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16
Jun

The Difference Between an RFP and an RFQ

What is the difference between a request for proposal (RFP) and a request for quotation (RFQ)? Fundamentally, both have similar purposes – they seek information.

Organizations that intend to solicit RFQ or RFP documents to prospective vendors are experiencing an issue or need external support for an upcoming project. Vendors will respond to either an RFP or an RFQ with information about their company to show the issuing organization the capability strength of the vendor.

So, what can we say is the difference between an RFP and an RFQ? The main difference is the type of information requested and the purpose of soliciting each. An RFP requests proposals and an RFQ requests pricing from vendors for a specific service or requirement.

What is an RFP?

An Request for proposal is typically a lengthy document with several sections and strict requirements. It is a formalized and structured solicitation with several questions or statements that require a formal response from a vendor. An RFP is lengthy because it contains several parts including the following:

  • RFP Scope. The scope of an RFP explains the project deliverable requirements and what is expected of the vendor daily, as well as throughout the duration of the contract period.
  • RFP Background. The background section of an RFP describes the issuing organization, usually including its mission, the state of its operations, and reasons for the supplier need. You can lean on this section to understand more about the organization and to leverage details for the RFP response.
  • Technical Proposal Requirements. An RFP requests detailed information from the vendor and often those details must provide a technical solution to the problem presented in the Background section. Here you will find most of the questions and statements that you have to respond to as a vendor. The bulk of the requirements are in this section.
  • Cost Proposal Requirements. In this section of the RFP, vendors can learn the  requirements for pricing their services and how to present it in a compliant manner for the RFP response.
  • Terms and Conditions. The terms and conditions are near self-explanatory. You can learn the terms of the agreements required between the issuing organization and its partner vendor, as well as other vendor requirements for the contract like minimum insurance coverage.
  • Submission Requirements. This is an important section to pay attention to in the RFP (As all sections are important too). Yet, this section of the RFP will reveal specific details on how to submit the final RFP response. Submission requirements can be as stringent as requiring seven hard copy proposals printed on recycled paper, tabbed in one-inch binders, and signed in blue ink. It is an important section because vendors who do not comply with the specifics of this section can very easily lose the bid against other compliant vendors before the submission is ever read.
  • Evaluation Criteria. Here you can learn the weight of your responses when they are scored. Vendors should pay close attention to this section of the RFP to understand what areas of the RFP response require more effort over others.
  • For the most part, your RFP will usually have attachments including agreements and affidavits that require signature from an authorized party. Review all attachments with management and legal before signing.

These are just some of the sections that you can expect to see in a standard government or commercial RFP. Keep in mind that federal government RFPs and those in other industries are entirely varied.

Guess you’ve figured out that responding to an RFP is probably a big deal that takes a good amount of time. You’re absolutely right! An RFP is issued to several vendors during the same time to gain competitive responses that are detailed, specific, and compliant. Vendors that streamline their RFP response with RFP software or proposal management Software find it easier to manage all those response requirements when an RFP is received.

What is an RFQ?

An RFQ is a chance for potential suppliers to competitively cost the final chosen solution(s). Issuing organizations are already ahead of what they require from a vendor when an RFQ is sent. An RFQ requests competitive price bids from vendors for a specific project or scope of work. Generally, an RFQ exercise is conducted with select vendors who are on the organization’s vendor list or who were determined to be a qualified vendor beforehand. Issuing organizations seek competitive pricing to help lower costs of services.

An RFQ is pretty straightforward and much shorter than an RFP. Yet, that is not the sole difference between the two solicitation documents.

An RFP requests detailed solutions and specific details from each responding vendor, where as an RFQ mainly requests pricing for specific services. See the difference?

When is an RFP or RFQ issued?

Issuing organizations require different levels of information from prospective suppliers or vendors at different times. Imagine having to sift through hundreds of pages of vendor RFP responses and pricing, all at the same time, in response to one contract for one project and one award. It would take time that could delay the project itself, which will cause even more trouble than the original client problem in the first place.

Organizations will issue an RFP, RFQ, or an RFI at different times. An RFP or RFQ always follows an issued RFI, which is a request for information. Once preliminary information is understood and received, organizations use the various stages of the procurement process to distinguish the most capable vendors for existing and future requirements.

The RFP is issued when an organization has a complex problem or is unsure of the best solution that could align with their needs. It helps the issuing organization learn vendor capabilities in full, as well as imagine different ways to approach their internal challenges.

The RFQ is matter-of-fact. It is issued when an organization simply wants competitive costs for a clearly defined scope of work. You will likely see these issued when the organization is ready for the project to commence.

Whether you receive either one, stay prepared to respond to an RFP or RFQ with the best proposal management software.

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