NFIB

Maximize Your Chances When Responding to an RFP
05/ 07/ 2004

by Jeffrey Moses

If your company becomes involved in a Request for Proposal process (RFP), there are specific issues that require careful attention. To maximize your chances for selection from among other candidates and to avoid getting into a situation that could prove extremely time-consuming and costly, consider the following:

What is an RFP? An RFP is an offering by a company or government agency asking suppliers to send in bids for a contract to supply products or work over a designated period. Included in the RFP may be proposed services or products, 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 larger number of suppliers are requested to make formal presentations to a board). At times, an RFP can be a multi-step process, involving numerous presentations. In such instances, a large initial group of suppliers will be 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 greater the time commitment required by each participant. It is common for total presentation preparation to cost a significant percentage of what a supplier would expect to make during the first year of a contract. For this reason, certain key factors of RFPs should be followed to make the process as productive and cost-effective as possible.

Address the budget first: First, determine the proposed budget for the products or services for which the RFP is being offered. This can help determine if it's even worth your time and effort to undertake the presentation, especially if it will be lengthy.

Determine in advance 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.

For service-based contracts and projects, the total annual projected budget should be included in the RFP. Based on a complete and accurate budget, a supplier can calculate roughly how much the sale or service contract will be worth. For instance, a small business making a proposal for a one-year contract with a government agency to provide cleaning materials can fairly accurately determine how much it will actually earn during the first year.

Know your contact: Make sure you know exactly who your contact will be at the company or government department and how much influence that person will have with others who will be involved in the decision-making process. If a committee will decide everything, every meeting could turn into a lengthy process that might leave you pulling out your hair in frustration.

Exercise caution with numbers: Be careful when you commit numbers to paper for a proposed budget. At a recent presentation I was involved in, representatives of the bureau requesting the proposal sat there looking noncommittal until my associates and I began talking dollar figures. Though we made clear that the figures were all projections and would need to be amended once full information was gained about the project, all the representatives were busily jotting down percentages and dollar figures of varying allocations. Usually, there is no way 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 or government agency is willing to spend on each item.

Make sure it's worth your time: Frequently, organizations (even government agencies) put out an RFP for products or services even when they are completely happy with their present supplier and don't have the slightest intention of replacing them. They do this for several reasons:

1) They may want to keep the current supplier on its toes. By putting out an RFP (even though they know they won't hire any of the suppliers making presentations) the company serves notice to its present supplier: nothing lasts forever, work harder.

2) They may just want to bring in a few new, free ideas for the present supplier.

3) Sometimes a company or government agency has to put out an RFP once in awhile, even though it does not intend to replace its current supplier. Many government agencies, for instance, are required to put out RFP's annually or lose their budget, even though they may have the same supplier for a job year after year.

All of these scenarios make answering an RFP a complete waste of time for outside suppliers. Therefore, before becoming involved in an RFP, ask what supplier currently is working with the company. Ask if the company or agency is happy with its current supplier, and ask why (or if) the supplier is being replaced.

With a little research, you can usually learn how long the current supplier has been working with the organization. When you smell something fishy, don't spend time and resources preparing a lengthy proposal.

When you determine that an organization really is going to replace its current supplier, find out why the company/agency isn't pleased with what its current supplier is doing. This can help you in your presentation.

Make sure that the organization isn't planning to routinely put out another RFP in a year, meaning that you will have to compete all over again with other suppliers to re-win the job. Sure, you may have the inside track, but you'll have the aggravation and expense all over again.

Make it a priority: When you decide to tackle an RFP, approach it head on. Based on the budget and how much you can make from winning the contract, spend as much time as appropriate to design a proposal that will be creative, innovative, practical and targeted directly to the needs of the organization requesting the proposal. Remember, you may be in competition with suppliers who are spending an enormous amount of time preparing their proposal, so you'll need to pull out the stops and do everything you can to win the interest of the agency or company.

Do your research: To maximize your chance of targeting the needs of the organization, do as much market research as you can in advance. Take surveys, interview the organization's executives and staff (if possible and applicable), study the organization's business plan and annual report, talk with the organization's accountants, and when possible even talk with former or present suppliers. Going the extra mile in your presentation will help your company stand out.

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