RFP/ Negotiation Process

The Process of Soliciting Requests for Proposal and Negotiating the Contract

RFI vs. RFP
A “request for information” generally solicits information from as supplier concerning operating capabilities, scope of services, financial condition and other issues that affect the selection of a potential service provider. The RFI does not generally request pricing information.

A “request for proposals” may include a request for information. But an RFP generally requests a proposed price for a defined scope of work within defined performance parameters. An RFP is an invitation to bid.

Vendor Selection
Selection of vendors may start with a list of likely suspects willing to respond to an RFP. The suspects might already have a business relationship that might be expanded. For BPO, it is likely that the parties do not have a prior business relationship. After doing some due diligence, the enterprise customer selects several vendors — typically four or five — to receive RFP’s.

Before submission of the bids, the bidders might be given an opportunity to submit questions for clarification of any confusing or missing information in the RFP.
After receiving service provider responses to the RFP’s, the enterprise customer evaluates the responses in accordance with scores that relate to a pre-determined grid of selection criteria.

Negotiations
At this time, the enterprise customer might “down-select” the bidders to two finalists. After discussions relating to their responses as further review of the scoring methodology, the enterprise customer may either start negotiations with one finalist or both finalists. Negotiations may be conducted by telephone, videoconference or face-to-face meetings. At some point, the winner receives a contract.

Issues in Soliciting RFP’s
Enterprise customers may need to fine-tune this generic process to their particular styles and needs. Keeping in mind that bidding and evaluation of bids is an expensive process for all parties, enterprise customers should adopt a streamlined process for minimizing its own costs as well as an ethical policy on managing the costs of the bidding process for all parties.