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Often maligned, RFPs are a valuable tool and opportunity

by on July 10, 2009
Last updated on
It seems that every month another expert writes an article on how RFPs are bad for business, RFPs are a bad idea, top 10 lists of why you hate them, RFPs should be done away with because they increase risk and cost, and that RFPs will soon be extinct.

While we have a vested interest in RFPs in that we run the RFP Database, we do find them to be one of the most democratic, meritorious, and pragmatic approaches to procurement and purchasing. They're not a full proof solution, and often times they are run poorly, but that's exactly why we recommend that you be selective in the RFPs you respond to.

A very quick intro to Requests for Proposals

Requests for Proposals (RFP) are a document created by an organization detailing a product or service sought and distributed to suppliers as a way of receiving structured competitive bids. RFPs typically consist of a listing of requirements for their needs, a structure for resulting proposals from suppliers, contractual information, profile information about the supplier, and pricing documentation.

Complaints against RFPs and the process

Many of the complaints against RFPs, such as the ones listed below, are problematic and fairly common. Some are more legitimate reasons than others, but as we've said before you should always be selective in the RFPs you respond to.

1) Cover for a pre-selected vendor

The biggest fear of every vendor is that they're spending time pitching a project against a stacked deck, that the issuing organization has already selected the vendor they would like to use but that the RFP is simply being issued to satisfy a requirement and attach a veneer of transparency.

This is a valid fear, but by simply asking the issuing organization pointed questions about the situation you can assuage this fear or learn enough to walk away from the project. Ask them: "is there a current vendor in place and are they bidding on this project?" or "did a firm assist in the writing of the rfp and are they also bidding?" If they are you know what you're up against and can make up your own mind whether or not to bid on the project.

2) Only about lowest pricing

Perhaps it's because we work in a service industry, but we have never encountered this problem when it comes to RFPs. Yes, everyone has a budget, and yes, almost every RFP says "pricing will be considered when evaluating proposals", but does anyone expect it to NOT be a consideration?

In assisting organizations with their RFP process we have often heard "they're too cheap compared to everyone else, there has got to be something wrong there" as often if not more so than "they are simply too expensive". This has lead us to believe that yes, pricing is important, but it is much better to price your solution in the middle of the pack than it is to price it at the bottom of the barrel.

3) Boxed in to a pre-determined solution

Vendors often feel that RFPs automatically put them at a disadvantage because the project might be structured by stakeholders based on their knowledge of their requirements and a specific direction clearly indicated. They might have already made up their mind that their project requires a Microsoft solution, or that they require a LEED certified architect, or some other requirement, or any other reason either because that's what their familiar with or that's the direction they are required to take.

A vendor might have a solution to the project and feel that it is a better solution for any number of reasons, but because it is not the exact project specified by the RFP, that it is the fault of the RFP process for not enabling alternative approaches to be submitted. Asking the project manager a simple questions such as "will an alternative solution that fulfills the project goals be considered?" will quickly let you know where you stand with the project and whether or not you should spend time responding.

4) Cattle call, not worth participating

If you're a sled dog and not at the front the view never changes, right? Sure, and open call for proposals will get dozens of respondents, but how can you possible win if you never take the field? Every business is in business because they believe that they have a product or service that is worth buying and that, somehow, they have enough market differentiation to set themselves apart from the crowd and win projects. No company is the #1 choice for every project because someone somewhere has excelled at that specific type of project and can win through a combination of experience, pricing and proposed solution. Unlike the other complaints, this one requires that you perform a bit of introspection to determine how likely you will be successful in setting yourself apart from the rest of your competition.

5) Impersonal, no ability to connect

This is the complaint usually heard from smooth-talking salesmen who often are heard bragging that they can sell anything to anyone. They're disheartened by the RFP process because it emphasizes fulfillment of specific criteria, turns slick marketing pieces into a negative, and limits conversation, golf outings and free dinners. This is usually spun as "we need to meet with the client, work with them to determine their needs, get a feel for the project, etc.", but what they're really trying to angle for is an "in".

When proposing to projects that we felt needed further definition or to work with the client to better formulate their needs we have often pitched a 2-phase project with the first phase being the "lets figure out the project needs together". This phase had the discussions, discovery, requirements gathering, etc. that then was put into a detailed SOW which became Phase 2. And if the organization isn't interested in this two phase approach, you can always walk away from the project.

6) Impossible odds

This complaint often arises from a correlation/causation issue in that "since I've never won a RFP" that must mean that "RFPs must be impossible to win". As we've disputed in the past, this isn't a problem with the RFP process, but is in fact a process of companies not being selective enough in choosing which RFPs are worth them spending the time in responding. If you're specialized and can effectively demonstrate that you are the superior option there is no reason why you'd be facing long odds.

Advantages for issuing agency

RFPs are often a mandated requirement for municipal agencies, non-profits and corporations as a way to try to get unbiased and competitive bids for their needs. Organizations often don't receive enough proposals to truly receive a competitive bidding process because they don't publicize them enough, but even when they only receive three bids, RFPs still provide them with advantages. They can also be seen as time consuming since they require that the organization put time and thought into their needs and requirements, but this is time well spent.

1) apples to apples comparison

How can you evaluate which is the best solution for you and which provides you with the best pricing for the features you want without the ability to put the two solutions side by side? The RFP process enable an organization to define their needs/goals, get specific pricing for the solution that meets their needs, and evaluate multiple solutions on a level playing surface.

2) promote open and fair competition

One of the worst things an organization can do is be seen as playing favorites and putting a veneer of competition on their purchasing process when they're simply going to award the project to someone's nephew. When you have transparent competition with a documented set of requirements and evaluation process the process for getting funding and approval for your project because that much simpler. People won't think "oh, they awarded this project to this company because the CEO took the PM out for a round of golf and a fancy dinner"; instead you'll be able to point to the proposals, point to the evaluation criteria, and say "this project was the one best suited to our needs and won on its merits".

2) competitive pricing and alternative solutions

Squaring away funding for a project is obviously more difficult when you've had a less than competitive process and/or only received one proposal; it's easy to question whether you've received a fair price if you don't have other pricing to compare it against.

During the competitive bid process many vendors will often propose solutions that deviate from the specified, or at the minimum ask you questions that might challenge your defined project and assumptions. This feedback might cause you to re-evaluate your project, and in the process, create a stronger project due to the added definition and discussion.

4) potential wide-range of submissions

If you are open to simply receiving the best solution based upon its merit and within loose guidelines for your specific project you will be surprised at how wide-ranging the submissions will be. Every solution provider tries to distinguish themselves from their competition and believes that they offer something different and something better than everyone else. Let them and encourage them. You want to find the solution provider that will not just meet the needs and requirements of the project, you want to find the provider that will exceed them.

5) non-sales documentation of solution

Once your RFP gets the submitters to move past their stock sales and marketing pieces you're actually able to learn something, minus the overkill in buzzwords, about the provider and their solutions. While vendors like to say that they despise RFPs because they have to jump through so many hoops and spend so much time writing proposals, if it wasn't for the RFP and the fact that you're telling the vendors the information YOU need in the format YOU want, you'd likely receive hundreds upon hundreds of sales material that wouldn't tell you what you were getting nor what it would cost.

Advantages for responding companies

Small and mid-sized companies shouldn't listen to the advice of experts that tell you that the RFP process is broken or that you should never spend time responding to RFPs.

1) small biz equalizer against large biz

How often do you as a small or mid-sized business get the opportunity to participate in a competitive bid process that is judged on its merit? An open RFP gives you the opportunity to submit your proposal alongside the "Big Dogs" and show how a small, nimble company can in fact be the best solution.

2) connections matter less

Not all of us have connections to Fortune 100 companies or Executive Directors for large non-profits, so while we might not have the time and money to invest in extensive marketing endeavors, open call RFPs provide us with the immediate open door. The trick is, now that the door is open enough for us to stick our foot in (in the form of a proposal), we need to capitalize on it with an amazing pitch.

3) can reward innovation and expertise

While not all RFPs encourage you to venture outside the box of their firm needs and requirements, there is always the chance that the reader will realize the brilliance in your proposal and the fact that you went a step further than your competitors in proposing a solution that would save them time/money or yield increased returns.

4) plays to your strengths

In the process of being selective in the RFPs you respond to, an open-call RFP enables you to select projects that play to your strengths as well as your more profitable projects. You can actively seek out the projects that, in your mind, are big, easy, and juicy. It's not longer about the projects that find you, but that you can actively seek out these long-ball business opportunities.

So in short, go out, find some RFPs, but don't forget to be selective!

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