When performing your procurement tasks, you will likely be challenged with issuing an RFQ, RFP, RFI, ITQ, or other documentation when trying to resolve a request within your company or organization.
The acronyms above stand for RFQ – Request for Quotation (Quotation), RFP – Request for Proposals, RFI – Request for Information (Interest), ITQ – Invitation to Quote, IFB – invitation to bid and others.
Before we get into this, let’s talk a bit about competitive bidding. Quotes are normally locked in when the size of the proposed commitment exceeds a certain dollar amount: for example, $1,000. Some government agencies are required by law to bid and will award to the lowest responsible bidder. In industrial practice, proposals can be requested in order to select those companies with which the final price will be negotiated.
When deciding to solicit competitive bids, reliable sources are determined, precise wording is developed, and then a request for bids can be requested.
An RFQ is typically used when the owner knows exactly the type and quantity of goods they want to buy, while RFPs ask bidders to provide a solution to a problem that could be solved in different ways.
An example of when to use an RFQ is if you are buying 10 Toshiba laptops with 2GB RAM, 100GB HD, DVD burner, Windows XP, etc. You know your requirement and have a specification to issue with the request.
When to use an RFP would be if you were unsure whether to buy, lease, or rent the same 10 computers with software and hardware requirements that may differ from PC to PC. This gives bidders the opportunity to offer a solution to your requirement.
With the above in mind, it should be noted that evaluating an RFQ is often easier than trying to determine an award from the results of an RFP.
An RFI or request for information or interest is just that. The Owner may be considering creating a list of vendors for future projects or calls for bids and, by sending the RFI to potential vendors, will pre-qualify those vendors for bids.
One final tip, prepare your documents from the provider’s perspective. Eliminate the unknowns to ensure you reduce the number of inquiries and potential legal challenges. This will also help vendors provide accurate pricing and the cost associated with delivering the request to your company.
