Creating the RFP/RFQ

Many firms have their own general terms and conditions such as insurance coverage requirements, confidentiality, and indemnification clauses available from their procurement department. In certain cases, boilerplate text is available. As expected, service providers have their own contract terms and conditions and some may insist on customer acceptance "as is." Smaller firms have less leverage and often are presented with the "take it or leave it" alternative. However, in many cases, buyers can negotiate changes.

The RFP process can be used for requesting innovative solutions in architecture, local and long-distance services, and new product deployment. Given the rate of technological innovation and carrier consolidations and divestitures, customers may not be aware of new products and prices available. Serving as the Swiss army knife of buyers, the RFQ is used for diverse purchases, such as installation, maintenance, equipment, and voicemail systems.

There has not always been a fine distinction between RFP and RFQ. In theory, an RFP invites the service provider to develop imaginative solutions to the buyer's business needs. In contrast, the RFQ states exactly what the buyer requires (very detailed specifications) and is looking solely for pricing. Most RFPs and RFQs fall between these two ideal structures. Generally, if the buyer does not have the expertise of staff to develop a well-defined RFQ, then an RFP is preferable. It does not make sense to send out an RFQ for yesterday's solution; reputable vendors know the "new, new thing" on the market.

Whether documents are simple or formal, they should contain explicit instructions for the respondent's proposed solution. Otherwise, the vendors are guessing requirements and the playing field for the subsequent evaluation is uneven. As telecommunications consultants, the authors have occasionally been brought in after an RFP has been issued to discuss the selection process with the "non-winners." Where bad feelings occur, the cause is most often poor wording of requirements and concerns that the selection criteria were vague, rendering the final choice as arbitrary.

The Request for Proposal/Request for Quotation

The individual responsible for initiating an RFP/RFQ should consider the following "philosophy" questions before moving forward:

• What is the end result? Lower costs, better service, specific functional requirement, or perhaps (legitimately) to demonstrate that the current provider is the best and no others can compete.

• Is it worth it? RFPs/RFQs are time-consuming for all parties. Sometimes it is better just to buy a hammer at the nearest store, regardless of its price. What economic or "political" conditions would make an RFP/RFQ mandatory?

• Is the document to be highly detailed? Is there enough information to write a worthwhile RFP, or will vendors be spending fruitless hours guessing what is required? For example, when bidding on a large PBX installation, the vendor needs to understand the number of digital and analog lines required because these drive the quantity of line cards, shelves, etc. If the RFP is too high level, one of two outcomes will result: (1) some potentially strong vendors will not participate or (2) bidding vendors will increase their prices to cover unforeseen costs. A third, less-savory practice is the deliberate underbidding on a vague RFP with the expectation that profits will accrue from the many change orders that the vendor knows will be required.

• How can a good list of suppliers be obtained? Should a two-step process be followed, with a first wave of perhaps ten respondents and a second tier of three for the most thorough review?

• How is the evaluation to be done? Who has the time, qualifications, and objectivity to do it?

• How much education is required from the respondents? Does the organization need key evaluators to attend demos, talk to references, etc.?

• What can be done to make an admittedly "fuzzy" evaluation process more fair? Will the "non-winners" be provided with a full explanation of the final decision?

• Will proposal content from the winning bidder go directly into the contract? This is an important requirement for the buyer because it ensures that the features and benefits presented in the proposal become contractual requirements.

• Will price increases be allowed? If the bidding and evaluation process takes several months, it is possible that the respondents' costs have increased in the meantime.