, the process typically follows a series of defined steps designed to ensure consistency, fairness, and informed decision-making:
- Identify the need: Stakeholders define the need or the project’s scope and its desired outcomes.
- Draft the RFP: Procurement teams create a proposal request outlining the company’s requirements, timelines, submission guidelines, and evaluation criteria.
- Distribute the RFP: The RFP document is shared with qualified vendors to formally solicit proposals.
- Evaluate responses: Submitted proposals are assessed against predefined selection criteria, such as pricing, capabilities, and experience.
- Select a vendor: Decision-makers choose the best-fit supplier and proceed to contract negotiations.
When Should You Use a Request for Proposal?
RFPs are most effective when evaluating vendor expertise, solution approaches, and long-term fit, not just cost. Common uses include:
- Complex projects or services: Initiatives that require customization, specialized knowledge, or multiple deliverables.
- High-impact or high-spend decisions: Purchases that carry financial, operational, or compliance risks.
- Multiple viable vendors: Scenarios where several suppliers could meet the need, thus prompting a deeper, more thorough review of each’s methods, capabilities, etc.
- Strategic or long-term partnerships: Engagements where scalability, support, and ongoing alignment with business goals are critical.
- Formal procurement requirements: Public sector or regulated environments that require a documented bidding process.
What’s the Difference Between an RFP vs. RFQ vs. RFI?
Based on their needs, goals, and timelines, procurement teams have a few types of requests to choose from. Therefore, when choosing between an RFQ vs. RFP or RFI vs. RFP, it can be very helpful to know the nuances of each type.
| Request Type | Purpose | When to Use |
|---|---|---|
| Request for Proposal (RFP) | Evaluates solutions, expertise, and overall value | For complex projects where multiple approaches are possible, such as selecting a new software system or long-term service provider. |
| Request for Quotation (RFQ) | Compares pricing for defined requirements | For standardized goods or services where price is the primary decision factor. |
| Request for Information (RFI) | Gathers high-level market and vendor information | When researching options or shaping requirements before issuing an RFP or RFQ. |
What Should Requests for Proposals Include?
While formats vary, an RFP template usually includes at least some of the following components:
- Introduction and background: An overview of the organization, the problem it needs to solve, and the RFP’s purpose.
- Project scope and requirements: A detailed description of deliverables, functional requirements, and expectations for the proposed solution or service.
- Timeline and milestones: Key dates for questions, proposal submission, evaluations, and anticipated project start.
- Submission guidelines: Response process instructions on how vendors should structure and submit their proposals, including formatting and contact details.
- Selection criteria: The standards used to assess proposals, such as experience, approach, and compliance.
- Pricing and terms: Guidance on cost structure, budget expectations, and contractual considerations.
What are the Benefits and Drawbacks of RFPs?
Along with knowing what RFPs typically contain, it's equally important to weigh how using an RFP impacts the procurement process, including both the advantages they can deliver and the limitations organizations should consider.
Request for Proposal Tool Benefits
By clearly defining requirements and evaluation criteria upfront, requests for proposals create a structured, transparent process that helps organizations compare vendors fairly and select solutions based on overall value.
This, in turn, encourages more thoughtful, detailed responses from suppliers, which can lead to better expectations and long-term outcomes.
RFP Drawbacks
However, gathering information, writing an RFP, distributing the requests, and reviewing submissions can be very time-consuming. This leads some organizations to explore investing in RFP software or to bypass the process altogether.
Furthermore, overly rigid requirements may limit vendor creativity or exclude innovative solutions. Simpler procurement processes can, therefore, be more efficient for smaller, more urgent purchases or needs.
