Supply Chain Glossary

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Request for Proposal


Source: Procurement Glossary
Author: Paul Rogers
Institute: CIPS - UK

Courtesy of


 

A Request for Proposal [RFP] is a market enquiry prepared by the buyer and issued to prospective suppliers for higher value and/or more complex solutions.  The purpose is to invite commercial offers from a number of suppliers in order to secure competition, and to gather information about the supplier’s solutions and capability, and key market intelligence.  The selection of a Request for Proposal as opposed to a Request for Tender usually reflects the fact that the specification is not a conformance specification, which requires complete adherence to the buyer’s standards, but rather that bidders are free to submit potential solutions which meet the performance required.  The evaluation of the RFP may require the buyer to compare alternative approaches to meet the same need, and most buyers structure their documentation such that some elements are to be read, and some elements are to be completed and returned in the format and with the contents requested.  Typically this will include an opportunity for the supplier to confirm acceptance of the buyer’s terms and conditions so that the buyer may win the ‘battle of the forms’.

The use of RFPs has increased significantly as more and more categories and projects have become contestable.  The corollary is that bidders’ success rates tend to be low, with a 20% success rate being unusually high.  Accordingly, some suppliers manage their success rate by only bidding for those RFPs which are clear and demonstrate good governance, and which they believe their company has a reasonable chance of winning.  See also Battle of the Forms, Evaluation, Tender, Invitation to Treat and RFx.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 




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