MLR

RFPs: How to use them to your best advantage

There may be times when your company needs the expertise of an outside vendor or consultant. Finding the right one isn’t always easy. An RFP (request for proposal) can help.

meeting

Never managed an RFP before? Intimidated by the prospect?

Relax. It’s easier than it sounds – and a lot easier than cleaning up later because the vendor you hired was a bad fit.

When writing an RFP, just remember “garbage out, garbage back.” The vendors who will be responding need to have a clear understanding of your company and its needs.

A well-written RFP will clarify your objectives and the scope of the services you are seeking. It will also provide a structured format in which the vendor should present its capabilities, costs and expectations. RFP templates are available on the Internet that might help you.

Writing the RFP

The first step in creating an RFP is defining the project and your specific needs. What exactly do you want a vendor to do? How? When? Where?

RFPs typically have the following sections, though these can change somewhat depending on the nature of your project:

Introduction Explain to potential bidders in broad terms why you are putting out an RFP and what you hope to accomplish by hiring one of them. You may also summarize key points from other sections, such as when their responses are due and when the project would start.

Background information This section includes information about your company and the history of the current project, leading up to the need for the RFP.

Requirements This is a detailed explanation of what you want the vendor to do, and a list of the information you expect to receive from the candidates.

It is the most important section and usually requires the most time – both for you to write and for the vendor’s response. It can be written either as imperative sentences (“List all of your locations”) or interrogatory (“Where are your branches located?”).

Structure of the response Present the structure of how you would like to receive the response. If the project is complex or highly technical, you can break out the requirements into bullet points to which the vendors are expected to respond.

A typical format for the response might include:

  • Executive summary (high-level overview with key points)
  • Vendor company background information
  • Proposed services or deliverables (how the vendor will meet the RFP requirements)
  • Pricing
  • References (previous customers)

Selection criteria Tell vendors how the winning bidder will be selected. This gives you a chance to highlight your priorities, your must-haves and nice-to-haves, to guide vendors’ responses.

Timelines Specify the deadline to receive their responses, the date you will announce the winning bidder, and the date the project will begin.

Keep in mind that the longer your RFP is, and the more detailed response required of bidders, the more time you need to allow them to prepare a thorough response.

Evaluating Vendors

The evaluation process actually starts before you receive any RFP responses – that is, when you decide who the recipients of the RFP should be. Do a little homework to get some good prospects.

You may already know who the vendors of interest are. If not, try the relevant professional organizations, ask trusted colleagues and other vendors who aren’t in competition, or even do an online search.

Get enough information to rule out vendors that are clearly not a good fit. But limit recipients so you don’t end up with reams of replies that create a mass of disappointed parties who never stood a chance. On the other hand, it’s good to have diversity. Send it to some large national vendors and to some small regional ones, for example.

Don’t choose a vendor based on price alone. After you read the RFP responses, narrow the list down to the best ones and interview those.

Face-to-face interviews provide the most information. What is the chemistry between you? How well do they seem to listen to your concerns? Check references. Ask pointed questions. They may be reluctant to say anything negative, but what they don’t say can be just as useful.

Finally, once you choose a vendor, write a good contract that spells out all the particulars and protects both your interests and those of your vendor. Your RFP and the vendor’s response to it form the framework of your contract. If the RFP is well written, the contract negotiation process should go more smoothly.