Frequently Asked Questions

What is the Difference between an RFP, RFQ and RFI?

Below you’ll find a general description of the differences between a Request for Proposal (RFP), Request for Quote (RFQ) and Request for Information (RFI).

Request for Proposal (RFP):

Different from an RFI (Request for Information) and RFQ (Request for Quote), the RFP not only asks how much you will charge for providing a service, but how you will go about providing the service. It asks questions to determine if you have the right experience and fit for the client. Often, it will ask that you provide your expertise to create a solution that the client has not yet considered.

Typically, the RFP begins with a summary of who the client is and a description of the project being bid. The process for the RFP submission and selection of the successful vendor is outlined. The manner of submitting the final document varies widely between companies. Some are done completely online through a web service that specializes in contract procurement. Some ask for it in multiple hard copies. Some ask for it to be emailed to them in Word or Excel. Some ask for both hard and electronic copies.

Often, the desired end product or service is known, but specifications and how that service or product is to be provided is left open. The client is counting on your expertise to provide a solution that best meets their needs. Quantities and timelines may be defined or may be left flexible based on the solutions you offer. Many include either a copy of the contract that would be issued upon award, or the key clauses that the vendor is asked to agree to.

Request for Quote (RFQ):

Sometimes called a Request for Tender (RFT), the RFQ is used when the client knows exactly what they're looking for. A full description of the project including quantities, specifications, timelines and deliverables is provided. The client may ask you to quote exactly on the specifications provided or that you provide a sliding scale based on quantities or total project dollar value (ie: if they purchased 100 or 1,000, what the price difference would be). If you have not already been pre-screened as a vendor, you'll be asked to provide information about your company and your suitability to the project. Similar to an RFP, many include either a copy of the contract that would be issued upon award, or the key clauses that the vendor is asked to agree to.

Request for Information (RFI), Request for Prequalification (RFPQ), Request for Expression of Interest (RFEOI):

An RFI is an information gathering tool. It asks questions about you as a vendor and your suitability for an upcoming project. This is often the prelude to short-list a group of vendors to receive an upcoming RFQ or RFP. It can also be used in the process of identifying a group of preferred vendors. Requests for Prequalification (RFPQs) and Requests for Expression of Interest (RFEOIs) are tools used by clients to prequalify vendors before they are ready to buy their services.

Some public sector organizations like school boards, cities and municipalities require that you first pre-qualify as a vendor before you can bid on any RFT, RFQ or RFP.

Why and When Do Organizations Go Out to Bid?

Why would an organization go out to bid in the first place? Financial transparency, due diligence and cost control are the main reasons that companies and organizations go out to bid in the private sector. Simply put; the bid process:
  • keeps transactions at arm’s-length and discourages ‘back-door’ deals
  • creates an opportunity to reduce costs through volume pricing and competitive bidding by vendors
  • allows purchasers to test the market and find creative solutions
In the public sector, organizations are mandated to go out to bid. Since it’s most often tax dollars funding these purchases, the bid process is designed to keep transactions above-board, transparent and to offer vendors equal access to opportunities.

When do they go out to bid? Most companies and organizations have purchasing standards that dictate when they should or must go out to bid before purchasing products or services. A common format for purchasing is to divide total annual spend on a product or service into 3 categories and will look something like this:
  • Category #1 - Low-spend* purchases: A dollar limit is set and as long as the total spend is under this dollar limit, the department making the purchase chooses the vendor directly. These may be preferred vendors prequalified by the company or organization, or the department may source the vendor as the need arises. This usually involves issuing a purchase order (PO) when the purchase is made.
  • Category #2 - Medium-spend* purchases: A second, higher dollar range is set and any purchases that fall into this category must have a minimum of 3 quotes before a purchase is made. As in Category #1, these may be preferred vendors prequalified by the company or organization, or the department may source the 3 vendors as the need arises. This usually involves issuing a purchase order (PO) when the purchase is made.
  • Category #3 – Large-spend* purchases: In this third category, if the total spend goes above the set limit, the purchaser is mandated to source a vendor through the formal bid process which can include issuing an RFQ, RFT or RFP depending on what best suits the project. This usually involves signing a contract with the chosen vendor and is often for a period of 3-5 years, sometimes with options to extend based on satisfactory performance.
*Companies typically consider “spend” to be the total projected costs to complete a project, or if products and services are purchased regularly, the total accumulated costs for the year for those products or services.

For example: A purchasing process might look like this:
  • Under $10,000 spend: Left up to the department lead or purchasing manager to source a vendor and complete the purchase.
  • Over $10,000 but under $100,000 spend: Department lead or purchasing manager must obtain 3 bids, with the successful vendor often being the most qualified vendor who provides the best value related to cost.
  • Over $100,000 spend: Purchasing manager or bid coordinator creates a bid document and the opportunity goes out to bid in the form of an RFQ, RFT or RFP.
Note that dollar limits and spending categories can differ greatly between companies, organizations and the public sector. If you’re a vendor and want to do business with a specific organization, try and discover what their purchasing process is. That will help you determine where you fit within the bid process.

Where do you find bid (RFP, RFI and RFQ) opportunities in Canada?

There are many places you can go to look for bid opportunities in Canada. The company or organization’s policies and whether they operate in the private sector (ex: privately owned companies and corporations) or public sector (ex: governments, municipalities, school boards and hospitals) will influence how and where they post bids.

If you have a potential client in mind that you’d love to do business with, find out how they post their bids and where. Then let them know you’re interested in participating in their next bid.

The Private Sector

In the private sector, most bids are by invitation only. Those managing the bids do their homework by short-listing a group of companies that they believe can provide the services they’re looking for. They obtain their short-list by any one or a combination of the following:
  • An RFI will be issued before short-listing a group prior to the RFP process.
  • They’ll canvas their peers and competitors to see who is currently providing them with similar services.
  • They’ve kept a file with contact information from salespeople who have approached them in the past.
  • They’ll research potential bidders on the internet.
Typically, anywhere from three to a dozen bidders are invited.
  • The down side to this process is: it’s harder to get your name and qualifications known so that you can be considered for inclusion in the bid process.
  • The up side is: going into the bid, you are a known entity. You are also competing against a relatively small group of competitors.
With the popularity of online bidding sites growing, some private sector companies will post their bids on these online bidding sites. For example: two popular Canadian online bidding sites are Merx.com and Biddingo.com.

The Public Sector

Companies and organizations operating in the public sector are mandated to post their bids publicly. These bids can be found:
  • Online through websites such as www.merx.com and www.biddingo.com. For example, the City of Barrie, Ontario posts their bids on Biddingo.com. These online sites charge fees, either for the single download of a bid document, or an annual membership fee to download unlimited documents. Note the exceptions below for federal and provincial (Ontario) bids.
  • Government of Canada bids and tenders which are downloadable at no charge from their website at buyandsell.gc.ca.
  • Province of Ontario bids and tenders which are downloadable at no charge from their website at ontariotenders.bravosolution.com.
  • On the organization’s website.
  • Through ads posted in local newspapers.
It is not unusual for twenty to thirty bids to be submitted. Often, the list of bidders is made public.
  • The down side to this process is: it’s easy for your bid to get lost in the sea of bids that the reviewer(s) must read and sort through. Unless you’ve worked at building a relationship beforehand, you’re also going in as an unknown.
  • The up side is: the bids are easy to find and reasonably accessible. You get to make your pitch to an audience you might not have access to otherwise.

How do you decide whether or not to bid on a contract / RFP?

Just because you can bid on a contract, it doesn’t necessarily mean that you should. Before investing a lot of time and money into a bid process, conduct a quick ‘Bid, No Bid’ analysis to make sure that the effort will be worth your while. A ‘Bid, No Bid’ analysis can be as simple as a quick mental checklist that weighs the costs against the benefits of bidding for the contract and a realistic view of your chances at success. During this process, you would :
  • conduct a cost/benefit analysis
  • take a realistic view of your chances of winning, and
  • make sure that you can deliver what the customer is looking for.

Cost/Benefit Analysis

Perform a quick calculation of the total dollar value of the project that you’re bidding on. Be sure to consider more than just what it will bring in on the top line. How much do you stand to net over the term of the contract? Are there any other benefits? For example, would winning this contract place you in a good strategic position to win others?

Once you’ve calculated the benefits, determine how much time and money will be spent in putting together your bid. If you’re running a small one or two-person operation, don’t overlook the cost of what won’t be happening in your business while you’re working on the bid.

Like any other business decision, the end result, once you’ve weighed the costs against the benefits, should be a positive outcome large enough to be worthy of the effort.

A Realistic View of Your Chances

One thing is sure: if you don’t bid on a contract, you won’t win it. However, before you invest a lot of time and money into a bid, you should consider your chances of success. The ideal scenario is to have an existing relationship, with a champion within the organization, great value, a fantastic game plan and a well-written proposal. Realistically, if you can’t have all the pieces to the ideal scenario, try to have as many as possible.

Consider, as well, who your competition is. Is this a bid for an existing contract with a current incumbent? How well is the current incumbent doing and what kind of relationship do they have with the bid owner? If the bid owner is singing their praises, it’s not impossible to dethrone the current incumbent, but it’s going to be pretty darn tough.

Be Sure You Can Deliver

There’s nothing wrong with stretching your goals and planning for growth. Before you consider bidding on a large contract however, make sure that it’s something that, with some hard work and planning, you can realistically deliver. Pay close attention to timelines and implementation schedules and the resources you’ll need in order to succeed.

What's the biggest mistake that people make when responding to an RFP?

In my opinion, the biggest mistake that business owners make when responding to an RFP is that they jump in right away and start responding to the questions within the RFP before they’ve asked themselves the most important question of all.

What’s the most important question?

The most important question a business owner should ask before beginning to respond to an RFP is: “What’s it going to take to win this contract?”

By having a good think about your strategy for winning first, you’ll also have a better idea of how you should answer the questions within the RFP and the areas that you should stress. However, if you just jump in and start answering questions, your answers may seem haphazard and your customer may not be able to connect the dots to visualize what you bring to the table.

What are other common mistakes that people make when responding to RFPs and RFQs?

Here are five common mistakes that business people make when responding to an RFP or RFQ.
  1. Waiting until the last minute to read the document. It’s extremely rare for a client to be generous with the time allotted to respond to an RFP or RFQ. If they’ve given you three weeks to respond, it’s because you need three weeks to do a proper job of it. By waiting, you may also miss important deadlines listed in the document.
  2. Not following the instructions. Part of reviewing an RFP is to review the instructions. Ensure that you follow them to the letter. Not doing so can disqualify you.
  3. Including a lot of fluff and generalities in responses. It’s been my experience that people will often use copy and paste from existing marketing pieces and web content to try and answer questions in an RFP rather than having to think about and create a relevant answer. Unless you’ve got some focused, well-written marketing and web content, most often this type of approach ends up sounding generic and full of fluff. There’s no better way to disengage a decision maker than by forcing them to read through fluff to try and decipher what your answer is. Take the time to answer all questions specific to your customer who issued the RFP. Yes it can take more time, but your customer will recognize the effort you made and appreciate that you’ve respected their time in the process.
  4. Spending all your time talking about how wonderful you are. Yes, your customer wants to be assured that you have the experience and expertise to deliver on their needs. But don’t spend all your time talking about yourself. Customers are more interested in how and what you’ll do to solve their problems, save them money and simplify their working lives. Spend most of your time telling them about these things and you’ll win over the decision makers.
  5. Expecting a customer to do the math. Part of your job in putting together a response for an RFP or RFQ is to connect the dots for your customer. For example, if you’re proposing a solution that will save them money, don’t expect a customer to sit down and calculate how much. Even if they do (and most won’t unless they’ve worked it into their pricing worksheets), they’ll probably misinterpret and calculate incorrectly. Be crystal clear about what you’re proposing.

What's the difference between a decision maker and an influencer in the RFP process (and why is it important to know)?

No matter how large an organization is, the decision to award a contract is still made by people. If you understand who these people are and what makes them ‘tick’, you stand a better chance of meeting the needs of the project and their own individual needs.

It’s a good idea to research who the decision makers and influencers are in awarding a contract through the RFP process. As you research, remember that the main contact person for your bid response most often isn’t the decision maker. They most certainly will be an influencer (someone who makes a recommendation about awarding the bid to the decision maker), but often the final decision is made by someone else.

If at all possible, find out who the decision makers are. By understanding them, you can better package your solution and the tone and content of your response.

For example:
  • If the main decision maker is the Chief Financial Officer, have all your ducks in a row. Speak to facts and figures.
  • If the Human Resources Director has a key voice, make sure people are a big part of your equation.
Find out what makes that person tick, what excites them. Let’s say that they’re the business owner and they’ve always wanted to be recognized by the peers in their field as a leader. How might your solution help them to achieve this? Adding a value to your solution (along with the dollars and cents values) that would contribute to this can become the deciding point between two close bids.

What should I do if I have a lot of technical data that I need to include in my response to an RFP?

Most business professionals are bombarded with things to read. They often burn the midnight oil catching up on emails that they couldn’t get to during the day. Let’s face it, the last thing they want to do is read your proposal.

Keep your answers (yes, even the technical ones) as concise as possible while still providing the reader enough information to make a decision. Be sure to avoid industry jargon and buzzwords so that a busy business professional can quickly grasp what you’re talking about.

If you feel you absolutely must provide every detail of what your widget is capable of doing to meet the requirements of the RFP, summarize the key benefits for your reader first in your response. Then put the full technical details in an appendix and refer the reader to it. If they want all that detail, they’ll go looking for it. If not, you’ve given them a good overview without burying them in words and data.

Should I use templates to answer questions in an RFP response?

I’m often asked by sales professionals if I can help them write powerful RFP (Request for Proposal) response templates that will help them win every upcoming bid. The truth is, except for those carved-in-stone processes that don’t change often (like your safety policy) there is no such thing as a template that will work for every RFP response.

How a template response can help you save time, but lose the bid.

Though going the template route sounds like a time saver, you'll find that the end product won't give you the kind of results you want. You’ll end up with a lower win ratio and have to bid on even more contracts in order to meet your sales targets.

Don’t misunderstand; templates for standard questions often found in RFPs, like requests to show your quality assurance program or problem resolution process are a good thing and should be used.

But the key pieces like your solution, executive summary and related experience need to be written specifically for the RFP and the project.

Here’s why… Most RFP decision makers see a lot of responses and can smell a template response a mile away. You stand a much greater chance of winning a contract when the decision makers feel that you really understand them and their needs. Your solution needs to address their problem, not the average customer’s problem. A template response won't do that for you. That’s especially true when you’re asked to provide a technical solution to a complex problem.

The RFP asks that I include information about my value proposition. What is a "value proposition"?

 value proposition is a verbal balance sheet. It explains what you, the seller, have to offer and how a buyer will benefit from the transaction. The benefits, whether presented in hard or soft dollars, must always outweigh the costs in a sufficient amount to catch the buyer’s interest.

Benefits to Buyer (minus) Cost of What You’re Selling (equals) Positive Value*

*Note: The Positive Value does not necessarily need to be in dollars and cents, but must be quantifiable. Those Positive Values that can be measured in hard dollars and savings or increases in revenues are the easiest to sell (and for business owners to understand).
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