A request for proposal (RFP) is a solicitation made, often through a bidding process, by an agency or company interested in procurement of a commodity or service, to potential suppliers to submit business proposals. It is submitted early in the procurement cycle, either at the preliminary study, or procurement stage. The RFP process brings structure to the procurement decision and is meant to allow the risks and benefits to be identified clearly up front.
The RFP presents preliminary requirements for the commodity or service, and may dictate to varying degrees the exact structure and format of the supplier's response. Effective RFPs typically reflect the strategy and short/long-term business objectives, providing detailed insight upon which suppliers will be able to offer a matching perspective.
Similar requests include a request for quotation and a request for information.
In principle, an RFP:
- informs suppliers that an organization is looking to procure and encourages them to make their best effort.
- requires the company to specify what it proposes to purchase. If the requirements analysis has been prepared properly, it can be incorporated quite easily into the Request document.
- alerts suppliers that the selection process is competitive.
- allows for wide distribution and response.
- ensures that suppliers respond factually to the identified requirements.
- is generally expected to follow a structured evaluation and selection procedure, so that an organization can demonstrate impartiality - a crucial factor in public sector procurements.
Read more about Request For Proposal: Specifications, Other Requests
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