Ask five people how they use a Request for Proposal (RFP), and you'll get five different answers. What's considered an RFP in one firm is called a bid in another. This inconsistent terminology can cause confusion and deliver below-average results. RFPs and bids are different, whether implementing new technology, looking to expand or installing new equipment, knowing the difference could mean success over failure. Knowing how to prepare and utilize RFPs enables you to make better purchases for your firm.


To begin, RFPs are not bids. David Hawkins, VP of Sales and Marketing for ID Mail Systems Inc, says, "An RFP is not expected to be acted upon, and the bid is a definitive purchase in a certain time frame." Bids tend to be very specific and are used once a need or solution is defined and a decision to purchase has been accelerated. Both bids and RFPs contain specs such as shipping methods, delivery times, component details and terms. Yet RFPs are not as narrowly defined as bids and are utilized more as a fact-finding tool.


Secondly, an RFP is not a tool for finalizing projects. Have you ever called in a vendor to discuss your needs? The vendor sells you on service, features and pricing of a certain item it exclusively sells, then you end up putting out an RFP whose specs look awfully close to the helpful vendor's brochure. What this means to other vendors receiving RFPs is that you've already made your decision. If their equipment does not fit within a circular footprint or lacks a specific feature, why bother bidding? In essence, you've single sourced your RFP without giving others a fighting chance.


Besides, by running with one vendor, you miss opportunities and solutions the others could provide. Realize the extra work you put in now is nothing compared to the work you, your employees and your customers live with for years to come. A mail facility in California says it's so large that it "only sources to two vendors, and [the vendors] deliver." This is a big mistake and limits the choices your company can make.


An RFP's objective is to help you find people who supply alternative solutions. The U.S. Government tends to send out RFPs containing all the legal mumbo jumbo and details that may drive one crazy, yet they allow for competition. When sending out RFPs, be open to new technologies and unexpected solutions.


Getting Started

When creating RFPs, don't start with a pen and piece of paper or a keyboard and computer. RFPs are used in early stages of a project and only comprise a part of the whole. When making any purchase, set up a methodology for getting the best results. Robert Cooper, developer of the Stage Gate process, says 57% of new services fail due to poor planning. If planning isn't exemplary, the whole project goes downhill from there.


Begin with a 6-Step "Stage Gate" process to define the steps taken to deliver great solutions. With this approach, even before you begin to spend time or money, you've got an end in mind and the backing of senior management. Have you ever had the CFO join into the project several months into the process and say, "Too big, too expensive and we're not going this way, so use XYZ Company?" The Stage-Gate Process gets management to buy in early, preventing snags later on.


The process works like this. First, sit down with a cross section of management, describing what you want to achieve and why. Invite their input and concerns. The CFO may cap your budget at $1.2 million or $43,000. They'll want to hear the benefits. If they agree that the project meets company needs, you'll all move forward knowing what their concerns are up front. Note: Just by talking to other departments and senior management; you're already starting to build your RFP. RFPs come from information gathered and decisions in progress.


The 6-Step Process involves:

1. Idea Generation

2. Scoping (This stage is where RFPs are created and sent out.)

3. Business Case Development

4. Purchase and Installation

5. Execution

6. Review


Step 1 Idea Generation: Once you've defined objectives, you can start looking at alternatives and ideas on how to solve the challenges facing your department or company. Remember, you're not just buying equipment, you're buying solutions. Management wants the new sorter to cut down on manual labor. Employees want the bioterrorism feature to ensure staff and public safety. Floor supervisors want speed to increase efficiency. Your job is not to purchase but to create solutions for the challenges the organization may have. A good RFP addresses your challenge and does not ask for prices as the end all. This initial stage provides the backbone you need to write the RFP.


Step 2 Scoping Your Ideas: This helps you to find more in-depth information about the solutions already suggested in Step 1. Check the following bulleted items. If you have addressed these items, you're ready to perform a surface scan, or scoping, to find out the possible solutions available to you.

  • You've outline what your objectives are

  • You've defined what your outcomes must be

  • You can give ranges for output

  • You can give feedback on footprint, electrical or technological needs

  • You can talk clearly about what it is you're about to enter into


    The RFP is your way of communicating to potential vendors, "What can you do for me? This is what I wish to achieve." It's not so specific that only one or two vendors can make the grade and not so broad that no one knows what you really want without calling you to clarify. Hawkins says he's seen them all, from "RFPs that come in based on another firm's direct specs and those that are well written." He described a major company's proposal that was so ambiguous, "we had to go in [to their facility] to find out what they needed." You and the vendor don't need this waste of time.


    Brian Vass, VP of Marketing from Sant Corporation, a company specializing in software to "reply to RFPs" says, "RFPs run the gamut some are one page and some are hundreds of pages, each asking something different." He checks to see that an RFP contains a well-written company profile that fits with the problem at hand along with several of the suggestions below. Eliminate additional fluff since it confuses the firm creating a reply.



    So what exactly is the basis for an RFP? A general rule is that the components should address objectives, measures for success and details.

      1. Be sure to state the problem or objectives. And what you want to accomplish succinctly. Example: Your firm is processing 2,000 pieces per day and using the same footprint of 12 by 12, you need to meet a 5,000 piece per day requirement.

      2. State the measures of a successful purchase both long term and short term.

      3. List any compliance matrixes and any legal confidentiality concerns.

      4. Detail a task list and timeline for the RFP beginning with when the documents are needed back and ending with the date a vendor selection will be made.

      5. Summarize technical specs. This may be voltage usage or a screw compressor that can't exceed a certain PSI.

      6. Include any optional requirements. Perhaps you want a sort feature, but it's not necessary.

      7. Write a terms-and-conditions section to keep people honest in dealing with you. You're in the driver's seat; there is no commitment here, so put it in writing.

      8. Provide appendices and extra attachments including existing plant layout or needs. When looking for others' input, the better informed they are, the better they're able to help. Plus, they've probably seen this scenario before and have great free advice to give.

      9. Supply your contact information and to whom specific questions can be addressed, especially when working in a team environment. Remember to keep your IT people involved.

    10. Depending on the company and/or situation, provide a budget cap. If you've only got $54,000, it's often wise to state it. However, if you feel that this could limit your options or influence vendor response in a negative way, numbers can be omitted. ·



    To broaden the range of potential vendors, consult associations, competitors and trade shows to develop a long list of vendors, not just two or three. Then send it out to a dozen, or a few dozen, realizing that several will not reply. The U.S. Government makes the RFP available to anyone who wants to bid. Here, volume does count. 


    Once responses come back, clarify everything before eliminating a vendor. There's always a possibility that vendors have misunderstood your specs, altering responses to the RFP.


    Step 3 Business Case Development: Before any money is spent, Step 3 requires you and key people to review the narrowed-down fields and try to make a business case for your selection. Like Step 2, you do your research, but the research is more extensive. Visit other facilities to see equipment or technology in action or the ideas in a working environment. Do interviews with clients. A few hours or dollars expended now prevents crises later, improving your position.



    Step 4 Purchase and Installation: If the business case was done well and time was spent with electricians, IT people and facilities management staff, your selection tells everyone what to expect in preparation for the new purchase. When pulling together the purchase order, use the RFP as a checklist and basis for the contract and to ensure that the vendor fulfills all your requirements that you have states in the RFP.


    Step 5 Execution: This is what has been outlined by your team. Training should be done early, not once the equipment is in place that's wasted money. Try to send employees to a short schooling session with the vendor. When constructing the RFP in Step 2, include your training requirements and any spare parts or technology you'll need on hand to keep the new purchase running 24 hours a day, seven days a week if needed. When writing up the purchase order in Step 4, transfer the requirements from the RFP.


    Step 6 Review: This is the last stage and often never done. Review what you did right and wrong through the process to learn for next time. As your company grows and changes, you'll be repeating the cycle.


    Writing an RFP is less challenging when done within a process. The purchasing process is less daunting when you prepare and utilize RFPs the right way. There are many ways to write an RFP, and those ways can vary from industry to industry and from company to company. However, the benefits of RFP don't differ. Initially, they define objectives and put everyone from your CEO to front-line staff on the same page. RFPs outline your needs for vendors and bring about more solution opportunities. Finally, RFPs are utilized throughout the purchasing process to ensure that your company's needs are met and solutions are achieved. Good luck using RFPs on your company's next purchasing project.


    David A. Goldsmith is the co-founder of MetaMatrix Consulting Group LLC, a consulting firm specializing in executive and senior management education. During two decades of speaking and business ownership, David and Lorrie Goldsmith have won awards such as CNY Entrepreneur of the Year and have appeared in publications from "The Financial Times of London" to the Japanese version of "Entrepreneur Magazine." For more information, visit

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