Large construction projects often involve RFPs.
A request for proposal, or an RFP, is a formal document that a vendor submits to bid on a project. Large and bureaucratic organizations, such as government agencies, universities and corporations, often request potential vendors to turn in RFPs. A RFP is useful on large, expensive projects, especially when the organization lacks staff with the specific skills necessary to complete the project.
Vendor Qualifications
A RFP includes information about the vendor itself. The RFP may ask the vendor to list the relevant skills of its own staff. According to the University of Missouri, the qualifications of the project manager and the previous projects of the company are especially important. The organization is hiring the vendor for contract work, not permanently adding employees. The organization may ask the vendor to prove that the vendor does not have overdue federal debts and that the vendor's staff do not use illegal drugs, according to the University of Pittsburgh.
Competitive Bidding
Organizations may have a legal requirement to obtain competitive bids. Federal or state law may require a university or a defense agency to make bids open to the public above a specific cost threshold. The RFP itself may be subject to regulations that prevent the organization from writing the RFP to favor certain companies or brands in awarding bids.
Scope
RFPs are relatively broad. The goal of the RFP is to find a contractor who has the expertise to perform the project. The RFP lists many requirements which mainly confirm that the contractor has staff with training and expertise in a specific area, such as installing a communications network. According to the University of Missouri, technical decisions such as the software methods used to create computer graphics or create a database should be left up to the vendor.
Multiple Steps
RFPs are part of a bidding process that includes several steps. The vendor may be required to submit a letter of intent before submitting the RFP. Some organizations screen out unqualified vendors before asking for a RFP, since RFPs include many pages of documents. If the organization is legally required to analyze all RFP submissions, screening all of the proposals can take a long time, especially if there are many vendors competing for the project.
Awarding the Project
The RFP process formally explains why a vendor receives an award for a project. The University of New Mexico grades RFP proposals by several weighted criteria, including experience, quality, cost and schedule. The lowest bidder does not always receive the contract. The organization receiving bids may also ask for details in each area, such as the specific costs of labor and materials. Vendors may have the legal right to contest a project that the organization awards to another vendor.
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