A request for proposal (RFP) is a document that an organization posts to elicit bids from potential vendors for a desired IT solution. The RFP specifies what the customer is looking for and establishes evaluation criteria for assessing proposals.
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An RFP generally includes background on the issuing organization and its lines of business, a set of specifications that describe the sought-after solution, and evaluation criteria that disclose how proposals will be graded. RFPs may also include a statement of work, which describes the tasks to be performed by the winning bidder and a timeline for providing deliverables.
An RFP may be issued for a number of reasons. In some cases, the complexity of an IT project calls for a formal RFP. An organization can benefit from multiple bidders and perspectives when seeking an integrated solution calling for a mix of technologies, vendors and potential configurations. A business moving from a paper-based system to a computer-based system, for example, might request proposals for all the hardware, software, and user training required to establish and integrate the new system into the organization. A simple hardware upgrade, in contrast, may only involve issuing a request for quotation to a single vendor.
Some entities such as government agencies may be required to issue RFPs to provide full and open competition. An organization may also release an RFP to boost competition to drive down the cost of a solution. That said, a proposal accepted on the basis of being the most responsive to an RFP’s specifications may not always be the lowest-priced bid.
The skill with which a customer creates an RFP can dictate the success or failure of the resulting IT solution. If the specified requirements are too vague, the bidder may miss the mark when it designs and implements the solution. Overly detailed and restrictive requirements, however, limit the bidders’ creativity and stifle innovation.
The RFP process may start with a draft RFP; bidders review the draft solicitation document and submit suggestions for improvement. The final RFP, reflecting feedback received during the draft stage, is then issued and bidders submit proposals. The customer may down-select bidders to a smaller group and enter negotiations on pricing and technical details. The customer may then invite the remaining bidders to submit a best and final offer in preparation to award a contract.