NFIB

Maximize Your Chances When Responding to an RFP, Part I
03/ 22/ 2002


If your company becomes involved in a Request for Proposal process, there are specific issues that require careful attention, not only to maximize your chances for selection from among other candidates, but to avoid getting into a situation that could prove extremely time consuming and costly, both before and after the selection. In today's Workshop, contributor Jeffrey Moses offers advice based on hard-won experience.

Definition: An RFP (Request for Proposal) is an offering by a company asking suppliers to put out bids either for a specific project, for a contract to supply work over a designated period, or for products. Included may be proposed products or services, proposed budgets and specific costs, fees, time schedules, etc.

An RFP can range from being an informal process (wherein a few suppliers are interviewed and a selection made from among them) to a highly formal process(wherein a number of suppliers are requested to make formal presentations to aboard or group of company representatives). At times, an RFP can even involve numerous presentations, with a large initial group of suppliers being gradually narrowed down in stages until a few select suppliers are asked to give final presentations.

Clearly, the more involved and lengthy the selection process, the more time commitment is required by each supplier. It is not unusual for total presentation preparation to cost a significant percentage of what a supplier would expect to make during the first year of a contract, assuming that they were awarded the contract. For this reason, certain key factors of RFPs should be followed to make the process as productive and cost-effective as possible.

First, always determine the exact budget for the products or services for which the RFP is being offered. This can help determine if it's even worth the time and effort to undertake the presentation, especially if it will be lengthy. If products are involved, a total dollar figure for products or a breakdown for each product category should be given by the company making the RFP. For service-based contracts and projects, the total annual budget should be given.

Based on a complete and accurate budget, a supplier can calculate roughly how much the sale or service contract will be worth. For instance, an advertising agency making a proposal for a one-year contract with a company to handle their PR, advertising, ad placement, etc., can fairly accurately determine how much the agency will actually make during the first year. If the budget turns out to be small, the contract may not be worth the time spent in securing it.

Determine in advance exactly what needs to be included in the proposal. If the RFP will go through stages as candidates are narrowed down, you don't want to have to completely re-do your presentation at every step.

Make sure you know exactly who your contact will be at the company and how much clout that person will have with others who will be involved in any decision making. If everything will be decided by committee, each and every meeting could turn into a lengthy process that might leave you pulling out your hair in frustration.

Be careful when you commit numbers to paper for a proposed budget. At a recent presentation I was involved with, representatives of the company requesting the proposal just sat there looking noncommittal until the proposed budget was described. All of a sudden everyone was busily jotting down percentages and dollar figures of varying allocations, even though the presenting supplier had made it clear that the budget was an estimate only. Usually there is no way that a supplier can know before being awarded a contract exactly what will need to be spent on various items, but representatives of the company viewing the presentation may take the proposed figures all too seriously. This can put a supplier at a decided disadvantage. When a proposed budget is requested, a supplier should consult very carefully with the contact person of the company to determine what needs to be in the budget, and how much the company is willing to spend on each item.

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