RFP Meaning: Why Businesses Use a Request for Proposal

A request for proposal (or RFP) is a detailed document that outlines a specific project and solicits bids from contractors to submit their proposals for the project. An RFP is an early step in a business’s “procurement process,” or the process of finding, selecting, and entering into a contract with a qualified vendor. An RFP is a type of “RFx” document or a document that a business compiles for a specific request. Other RFx documents include requests for information (RFIs), requests for quotes (RFQs), and requests for tender (RFTs).

Companies use RFPs to:

• Outline project details and expectations: Stakeholders outline the project's requirements and include details to help potential bidders and contractors understand the scope of the project and the company’s criteria for selecting a vendor.
• Request bids: An RFP kicks off the solicitation or proposal process. By releasing an RFP, companies solicit submissions from contractors. RFP documents are prevalent in the public sector, with many government agencies using the RFP selection process as their primary way of finding qualified service providers.
• Assess multiple vendors: Once companies and freelancers submit their proposals, the business reviews them and chooses the best vendor for their needs. The company uses an RFP to begin conversations with many different vendors or bidders before selecting a winning bidder, extending a final offer, and signing a contract for their project.

There is not a single RFP template, but some common aspects of an RFP include:

1. 1. Budget: An RFP contains a budget estimate to let vendors and providers know how much they can expect to earn from the project.
2. 2. Company details: In cases where the project is intrinsic to your company’s identity (for instance, a website redesign), you may include your organization’s mission statement, describe its overall brand identity, or include other critical background information to give potential vendors a better idea of their expectations and brand positioning.
3. 3. Contact info: All RFPs should include contact information so vendors know where to submit their proposals and who to reach out to with any questions.
4. 4. Deadline: An RFP must include a submission deadline so vendors know what date they need to submit their proposals.
5. 5. Project goals: All RFPs include a “statement of work”—details about the project that the company wants accomplished. You should describe the project's goals and dive into specific considerations potential suppliers should include in their proposals to help you understand how their contribution will help you meet your project’s objectives and your larger business goals.
6. 6. Selection criteria: Some RFPs include a list of evaluation criteria—like the desired experience level of the vendor or particular required skills—to help narrow down the proposals to qualified contractors.

An RFI (request for information) is a follow-up expression of interest during the RFP bidding process. The company asks for more details about a contractor’s abilities, deliverables, professional services, functionality, timeline, or other vendor information. It differs from an RFP because it’s addressed to a specific vendor (rather than a general call to interested vendors) and requests particular details instead of general information.

An RFQ (a request for quote or request for quotation) is a follow-up document in the RFP process; the company that issued the RFP expresses interest in the contractor’s proposal and asks for a cost estimate and breakdown of their services. As an RFP response, an RFQ applies to a specific vendor on the shortlist (rather than a general call to interested vendors) and focuses only on the price rather than other project details.

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